Boom, Bust & Dust
Canada’s Great Depression: 1929-1939
from A Short History of Canada (Desmond Morton)
Great Depression Fast Facts
- Occurred in Europe, the US, and Canada.
- Canada was hit the hardest and took the longest to recover.
- The darkest days in Canadian history.
- Economic crisis
- Unemployment
- Poverty
- Governments were powerless to reverse it.
- Decade became known as the ‘Dirty Thirties’
A Minimum Standard of Decency
In 1929 the Department of Labour insisted that a family needed $1200 - $1500 a year to maintain a ‘minimum standard’. 70% of working Canadians earned less than $1000 a year, so most Canadians were poor.
Nothing new there - they had been poor for generations.
USA: The Wall Street Crash
The stock market in the US was ‘roaring’ during the 1920’s. After the war, prices for stocks kept rising higher and higher, and investors made money quickly and easily. Buying on margin was popular. Buying on margin allowed people to buy stock on credit. Worked fine when stock prices were high. In 1929, prices fell and stock brokers wanted payment for stocks. To pay, investors tried to sell stocks. With everyone selling, no one was buying stocks anymore and the market crashed.
Black Tuesday: October 29, 1929
The US stock market crashed, which also greatly impacted other countries, especially Canada. Americans could no longer afford to buy our goods, meaning Canadian manufacturers had fewer buyers for our products. They were forced to lay off workers, and cut wages of remaining employees.
Wall Street Crash vs Wheat Crop
While ‘Black Tuesday’ is generally accepted as the beginning of the US Depression, we can blame an enormous wheat crop in 1928 for the Canadian version. Shouldn’t that be a good thing? Not necessarily.
Aaron Sapiro and the Wheat Pool
Sapiro was a Chicago lawyer who persuaded Western farmers to pool their wheat harvests and create a wheat ‘cartel’, which would be powerful in regulating prices and wheat production. It worked brilliantly as long as there wasn’t too much wheat nor any serious competition. By 1928, there was both.
- Worldwide wheat surplus
- Cheaper wheat in the USA, Argentina, Australia, and the Soviet Union.
We didn't worry immediately, since Canada was still prosperous. Inventories were large; there were problems coming:
After the stock market crash, wheat orders were down and, since the economy was based mostly on credit and exporting goods, what happens when creditors want repayment and exports dry up?
- Buyers cut/cancel orders
- Construction slows
- Wages get cut
- Half-time work became normal
- Temporary work stoppages were instituted
Mackenzie King, the Five-Cent Speech, and Richard Bedford Bennett
In 1929: 3% of Canadians were out of work. By 1930: 11% out of work. Politicians felt these numbers were ‘inflated’ by the provinces in order to get $ from Ottawa. WLMK believed it was a Tory ploy to get votes. When asked about helping the provinces that opposed his policies, King remarked: ‘I would not give them a five-cent piece’. Bad idea. WLMK wasn't worried, however, since the economic hardships didn’t affect him and his spiritualist said things were going well and he just cut the federal sales tax to 1%. Also, if he had to call an election, he’d just mention ‘conscription’ and people in Quebec would be reminded to not vote for the Tories. Richard Bedford Bennett was a lawyer born in New Brunswick. He was considered by King to be inferior to Meighen, whom he didn’t respect either. In the election, Bennett used the 5¢ speech against King, and convinced voters King was ‘callous’. He won the election in 1930.
The CRBC (CBC)
Bennett created the ‘sadly underfunded’ Canadian Radio Broadcasting Commission, which used radio broadcasts to tell people how well we were doing (propaganda). Radio provided escape from hopelessness: the ‘media in the 1930’s accepted a solemn duty to trivialize or ignore the misery of millions’ (musicals, films, air races, pro sports, the national hysteria caused by the birth of the Dionne Quintuplets).
The Depression by 1933
- 23% of Canadians were out of work; 1/3 of Canada’s manufacturing jobs vanished; farm income dropped by over $300 million; 15% wage cuts were imposed by Ottawa/provinces. People who lost their jobs were desperate (there was no employment insurance or welfare services). Men began “riding the rails”, traveling from one city to the next looking for work, but there were almost no jobs.
The Misery of Relief
The government set up relief camps (mostly former WWI internment camps) for some unemployed men, but the conditions were horrible. The men worked long days at hard labor such as building roads, and in return, they were given clothes, lodging, and 20 cents a day. Proud families would literally die rather than accept relief.
Hardest Hit: The Prairies
Wheat farmers suffered greatly. Because of the wheat pool, it was hard enough for them to sell their crops; and, from 1933-38 there was almost no rain on the Prairies. The topsoil was dry and just blew away and only a small amount of the seed grew in these conditions. Also, swarms of grasshoppers ate all the wheat they could find. Life was a struggle – no money for shoes, clothes were often made out of burlap flour bags, people survived by eating gophers they could catch in the wild, and some people couldn’t pay their mortgages and ended up losing their farms (starting to sound somewhat familiar?) Settling the West had been Canada’s greatest achievement. By 1933, Saskatchewan was Canada’s poorest province. People readily accepted relief from other provinces (although they didn’t know what to do with salt cod from Newfoundland)
Government: Robert Bennett and Mackenzie King
Bennett struggled to find a way out. The Liberals (under King) had no alternatives, and certainly didn't offer any. King considered himself lucky to be defeated in 1930 and in no rush to help the Tories, not that Bennett ever took anyone’s advice anyway (he was well-known for his arrogance). His reaction to criticism was to strike out and blame the Communists. Out of political dissatisfaction came new political parties in the West. The Social Credit Party had William Aberhart was its leader. He was a preacher who won support by mingling ‘radical and conservative’ messages. He relied heavily on the support of unions and used radio for messages. The SC Party existed only in in Alberta and Saskatchewan. The Cooperative Commonwealth Federation was formed to create a ‘full program of socialized planning which will lead to the establishment in Canada of the co-operative commonwealth’. To many, this sounded a lot like Communism and even the Communists didn’t like the competition. The CCF made strides in Saskatchewan, but not even the Depression could make many Canadians accept socialism.
A Need for Heroes
In the US, Franklin Delano Roosevelt’s ‘New Deal’ was sweeping the nation. ‘For the first time, Canadians coveted their neighbor’s political leadership’. Bennett, despite his best efforts, was having no luck (and receiving no help from his opposition). In an attempt to spur our economy, Bennett attempted to ‘borrow’ parts of Roosevelt's New Deal to use at home.
Bennett’s ‘New Deal’
RBB created a Canadian New Deal, saying: ‘There can be no permanent recovery without reform, and, to my mind, reform means Government intervention. It means government control and regulation. It means the end of laissez faire’. That meant unemployment insurance, minimum wages, maximum hours of work, measures against price-fixing, and a federal trade commission. Many Canadians felt the New Deal violated civil rights.
King’s Response
If the New Deal worked, King would try to take all the credit. If the New Deal failed, he’d say it was a bad idea and an example of a ‘Tory Dictatorship’. He felt that most of the New Deal was beyond Ottawa’s power anyway. Bennett lost a lot of support within his own party. And as if that wasn't bad enough...
‘On to Ottawa Trek’
Communist organizers took men from the relief camps on a march to Ottawa. The men agreed ‘there had to be more to life than laboring under army discipline for 20¢ a day’. The men were going to ride the rails to Ottawa to protest. Bennett ordered the trek halted in Regina. A small riot ensued, and two men were killed. This was, obviously, a severe blow to Bennett’s political future with an election looming.
1935 Election: ‘King or Chaos’
WLMK chose this slogan, made no political promises, and won a major majority. With political dissatisfaction across the country, a large number of political parties sprung up to oppose the Conservatives and - to a lesser extent - the Liberals. Many voters didn't trust the new parties (and certainly weren't going to vote for Bennett again), which turned them on to the Liberal Party and helped King win big. King was both lucky in defeat in 1930 and in victory in 1935. He reaped the benefits of the best parts of Bennett’s New Deal. He also:
- replaced the CRBC with the CBC.
- began Canada’s first airline (TCA)
The End of the Depression
We hit rock bottom in ’32 and slowly climbed out, thanks in part to Bennett’s policies. In the US, Roosevelt discovered that ‘purchasing power was a key to recovery’ and Canada, of course, followed suit. Does that sound familiar? In the end, the Great Depression forced Canadians to realize how difficult it was to face a fragile economy with a feeble government and penniless provinces. We had a long road to climb to get back on track, but, soon, a worldwide event would shake the foundations of democracy and put an end to the worldwide depression at the same time. World War Two resolved our economic worries and replaced then with some new ones.
