Canada in the 1930’s: the Depression Years

Unit 4

In this Unit, Students are Expected to Know

• 1. Causes of the Great Depression (Business Cycle & Stock Market)

• 2. Experiences of People (Unemployment, Poverty, Escapism, Migration)

• 3. Gov’t reaction (PM’s Bennett and King’s responses; people’s responses)

• 4. Emergence of New Political Parties

Background:

• After the boom of the 1920’s, a dramatic shift took place in the economy and society

• Good times ended in Canada and much of the industrialized world

Causes of the Great Depression

• 1. The Stock Market Crash of 1929• 2. Over-production• 3. Purchasing on debt/high credit• 4. Overdependence on primary

industries• 5. High tariffs/protectionism/limited trading

partners• 6. Overdependence on the USA for

trade

Stock Market Crash: The Business Cycle

• Economic conditions always change. Always up and down. This is called the “business cycle”

• Four basic stages:• 1. Recovery (Expansion)• 2. Prosperity (Boom)• 3. Recession• 4. Depression (Trough)

The Business Cycle

The Business Cycle of the 1920’s-1940’s

How the Stock Market Works

• The stock market is a place where businesses raise money by selling stocks or shares in their companies

• The 1920’s created so much confidence in the stock market that many people bought stocks

The Stock Market Crash

• By September 1929, American stocks started to drop and Canadian stocks followed

• Investors began selling large volumes of stock

• People panicked, trying to sell• Values fell• By Tuesday, October 29, stock markets in

New York, Toronto and Montreal crashed

• Many Canadians were ruined.• Stocks were worth only a fraction• They bought stocks with borrowed money• Unable to sell stocks to repay debt• Only a few bought stocks, but many felt

the impact.

Video: The Stock Market Crash

• https://www.youtube.com/watch?v=RJpLMvgUXe8

Over-Production

• In the 1920’s agriculture and industry reached high levels of production

• Every industry expanded. More than enough was produced, and goods were stockpiled

• For example, in 1930, 400,000 cars were produced. Only 260,000 were sold

• Warehouses were full of unsold goods• As a result, workers were laid off. They

had less to spend on goods and appliances, which slowed sales even more

Purchasing Stock/Buying on Margin

• In the 1920’s, the stock market was seen as an easy way to get rich

• Could buy stocks on credit. For 10% down, a stock broker, loan a person the balance, with a high interest rate

• As soon as stocks went up, pay off broker, and keep reminder as profit

• This was called “buying on margin”• It was risky! What if stocks did not go up?

What if stocks went down?• Stocks crashed on Tuesday, October 29.

people lost billions in a few hours

Credit Buying/Huge Consumer Debt

• Throughout 1920’s, people encouraged to buy now, pay later

• Families got themselves hopelessly into debt

• With interest, people to pay a lot more• If sickness or layoff occurred, it became

difficult for people to make payments• Repossessions would occur

Dependency on Primary Industries

• The Canadian economy relied on a few staples (wheat, fish, pulp and paper and fish)

• Our economy would stay strong as long as demand for these staples stayed strong

• Trouble would begin if there was a surplus or if demand slowed

• When world demand slowed, Canada’s economy weakened

• Compounding this fact were terrible droughts of 1921, 1931, 1933-37.

• Became known as dust bowl

• These droughts reduced production• Farmers couldn’t pay bills• Railways and flour mills slowed down• Chain reaction to all parts of the economy

Video: The Dust Bowl

• https://www.youtube.com/watch?v=guTek7ipD4U

Dependence on USA

• Much like today, Canada has close ties to USA

• USA replaced Britain as Canada’s biggest trading partner in the 1920’s

• In the 1920’s USA responsible for 40% of our imports and 60% of our exports

• Americans also invested heavily in Canada

• A downturn in the American economy would hurt the Canadian economy

High Tariffs/Protectionism

• Tariffs are taxes on foreign goods• Using tariffs to keep out foreign goods is

called protectionism• Every country tried to protect industry by

levying tariffs so they did not face competition from other countries

• As a result, businesses found export markets were cut-off

• Countries that practiced protectionism strangled international trade

• They shut their doors to international goods

• For an export country like Canada, our economy began to collapse

Impact on Canada

4.2 Experiences of People (Poverty, Unemployment, Migration, Escapism)

• The Great Depression caused major societal changes• Massive unemployment led to a rapids deterioration in

lifestyles• People were living in extreme poverty and had to find

ways to cope

• Many migrated to cities looking for work• Men and women rode the rails in search of employment• Thousands died. Many faced starvation• Many stayed home, took wage cuts, grew their own food,

and tried to survive

• Private organizations established soup kitchens to feed poor and homeless

• Many Canadians provided a meal to the poor and homeless travelers searching for employment

• Homeless people pooled resources to rent a room• Shanty towns developed in many cities

• Farmers were hard hit with drought, insect infestations and declining prices

• The distribution of “relief” was unequal. Married couples had priority, then single men, while single women received no relief.

• Immigrant women and visible minorities faced discrimination. Trouble finding employment. Often deported

Experiences of People (cont’d)

• For aboriginal groups, harsh conditions only became worse

• People tried to find relief in a variety of ways• Movies, newspapers and magazines, radios, fairs and

major events were all forms of “escapism”

• “Escapism” means trying to escape from unpleasant realities, by seeking entertainment

• The birth of the Dionne quintuplets was a form of escapism. Many were fascinated

• Video: Dionne quintuplets• https://www.youtube.com/watch?v=WCmvQ2vdMv0

4.3 Government Reaction to the Great Depression

• During the Depression, many men and women who had never asked for help were forced to go on relief

• “Relief” is financial aid given to the poor by government• By the late 1930’s, many believed government should

play a more direct role in providing help to those not to blame for their economic difficulties

• At the beginning of the Great Depression, many believed there was no role for government

• Many felt it was just a normal part of the business cycle and gov’t should not be involved

• At the beginning of the Great Depression, Prime Minister Mackenzie King refused to act

• In his “Five Cent” speech in Parliament, he said, they would not help any provincial Conservative government 5 cents

• The leader of the Conservative party made this comment a big part of the upcoming election campaign

• King and the Liberals lost the next federal election to RB Bennett and the Conservatives

Private Responses to the GD

• Church and charitable organizations established soup kitchens

• Clothing and shelter given to the unemployed• Milk supplied to women with babies• Churches across Canada sent help to people on the

prairies

• Municipal gov’ts also set-up soup kitchens• By 1931-32 govt’s began giving out a payment to cover

the bare necessities of life called “the dole”• Discontent people outside the Colonial Building in April

1932

Government Responses to the Great Depression

• In 1931, Bennett’s gov’t passed two relief acts that directed $20 million to towns/cities to be spent on public works (roads, bridges, dams)

• Only a small amount went to people in need

• For single young men, thousands left home & rode the rails looking for work

• Without a permanent residence they could not apply for relief

• To deal with so many young unemployed, gov’t set-up relief camps

• They were designed to keep young men out of cities so they wouldn’t congregate and protest

• Workers were paid 20 cents/day• Over 170,000 worked there. Turned over to provinces in

1936

People’s Responses: “On to Ottawa Trek”

• In June 1935, 1800 men tired of the conditions and living in relief camps, boarded trains to go to Ottawa to protest against the federal government

• Along the way, other “trekkers” joined to protest for economic reforms; minimum wage, unemployment insurance and social insurance

• Trekkers were met in Regina by the RCMP• Riots broke out. Many were injured and one was killed• The concerns fell on deaf ears

Government Responses: PM Bennett

• PM Bennett was initially was very cautious• In 1934, he established the Bank of Canada to try to

provide financial stability• With an election coming, Bennett offered Canadians a

“New Deal” in 1935. Included unemployment insurance, minimum wage law and a shortened work week

• Despite the drastic nature of his reforms, people voted Bennett out of office

• In 1935, Mackenzie King was re-elected as our PM• The inability of Bennett to solve problems during the

Great Depression led to people looking for other solutions

• New national parties appeared as a result of the Great Depression (Social Credit Party, Cooperative Commonwealth Federation -CCF)

• These parties would have a great impact on the future of Canadian politics

Why did they Emerge?

• People thought new parties would live up to their expectations. Old parties did not

• “Out with the old and in with the new”• Voting for change without really understanding what they

were voting for

• Some parties promised radical change. Others promised minor reforms

• All would have some effect on government. Only some would survive the depression

• Parties emerged because there was strong dissatisfaction and frustration with the government’s actions

…some modern examples