Great Depression, Canada

Canada was hard hit by the Great Depression. Between 1929 and 1933, the gross national product dropped 40% (compared to 37% in the US). Unemployment reached 27% at the depth of the Depression in 1933. Many businesses closed, as corporate profits of $396 million in 1929 turned into losses of $98 million in 1933. Canadian exports shrank by 50% from 1929 to 1933. Construction all but stopped (down 82%, 1929-33), and wholesale prices dropped 30%. Wheat prices plunged from 78c per bushel (1928 crop) to 29c in 1932. Worst hit were areas dependent on primary industries such as farming, mining and logging, as prices fell and there were few alternative jobs. Most families had moderate losses and little hardship, though they too became pessimistic and their debts become heavier as prices fell. Some families saw most or all of their assets disappear, and suffered severely.

Pre-Depression

In the years between 1900 and 1929, Canada had the world's fastest growing economy, with only a sharp but brief recession during World War I. The 1920s had been an especially successful period of growth, with living standards improving markedly.

The depression started slowly but quickened as the entire world was affected and exports fell. Factories reduced work weeks, due to lack of sales, and people were laid off. People without jobs were unable to buy products. The stores dropped their prices but that did not increase sales. Real wages of employees did not fall--for those still employed--but their weekly hours of work shrank.

Statistics

Real GNP

Year	Canada	USA	Can/USA
1929	100	100	100%
1930	91.6	87.7	104%
1931	77	79.7	97%
1932	66.5	65.9	101%
1933	59.6	62	96%
1934	64.5	65.3	99%
1935	67.1	71.5	94%
1936	67.5	76.4	88%
1937	71.8	80	90%
1938	69.7	73.2	95%
1939	72.4	76.1	95%

source: data source

World trade

The depression originated in the United States, and can be dated to the the Stock Market crash of October 1929. Given the close economic links with the much larger neighbor, the collapse quickly affected Canada. The Prairies and Maritimes were hardest hit, along with mining areas and heavy industry areas of Ontario and Quebec. Massive lay-offs occurred; some smaller companies went into bankruptcy and closed operations.

Canada did have some advantages over other countries, especially its stable bank system that had no failures during the entire depression, compared to over 9,000 small banks that collapsed in the United States.

Canada was hurt so badly because of its reliance on wheat and other commodities, whose prices fell by over 50% and because of the importance of international trade. In the 1920s about 25% of the Canadian Gross National Product was derived from exports. The first reaction of the U.S. was to raise tariff via the Smoot-Hawley Tariff Act, passed into law June 17, 1930. This hurt the Canadian economy more than most other countries in the world, and Canada retaliated by raising its own rates on American imports and by switching business to the Empire.

The British introduction of trade protectionism and a system of Commonwealth preference during the winter of 1931-32 helped Canada and Australia avoid external default on their public debt. The onset of the depression created critical balance of payment deficits, and it was largely the extension of imperial protection by Britain that gave Australia and Canada the opportunity to increase their exports to the British market. By 1938 Britain was importing more than twice the 1929 volume of products from Australia, while the value of products shipped from Canada more than doubled, despite the dramatic drop in prices. Thus, the British market played a vital role in helping Canada and Australia stabilize their balance of payments in the immensely difficult economic conditions of the 1930s.

Economic hardship

The contraction period of the depression in Canada lasted from May 1929 until 1933. After that there was a steady, slow upswing until 1939, when improvement came rapidly.

Urban unemployment nationwide was 19%; Toronto's rate was 17%, according to the census of 1931. Farmers who stayed on their farms were not considered unemployed. By 1933, 30% of the labour force was out of work, and one fifth of the population became dependent on government assistance. Wages fell as did prices. Gross National Expenditure had declined 42% from the 1929 levels. In some areas, the decline was far worse. In the rural areas of the prairies, two thirds of the population were on relief.

Further damage was the reduction of investment: both large companies and individuals were unwilling and unable to invest in new ventures.

In 1932, industrial production was only at 58% of the 1929 level, the second lowest level in the world after the United States, and well behind nations such as Britain, which only saw it fall to 83% of the 1929 level. Total national income fell to 55% of the 1929 level, again worse than any nation other than the United States.

Social impact

Hobos, transients and homeless

James Skitt Matthews's "The `Jungles' of 1931" was the first history of Canadian life during the Great Depression. His short essay, published in Early Vancouver: Narratives of Pioneers in 1932, told the story of transient homeless men, who in this case lived in a makeshift settlement on Vancouver's waterfront. For Matthews, this hobo jungle stood as a powerful sign of the beneficent impulses of local elites and the loyalty of the lower orders, and thus paralleled the civilizing projects of the West Coast's empire builders in the 1880s. McCallum (2006) uses archival evidence to report a different interpretation. A sizable minority of tramps departed from Matthews's script and organized the provision of food and shelter according to their own set of mutualist principles. Many transients refused to work for less than a living wage, some mocked those who provided them with aid, and some even stole a warehouse. This activity should be understood as evidence of a contradictory yet critical consciousness at odds with the values of Matthews's first history of the Great Depression.

Women

Women held 25-30% of the jobs in the cities. Srigley, (2005) uses oral histories with the primary sources (newspapers, the census, and other government records) to examine women's employment during the Great Depression in Toronto. She shows how privilege and disadvantage based on race and ethnicity, gender, and class influenced women's work experiences. Employed as blue collar workers in the garment industry or as clerical workers, domestics, and teachers, the working women of Toronto experienced varied levels of economic stability, came from distinct ethnic backgrounds, and encountered different job options in a period when employment access was particularly important for women and their families. For historians, Srigley concludes, gender should not be given analytical predominance for understanding all depression-era labor markets. In some historical contexts and for some women, gender had less relevance to their experiences than race, ethnicity, or class.

Baillargeon (1999) uses oral histories to show the resourcefulness of housewives who copes, often by strategies they learned from poverty while goring up. They bought inexpensive cuts of meat to cook for their families and made the Sunday roast last for an entire week; some they purchased meat directly from the abattoir rather than the local grocery and used more sausage, minced meat, and even horsemeat. They sewed more clothing, cut back on the time they used electricity and gas, and postponed the purchase of appliances. Such activities, Baillargeon concludes, demonstrate that women's unpaid domestic labor--cooking, cleaning, budgeting, shopping, childcare--is work and is essential to the economic maintenance of the family. Over half of her informants also worked for pay during the 1930s, taking jobs outside the home and taking in boarders, laundry, and needlework. Half the devout Catholics defied Church teachings and used contraception to limit the size of their families. Extended families used mutual aid--food, housing, loans--to help one another.

Government reaction

Early responses

At the start of the Depression, the provincial and municipal governments were already in debt after an expansion of infrastructure and education during the 1920s. It thus fell to the federal government to try to improve the economy. When the Depression began William Lyon Mackenzie King was Prime Minister. He believed that the crisis would pass, refused to provide federal aid to the provinces, and only introduced moderate relief efforts.

World War I veterans built on a history of postwar political activism to play an important role in the expansion of state-sponsored social welfare in Canada. Arguing that their wartime sacrifices had not been properly rewarded, veterans claimed that they were entitled to state protection from poverty and unemployment on the home front. The rhetoric of patriotism, courage, sacrifice, and duty created powerful demands for jobs, relief, and adequate pensions that should, veterans argued, be administered as a right of social citizenship and not a form of charity. At the local, provincial, and national political levels, veterans fought for compensation and recognition for their war service, and made their demands for jobs and social security a central part of emerging social policy.

The Liberal Party lost the 1930 election to R. B. Bennett and his Conservative Party. Bennett, a successful western businessman, campaigned on high tariffs and large scale spending. Make-work programs were begun, and welfare and other assistance programs became vastly larger. This led to a large federal deficit, however. Bennett became wary of the budget shortfalls by 1932, and cut back severely on federal spending. This only deepened the depression as government employees were put out of work and public works projects were canceled.

One of the greatest burdens on the government was the Canadian National Railway (CNR). The federal government had taken over a number of defunct and bankrupt railways during World War I and the 1920s. The debt the government assumed was over $2 billion, a massive sum at the time, but during the boom years it seemed payable. The Depression turned this debt into a crushing burden. Due to the decrease in trade, the CNR also began to lose substantial amounts of money during the Depression, and had to be further bailed out by the government.

Unemployment relief

At the outset, Saskatoon initiated a series of "work for wages" schemes designed to provide its residents with work. Financed by all three levels of government, municipal, provincial, and federal, but implemented entirely at the municipal level, the work relief projects enjoyed early success in keeping urban unemployment within at least manageable levels. But work relief's effectiveness in dealing with urban unemployment proved largely dependent on the duration and relative severity of the economic downturn. Between 1929 and 1932, most viewed the depression as a temporary anomaly, a short-term emergency requiring no more than short-term emergency measures. But after nearly three years of worsening social conditions coupled with increasing numbers of unemployed, the characterization of the economic situation as a short-term emergency foundered - the depression had become a long-term crisis. By the spring of 1932, the federal and provincial abandonment of public works in favor of the cheaper, more efficient direct relief marked this change in perception.

The unemployed, who were previously the responsibility of private assistance networks, reached unprecedented numbers by 1932, thus forcing the government to create legislation in a new area of intervention. The federal and provincial governments designed extensive assistance programs (direct relief and public works) that were nonetheless the responsibility of the municipalities to manage and implement. In general, older workers and those with large families were most likely to receive relief; the short-term unemployed and employable dependents were least likely to receive relief. Relief was based on need rather than labor-force status, so that poor families qualified even though they had in many instances not been in the labor force. Relief programs had little impact on the rate of unemployment.

In Drummondville, Quebec, elected municipal officers sought the collaboration of specific associations to perform this task, in particular the chamber of commerce, the Property Owner's League, and the Canadian Manufacturers' Association. In Regina, volunteer and government bodies combined to constitute a mixed social economy of poor relief that was both dynamic and relatively effective.

In 1932, the national government set up relief camps for the unmarried and homeless unemployed. These work camps, which paid workers twenty cents a day, were operated by the Ministry of Defense. In Quebec, the Valcartier camp served the homeless unemployed of Montreal. Those unemployed from Valcartier helped to renovate and clean parts of Quebec, as well as enlarge and repair the former military airbase. With this program, the government made use of a workforce it perceived as a potential threat to social stability and order. Though they provided the men with lodging and employment, the camps also had a totalitarian aspect, which led to their abolishment in 1936.

In Calgary the Young Men's Christian Association (YMCA) broadened the organization's mission from its original focus on the spiritual needs of teenagers. The at-first piecemeal response included a pledge to supply washrooms and beds for a growing homeless population. In 1933 the Leisure Time League was set up in 1933 to provide social and recreational programs for single men aged 16 to 30 facing the psychological pressure of unemployment and temptations of vice and crime. Programs included physical fitness, music, vocational training, foreign languages, and first aid.

Teachers

Middle class well-educated teachers were squeezed by the financial crisis facing their employers. In Ontario, the average age and experience of teachers increased but salaries decreased, and men started to replace women. To save costs schools were consolidated and positions elimintaed. Women were not hired if they were married, and those who were hired were given lower grades and lower salaries than their male counterparts; in addition, female teachers were responsible for more students but were supervised by higher-paid male teachers with fewer students. When the depression necessitated salary cuts, women suffered more. These factors tended to discourage good gender relations and to reinforce the view of women teachers as second class. Gender relations in urban schools were different from rural ones, based in part on experience differentials (it was more important, for example, to have experience to teach in Toronto than outside the city).

Canadian New Deal

With falling support and the depression only getting worse, Bennett attempted to introduce policies based on the New Deal of Franklin Delano Roosevelt in the United States. Bennett thus called for a minimum wage, unemployment insurance and other such programs. This effort was largely unsuccessful, the provinces challenged the rights of the federal government to manage these programs. Unlike Roosevelt, who simply threatened to stack the Supreme Court of the United States to defeat any constitutional challenges, Canada's supreme court at this time was the Judicial Committee of the Privy Council, an institution controlled by Great Britain.

The failure to fully restore the economy led to Bennett's defeat in the 1935 election when King and the Liberals returned to power.

Nevertheless, by this time the worst of the Depression was over. King's government implemented some relief programs such as the National Housing Act and National Employment Commission, and it established Trans-Canada Airlines (1937, the predecessor to Air Canada). It took until 1939 and the outbreak of war for the Canadian economy to return to 1929 levels, however.

One of the most important lasting effects of the depression was the new role of government. Under Bennett and Mackenzie King the first elements of Canada's welfare state were created, and the size and role of the government began to grow immensely over the next decades.

Contending philosophies

Kelly (2004) found the debates on national policy used three different political philosophies: social democracy, republicanism, and corporatism. The federal political parties were influenced by these in different ways. This crucial period is characterized by two distinct moments. In 1934-35, H. H. Stevens and R. B. Bennett proposed a bold synthesis of the republican and social-democratic paths, operating through a vigorous struggle against economic concentration by means of strict market regulation. Between 1937 and 1943, William Lyon Mackenzie King proposed a change of direction that fit more exclusively within the philosophical framework of social democracy. Leaving aside the struggle against economic concentration, the Canadian state took up the use of fiscal tools to stimulate consumption and economic growth. The first New Deal fell through in the midst of a quarrel that split the Conservative Party. The second New Deal succeeded and confirmed the hegemony of the Liberal Party on the federal political scene.

Labour issues

The judicial and political failure of Bennett's New Deal legislation shifted the struggle to reconstitute capitalism to the provincial and municipal levels of the state. Attempts to deal with the dislocations of the Great Depression in Ontario focused on the "sweatshop crisis" that came to dominate political and social discourse after 1934. Ontario's 1935 Industrial Standards Act (ISA) was designed to bring workers and employers together under the auspices of the state to establish minimum wages and work standards. The establishment of New Deal style industrial codes was premised on the mobilization of organized capital and organized labor to combat unfair competition, stop the spread of relief-subsidized labor, and halt the predations of sweatshop capitalism. Although the ISA did not bring about extensive economic regulation, it excited considerable interest in the possibility of government intervention. Workers in a diverse range of occupations, from asbestos workers to waitresses, attempted to organize around the possibility of the ISA. The importance of the ISA lies in what it reveals about the nature of welfare, wage labor, the union movement, competitive capitalism, business attitudes toward industrial regulation, and the role of the state in managing the collective affairs of capitalism. The history of the ISA also suggests that "regulatory unionism," as described by Colin Gordon in his work on the American New Deal, may have animated key developments in Canadian social, economic, and labor history.

Developments in Prairies and BC

Back to the farm schemes were common during the depression years. Some 200,000 homeless unemployed men were placed on prairie farms for the winter months under a relief measure known as the farm employment plans. This joint federal-provincial venture was intended to ease relief expenditures of the overburdened municipalities, undermine the radical threat posed by rootless single men, alleviate unemployment among the single and homeless, and assist farmers who could not afford hired help. But the plans served their constituencies very unevenly. Cost-cutting measures, changes in administration, and tightened regulation during the decade resulted in benefits to urban centers at the expense of rural communities. Increasingly, it was men from the cities who were sent to farms, saddling farmers with incompetent help and casting rural farm workers adrift.

Social Credit

see Social Credit

The demand for radical political transformation made its appeal after the worst period was over and the economy was recovering. Mortgage debt was significant because farmers could not meet their interest payments. The insecurity of farmers, whose debts were increasing and who had no legal protection against foreclosure, was a potent factor in creating a mood of political desperation. Since 1920 Alberta had been controlled by a radical farmers party, The United Farmers of Alberta (UFA). The UFA was baffled by the depression and a personal scandal caused the resignation of its leader. The prairies had always believed that they were being exploited by Toronto and Montreal. What they lacked was a prophet who would lead them to the promised land. The Social Credit movement began in Alberta in 1932; it became a political movement in 1935 and suddenly burned like a prairie fire. The prophet and new premier was radio evangelist William Aberhart. The message was biblical prophecy. Aberhart was a fundamentalist, preaching the revealed word of God. Aberhart and his flock quoted the Bible to protest against the evils of the modern, materialistic world: the evils of sophisticated academics and their biblical criticism, the cold formality of middle-class congregations, the vices of dancing and movies and drink. "Bible Bill" preached that the capitalist economy was rotten because of its immorality; specifically it produced goods and services but did not provide people with sufficient purchasing power to enjoy them. This could be remedied by the distribution of money in the form of social credit, or $25 a month for every man and woman. This pump priming was guaranteed to restore prosperity, he prophesied to the 1600 Social Credit clubs he formed in the province. Alberta's businessmen, professionals, newspaper editors and the traditional middle-class leaders protested vehemently at Aberhart's crack-pot ideas, but they had not soolved any problems and spoke not of the promised land ahead. Aberhart's new party in 1935 elected 56 members to the Assembly, compared to 7 for all the other parties.

Once in office Aberhart gave a high priority to balancing the provincial budget. He reduced expenditures and increased the sales tax and the income tax. The poor and unemployed got nothing. The $25 monthly social dividend never arrived, as Aberhart decided nothing could be done until the province's financial system was changed, and 1936 Alberta defaulted on its bonds. He did help farmers with a Debt Adjustment Act that cancelled all the interest on mortgages since 1932 and limited all interest rates on mortgages to 5%, in line with similar laws passed by other provinces. In 1937 backbenchers passed a radical banking law that was disallowed by Ottawa (banking was a federal responsibility). Efforts to control the press were also disallowed. By 1938 the Social Credit government abandoned its notions about the the $25 payouts. The Social Credit Party's inability to break with UFA policies led to disillusionment and heavy defections from the party, but Aberhart was reelected in 1940 and the party governed until 1968. The Social Credit party proved durable at the provincial level in British Columbia; it governed that province for decades under W.A.C. Bennett.

C.C.F.

In Saskatchewan and elsewhere elements of the progressive left consolidated to form the Cooperative Commonwealth Federation (CCF), a socialist party that achieved some success and was the precursor to the New Democratic Party. J.S. Woodsworth, the party's leader, was a vocal fixture in the Canadian House of Commons, and CCF candidates routinely won a portion of seats in provincial and municipal elections.

Communists

During the depression, there was a rise of working class militancy. Organized labour largely retreated in response to the ravages of the depression at the same time that significant portions of the working class, including the unemployed, clamoured for collective action. Filling this leadership void was the Communist Party's "Workers' Unity League," which sought to building a revolutionary trade union movement under a policy of dual unionism. Communists were always the driving force of the unemployed movement. They saw it as a potentially revolutionary force, one that was bound to expand and become more politically conscious, given that mass unemployment had become "normal, inevitable, and permanent." Between 1930 and 1935 they attempted to weld myriad local struggles into a national anticapitalist campaign, but were defeated by initially inappropriate tactics, competition from more respectable "reformist" unemployed bodies, vigorous state repression, and the simple reality that Canada was not, as they thought, in a revolutionary situation. After 1935, in the different political moment of the Popular Front, the CPC's priorities changed, and the unemployed movement declined in importance. Despite the CPC's failure to actualize its larger political goals, it did more than any other organization to show the jobless that they were not compelled to remain victims of a degenerate economic system. As one of its activists observed, when "all you could see was a sort of dead end towards any changes year after year, the organization of the unemployed created a feeling of optimism, it provided certain goals that projected beyond the immediate question of what do we eat today, what do we eat tomorrow." Although the actual number of Communist Party militants remained small, their impact was far disproportionate to their numbers, in part because of the anticommunist reaction of the government, especially the policies of R. B. Bennett who vowed to crush Communism in Canada with an "iron heel of ruthlessness." These conflicts diminished after 1935, when the Communist Party shifted strategies and Bennett's Conservatives were defeated.

Newfoundland

The most dramatic political response came in Newfoundland, which was not then part of Canada. Disgusted at the inability of the dominion government to overcome systemic corruption and deal with the severe depression, Newfoundland in 1934 decided to give up responsible government and democracy, and become a crown colony ruled directly by Britain.

Recovery

While the Canadian economy had slowly been recovering after 1933, it took the outbreak of World War II in 1939 to pull Canada out of the depression. Newfoundland recovered rapidly as well, with American money pouring in to build bases. From 1939, an increased demand in Europe for materials, and increased spending by the Canadian government created a strong boost for the economy. Unemployed men enlisted in the military. By 1939, Canada was in the first prosperity period in the business cycle in a decade.

This coincided with the recovery in the American economy, which created a better market for exports and a new inflow of much needed capital.

Bibliography

Surveys

• Broadfoot, Barry. Ten Lost Years: 1929-1939: Memories of Canadians Who Survived the Depression. 1973. 390 pp.
• Berton, Pierre. The Great Depression, 1929-1939. 1990. popular history
• Victor Hoar, ed., The Great Depression (1969) includes recollections of the 1930s
• Neatby, H. Blair; The Politics of Chaos: Canada in the Thirties (1972) online version, the major scholarly survey

Politics and public policy

• Campbell, Lara. "'We Who Have Wallowed in the Mud of Flanders': First World War Veterans, Unemployment and the Development of Social Welfare in Canada, 1929-39." Journal of the Canadian Historical Association (2000) 11: 125-149. Issn: 0847-4478 Fulltext in Erudit
• Cook, Ramsay, ed. Politics of Discontent (1967), with articles on Aberhart, George McCullagh, Pattullo and the Reconstruction Party.
• Fisher, Robin. "The Decline of Reform: British Columbia Politics in the 1930s." Journal of Canadian Studies 1990 25
• Glassford, Larry A. "Retrenchment - R. B. Bennett Style: the Conservative Record Before the New Deal, 1930-34." American Review of Canadian Studies 1989 19(2): 141-157. Issn: 0272-2011
• E. C. Hughes, French Canada in Transition (1943), sociological study
• Irving, John A. The Social Credit Movement in Alberta (1959)
• S. M. Lipset, Agrarian Socialism (1950), on CCF
• McHenry, Dean E. The Third Force in Canada: The Cooperative Commonwealth Federation, 1932-1948 U of California Press, 1950 online version
• Neatby, H. Blair; William Lyon Mackenzie King, 1924-1932: The Lonely Heights University of Toronto Press, 1963 online version
• Neatby, H. Blair; William Lyon Mackenzie King: 1932-1939: the Prism of Unity, University of Toronto Press, 1976 online version
• Walter Young, The Anatomy of a Party: The National C.C.F. (Toronto, 1969)

Economics

• V. C. Fowke, The National Policy and the Wheat Economy (1957)
• Rogers, Sean Harris. "Depression and War: Three Essays on the Canadian Economy, 1930-1945." PhD dissertation McGill U. 2000. 245 pp. DAI 2003 63(7): 2644-2645-A. DANQ70191
• Rooth, Tim and Taylor, Rebecca. "Exports and External Adjustment During the Slump: the British Market, Australia and Canada During the 1930s." Journal of European Economic History 2001 30(3): 569-595. Issn: 0391-5115
• E. A. Safarian, The Canadian Economy and the Great Depression (1959) has data on public and private investment in the major sectors of the economy
• Strikwerda, Eric J. "From Short-term Emergency to Long-term Crisis: Public Works Projects in Saskatoon, 1929-1932." Prairie Forum 2001 26(2): 169-186. Issn: 0317-6282

Labour

• Frager, Ruth. Sweatshop Strife: Class, Ethnicity, and Gender in the Jewish Labour Movement, 1900–1939 (Toronto 1992);
• Klee, Marcus. "Fighting the Sweatshop in Depression Ontario: Capital, Labour and the Industrial Standards Act." Labour 2000 (45): 13-51. Issn: 0700-3862
• Struthers, James. No Fault of their Own: Unemployment and the Canadian Welfare State, 1914-1941 (1983)

Women, families, social history

• Baillargeon, Denyse; Making Do: Women, Family and Home in Montreal during the Great Depression. Wilfrid Laurier U. Press, 1999. 232 pp. Based on 30 oral histories
• Friesen, Victor Carl. "The Rural Prairie Novel and the Great Depression." Prairie Forum 1977 2(1): 83-96. Issn: 0317-6282
• Gray, James. The Winter Years (1966) describes life in Winnipeg during the depression
• McLachlan, Elizabeth. With Unshakeable Persistence: Rural Teachers of the Depression Era. Edmonton: NeWest, 1999. 187 pp.
• Sangster, Joan. Earning Respect: The Lives of Working Women in Small Town Ontario, 1920–1960 (Toronto 1995)
• Strong-Boag, Veronica. The New Day Recalled: Lives of Girls and Women in English Canada, 1919–1939 (Toronto 1988).

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