IB Docs (2) Team
2. The Great Depression in Canada
The Depression that started in the US spread to many countries; Canada – with its strong economic ties to the US suffered particularly badly. Between 1929 and 1939, the Gross Domestic Product fell 40% and unemployment reached 27% by 1933. There are many similarities between the US and Canada regarding both the causes and impact of the Depression; the political response however was quite different.
Guiding Questions:
What were the causes of the Depression in Canada?
'The ten lost years': What was the impact of the Depression on Canada?
How effective was the response of federal government to the Depression?
What impact did the Depression have on the politics of Canada?
What were the long-term effects of the Depression on Canada?
1. What were the causes of the depression in Canada?
There were several reasons as to why the Wall Street Crash in the US led to a depression also in Canada.
Overproduction: As in the US, the 1920s had seen demand for consumer goods grow and thus companies expand to meet the demand. However, by the end of the 1920s, the economy was slowing down and companies faced the problem of overproduction. This meant a need to decrease production which in turn meant loss of jobs for the workers.
Dependence on Exports: Canada relied on a buoyant export market for its wheat, timber and minerals; indeed eighty percent of all of these produce was exported.
Trade with the US: The US was Canada’s largest buyer of timber and minerals and largest investor in Canada’s industries.
Use of Credit: Many Canadians were buying on credit (or 'on the margin').
Situation of the farmers: Farmers were hit badly by the competition in the international markets for grain. Many had taken out loans and mortgages in the boom years but now the price of wheat fell due to overproduction and more competition internationally as countries such as Argentina and Australia produced wheat products. The Prairies were hit very hard by several years of drought and dust storms.
Speculation: In the 1920s, investors bought shares in Canadian companies believing that they would make money due to the buoyant state of the economy at that time; many bought shares 'on the margin'. However, high demand had driven the price of shares up beyond their real value.
Task One
ATL: Thinking skills
- In pairs consider the pre 1929 economic situation with regard to Canada; how would each of the bullet points above have made the economy vulnerable?
- Which of these points of vulnerability were the same as those in the US? Which were different?
- Consider the actions taken by the US to protect its economy following the crash; how would these have affected Canada?
- Create a Venn diagram to show the similarities and differences regarding the weaknesses of the US and Canadian economies pre 1929:
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2. 'The ten lost years': What was the impact of the depression on Canada?
'The world economic system was unstable unless some country stabilised it...In 1929 the British couldn't and the United States wouldn't. When every country turned to protect its private national interest, the world economic interest went down the drain, and with it the private interests of all'. Charles P. Kindleberger
Starter:
Watch the following trailer for the documentary 'Catch the Westbound Train' which is on the impact of the depression on Vancouver.
What points are raised regarding the impact of the depression on Canada?
Canada was hit very badly by the depression - though the impact was uneven. So while The Prairie provinces suffered badly, Ontario and Quebec were less seriously affected because of their more diversified industrial economies. There was also uneven suffering between the classes. Although wages dropped, prices also fell meaning that those with jobs improved their standard of living. It was farmers, small businessmen and the unemployed who suffered the most hardships. In addition, inequality between Canadians were exacerbated by discrimination against immigrants, Jews and Aboriginals.
Click on the eye for more specific information regarding the impact of the depression.
- The national income in 1933 was only 51% what it had been in 1929.
- Income from agriculture in the three Prairie provinces in 1932 - 33 was down 94% of what it had been in 1928 - 29; the lower demand for wheat in turn impacted on the railways as there was less need for freight movement; industries connected with the railways such as iron, steel and coal therefore also contracted leading to more unemployment.
- The economic problems in the Prairies were made worse due to the years of drought, alongside plagues of grasshoppers and hailstorms which caused crop failures. Many farms were devastated and thousands of families had to abandon their land.
- As a third of Canada's gross National Income came from exports, the collapse in world trade was a huge blow; the four western provinces which depended almost exclusively on exporting primary goods, were the most seriously affected.
- US tariffs such as the Smoot-Hawley tariff of 1930 further hit Canadian industries
- Unemployment rose rapidly; by the winter of 1933, more than one quarter of Canada's workforce was unemployed. By 1939 only about 300 000 Canadians out of a population of 11 million earned enough money to pay tax.
- Thousands had to exist on 'pogey' which were government relief payments; it was a humiliating process to get these payments and they were kept purposely low in order to try and force people to look for work.
- Many of the unemployed traveled around the country by freight train looking for work; these men were usually with outwork and without a job. Shanty towns grew up outside cities where these men would stay.
- Women struggled to find jobs; unemployed single women did not qualify for government relief.
- Immigrants were now viewed with hostility; many lost their jobs and by 1935, more than 28 000 had been deported. The Chinese in Vancouver suffered particularly badly as they were not allowed relief payments.
- Jewish people faced discrimination; many professions were closed to them; European Jews fleeing persecution in Nazi Germany were denied sanctuary in Canada.
- Aboriginals continued to face discrimination and hardship; they were given much less relief than non-Aboriginals and at the same time the government continued to take land from their reserves.
Task One
ATL: Research and communication skills
Research further the impact of the depression on Canadian people. You may want to focus on one particular area of Canada or one particular group of people.
Either create a TV documentary to show the impact of the depression, or write a news article for a Canadian newspaper. In both cases, you should explain the problems and include interviews to show the impact.
Watch this video from Canada: A People's History on the impact of the Depression on Canada to get further information;
This site from the Canadian History Museum is also useful3. How effective was the response of federal government to the Depression?
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Photo of a 'Bennett buggy'
A Bennett buggy was the name given to a car which had its engine removed and was pulled by horses.
Starter:
What is the message of this photo?
Task One
ATL: Thinking skills
What, according to this source, was the attitude of the government to the economic crisis?
'The response to the Depression of Canadian governments at all three levels was, with few exceptions, unimaginative and even economically harmful...Total government debt increased by $1.7 billion, or 27 per cent, from 1930 to 1937. None of this money represented an investment in boldly innovative projects. Boldness, indeed, is the last word to describe the policies of the federal government, whether directed by R. B. Bennett's Conservatives or William Lyon Mackenzie King's liberals. Their chief concerns were to avoid assuming new responsibilities, especially for unemployment, that might prove costly and politically unrewarding, and to maintain international confidence in Canada's currency and credit-worthiness'
Michiel Horn, The Great Depression of the 1930s in Canada', Canadian Historical Association, 1984
At the onset of the Depression, Prime Minister Mackenzie King believed that the situation was temporary and that the economy would recover without government intervention. When municipal and federal governments asked for financial support, he refused and famously said that he would not give 'a five-cent piece' to a Conservative provincial government. This statement contributed to his defeat in the 1930 election campaign. However, the new Prime Minister, Richard Bennett, did not have any radical approaches to solving the economic crisis and was just as reluctant for the government to provide any relief.
Task One
ATL: Thinking skills
Watch the following video and answer these questions.
- What was Bennett’s approach to dealing with the economic crisis?
- What factors turned the population against Bennett?
- What influence does Roosevelt have on Bennett's policies?
Bennett carried out some reforms to assist with the Depression:
- The Unemployment Relief Act which gave the provinces $20 million to spend on creating more jobs
- The Prairie Farm Rehabilitation Act of 1935 which was to help farmers build irrigation systems and reservoirs
- Higher tariffs to protect Canadian goods
- Work camps for single men to provide work on projects such as building roads and digging drainage ditches; 1700 men spent time in these camps
However, the first two of these failed to make any impact on the economy or farmers, and raising tariffs only encouraged other nations to put up tariffs against Canadian goods. The conditions in the work camps meanwhile were terrible and the payment of 20 cents a day led to a protest known as the On-to-Ottawa Trek.
Task Two
ATL: Thinking skills
To find out more about the On-to-Ottawa Trek, watch the CBC History of Canada video on the Depression which can be found here from 46 minutes.
- What motivated the men from the camps to go on the march to Ottawa? What did they want from the government?
- How was the 'army' received in Vancouver?
- How was the attitude of Bennett? What or who does he belief is influencing their demands?
- What happened as a result of Bennett's attitude?
Task Three
ATL: Thinking skills
Read letters that were sent by ordinary Canadians to Prime Minister Bennett which can be found here on the Canadian Museum of History site.
You can hear several other letters to Bennett on the CBC History of Canada video here 40 minutes in to the video.
What can we learn from these letters about the Depression in Canada?
What do you think about Bennett's response to these letters?
Task Four
ATL: Thinking skills
- What is the message of this cartoon?
- With reference to origin, purpose and content, what is the value of this cartoon to a historian studying the impact of the government during the Depression in Canada?
- Find at least one more cartoon which comments on government policy in Canada; print it off and annotate to show its message. Share your cartoon with the rest of the class.
(The Worker was a Communist Party newspaper)
Task Five
ATL: Thinking skills
Watch the following interview with John Boyko who argues for a more positive assessment of Bennett.
What arguments does he give in support of Bennett's actions?
Discuss in pairs your views on this interpretation of Bennett.
How it possible for historians to have different interpretations of the same person?
In 1935, Bennett's failure to improve the economic situation led to voters replacing him with Mackenzie King once more. The National Employment Commission, set up in 1936 to examine the unemployment situation in Canada, recommended that the federal government should spend millions of dollars on job creation and training programmes. However, King continued with the belief that spending federal money on social problems during a depression did not make economic sense; he thus only spent a fraction of what was recommended.
In addition, no action was taken to clarify the financial roles of provincial and federal government, despite the recommendations of another commission. The Royal Commission on Dominion-Provincial Relations was established by King in 1937 to look at the tensions created by the Depression regarding which governments should be paying for social and unemployment assistance. The Rowell-Sirois Report recommended that the federal government should give the poorer provinces grants or 'equalisation payments' to ensure that every province could offer the same level of services to its citizens, and also aid that the federal government should pay social benefits and unemployment insurance.
Ultimately the economy only recovered with the outbreak of the Second World War; the massive state expenditures necessitated by the war finally reduced unemployment to minimal levels by 1942.
4. What impact did the Depression have on the politics of Canada?
With the failure of the federal government to find effective economic solutions to the crisis, some Canadians started to look for more radical solutions. This resulted in the formation of several new political parties: The Co-operative Commonwealth Federation (CCF), The Social Credit Party, The Reconstruction Party, the Union Nationale.
Task One
ATL: Research and thinking skills
Divide the class into groups; each group should take one of the 'alternative' political parties that was set up in the 1930s in Canada (see above) and research:
- the key ideas/ideology underpinning the party
- its policies
- electoral popularity and extent to which the party had any success in bringing about change
Each group should create a brief presentation on the party to share with the rest of the class or create a poster to promote the ideas of the party.
5. What were the long-term effects of the Depression on Canada?
Although there was little change in economic and political structures during the 1930s, the Depression in Canada did ultimately result in an expansion of state responsibility for the economy and for social welfare.
- In 1934 Bennett's government passed the Bank of Canada Act in 1934 which created a central bank to regulate monetary policy
- In 1935, the government created the Canadian Wheat Board which worked to market and establish a minimum floor price for wheat
- in 1940 the federal government assumed responsibility for the jobless by introducing a national unemployment insurance scheme and employment service.
- In later years, the idea of 'equalisation payments' (see above') was also introduced.
Task One
ATL: Thinking skills
In pairs consider the similarities between the US and Canada in terms of:
- Government response to the economic depression
- The economic and political impact of these responses (both short-term and long-term)
Create an infographic to show your findings.
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