Encyclopedia of the Great Depression

Canada, Great Depression in

CANADA, GREAT DEPRESSION IN

Like most of the industrialized world in the 1920s, Canada enjoyed an uneven prosperity during the latter years of that decade. Internal economic growth was based on speculation (in real estate and on the stock market) and a great wave of consumer spending on houses, automobiles, and household appliances, all financed on credit and promoted by a newly-developed advertising industry. When Wall Street led the way in a collapse of stock prices in October 1929, Bay Street in Toronto was only a heartbeat behind. Canadian businessmen did not initially see Black Tuesday as more than a temporary setback, but it was soon associated with a general economic collapse that was more serious and protracted in Canada than in almost any other "advanced" nation of the world.

THE CANADIAN ECONOMY

The Great Depression was hardly a uniquely Canadian phenomenon. It was the downward part of a periodic international economic cycle that affected all nations, although the industrialized suffered more. On the other hand, the Depression was arguably more severe in Canada than in almost any other nation except the United States. Officially recorded unemployment reached almost one-fifth of the labor force in Canada in 1933, but such statistics were only the tip of the iceberg. In Montreal, in 1934, almost 30 percent of the population was living on official assistance, and the figure for French-Canadians was almost 40 percent. The relief allocation in Montreal—$21.88 per month—was well below the estimated cost of a "restricted diet for emergency use."

The government did not count independent farmers as unemployed, although many had negative incomes in the early 1930s. The prairie farm

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community, especially, suffered through drought and bad harvests in these years, which meant that farm families did not always have their own harvests to eat. Omnipresent dust became the symbol for the Depression in western Canada. The government did not count independent fishermen or timberers as unemployed either, and most significantly of all, it did not count women. In the worst years, therefore, fewer than half of those Canadians who wanted a paying job were able to find one.

Two major factors made the Canadian economic situation so serious. One was proximity to and involvement in the American economy because the United States was even more hard-hit by the depression than Canada. The other was the extent of Canadian reliance on the production and sale abroad of raw materials ranging from grain to lumber to minerals. The bottom dropped out of the international market for such goods in 1929, and it did not recover until much later in the 1930s. Canadian manufacturing production also dropped by one-third between 1929 and 1933. But Canada had other problems as well, including political and constitutional arrangements that militated against active policies of social assistance and social insurance to those Canadians who were suffering.

CONSTITUTIONAL PROBLEMS

Canada was a federal state, and sections ninety-one and ninety-two of the British North America Act—the largest part of the Canadian constitution created by act of the British Parliament in 1867—carefully distinguished between the powers of the federal government and the powers of the provinces.

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Provincial powers included almost all of the powers relevant to social conditions. But the provinces were not given commensurate powers of taxation and revenue-raising, largely because the nineteenth-century Fathers of Confederation had never anticipated vast amounts of expenditure on health, welfare, and unemployment. …