The Great Depression, starting in the late 1920s and continuing through the 1930s, brought severe economic and social challenges to Canada. This period tested the resolve of its leaders and the endurance of its people, necessitating a range of responses from the federal government.
The Political and Economic Climate of the Great Depression in Canada
The onset of the Great Depression saw Canada's economy suffer greatly due to plummeting demand for its exports. For more context, you can explore the political and economic causes of the Great Depression.
- The stock market crash of 1929 rapidly contracted the American economy, which had a cascading effect on Canada.
- By 1933, Canadian gross national product had fallen to nearly 58% of the 1929 level. Similar economic hardships were experienced globally, impacting countries like those discussed in the impact of the Great Depression on Latin America.
- Unemployment reached a peak of 30% in 1933, and those with jobs faced wage reductions and harsh working conditions.
Leadership and Policy: Mackenzie King
Economic Policies Under King
Liberal Prime Minister William Lyon Mackenzie King served during the initial years of the Depression but struggled to respond effectively.
- King's administration favoured a laissez-faire approach, minimizing government intervention. This approach can be contrasted with other historical periods of economic hardship, such as the 1905 Revolution in Russia.
- Limited government assistance was provided, primarily through modest public works programs.
- King's government was reluctant to provide direct aid to the unemployed, preferring to loan funds to the provinces.
Political Impact of King’s Policies
King's inability to offer substantial relief led to the Liberal Party’s defeat in the 1930 election.
- He was criticised for his perceived indifference to the plight of the unemployed.
- His approach to the economic crisis cost him political support, leading to the election of R.B. Bennett.
Leadership and Policy: R.B. Bennett
Bennett’s New Deal
Conservative Prime Minister R.B. Bennett’s initial response was conservative, but public pressure led him to adopt more interventionist policies.
- Bennett increased tariffs to protect Canadian industries but this exacerbated the economic downturn as international trade slowed. This protectionist approach can be seen in other historical contexts, such as the policies of Kaiser Wilhelm II.
- He introduced the Relief Act in 1932, providing federal funds for the provinces’ relief programs.
- In 1935, Bennett proposed the ‘New Deal’, inspired by Franklin D. Roosevelt, featuring more radical reforms aimed at social and economic recovery.
Specific Policies in Bennett’s New Deal
Bennett's New Deal included a variety of proposed legislation:
- Minimum wage laws were suggested to protect workers from exploitation.
- Maximum working hours were proposed to ensure fair labour conditions.
- Bennett advocated for stronger unemployment and health insurance schemes.
- He aimed to regulate working conditions to improve the lives of labourers.
Economic and Social Reactions
- The proposals were received with mixed reactions. Some viewed them as a betrayal of Conservative principles, while others felt they were desperately needed.
- Bennett’s New Deal faced opposition from businesses and was challenged in the courts, with several pieces being struck down by the Judicial Committee of the Privy Council.
Political Impact
Bennett's late attempts to intervene in the economy failed to salvage his political fortunes.
- The measures were too late in his term to have a substantial impact or to reverse negative public opinion.
- The perception of Bennett's lack of empathy was symbolised by the 'Bennett Buggy', representing the desperate measures Canadians took to survive. Other nations also grappled with colonial administration during this period, such as Nigeria's direct and indirect rule.
Assessing the Effectiveness of Canadian Solutions
While both Prime Ministers attempted to address the economic crisis, their policies had mixed results.
- Neither King's nor Bennett's policies were able to significantly alleviate the widespread suffering during their respective terms.
- However, Bennett's eventual recognition of the need for government intervention laid the groundwork for future social safety nets.
Impact on Canadian Society and Politics
The Great Depression had long-lasting effects on Canadian society and the political system.
Social Implications
- The economic hardship increased public demands for social welfare programs.
- Political movements like the Social Credit Party and the Co-operative Commonwealth Federation (CCF) gained support by advocating for more substantial government intervention in the economy.
Political Realignments
- The failures of Conservative policies led to the re-election of Mackenzie King and the Liberals in 1935.
- King's subsequent terms saw a greater role for the federal government in social and economic matters, a trend that continued in Canadian politics.
The Legacy of the Era
- The Depression's impact contributed to the development of modern welfare policies, such as unemployment insurance, introduced in 1940.
- It also prompted the Bank of Canada Act (1934), which established the Bank of Canada as a central bank to manage monetary policy. The era's legacy can be compared with other transformative periods in history, such as the rise of Japanese nationalism.
Long-Term Effects of the Depression Policies
Economic
- The introduction of unemployment insurance and other social welfare measures in the post-Depression era helped to stabilize the economy in the long term.
- Government intervention began to be seen as a necessary tool for managing economic downturns.
Social
- The Great Depression sparked a stronger collective consciousness among Canadians about the importance of social support systems.
- The hardship suffered by so many Canadians led to an increase in unionization and collective bargaining efforts to protect workers’ rights.
Political
- The Depression led to the fragmentation of party politics in Canada, with the rise of new parties and the realignment of existing ones.
- It also fostered a greater sense of national unity as Canadians across the country shared in the collective experience of hardship and recovery.
Conclusion
The Canadian response to the Great Depression was characterised by evolving strategies under the leadership of Mackenzie King and R.B. Bennett. Their policies marked a significant chapter in Canadian history, reflecting the tensions between economic conservatism and the emerging needs for government intervention during a period of profound crisis. The era's legacy influenced the trajectory of Canada's social welfare system and shaped the country's political and economic policies for generations to come.
FAQ
Significant social movements and protests emerged in Canada during the Great Depression, which were critical in influencing government policy. One of the most notable was the rise of the On-to-Ottawa Trek in 1935, where a group of unemployed men protested the poor conditions in relief camps by riding trains from Western Canada to Ottawa. Although the trek was halted in Regina, the public attention it generated put pressure on the federal government to address unemployment and social welfare more seriously. Other movements, such as those led by social credit theorists in Alberta and the Cooperative Commonwealth Federation in Saskatchewan, pushed for more dramatic reforms to address economic inequality. These movements were instrumental in shaping public opinion and ultimately compelled the government to expand its role in the economy and introduce social welfare measures.
The Great Depression had a profound impact on the relationship between the federal government and the provinces in Canada, bringing to the fore the tensions regarding jurisdiction and fiscal responsibility. With the provinces initially shouldering much of the burden for relief efforts, many faced financial strain. The federal government's initial reluctance to intervene directly placed additional pressure on provincial resources. As the Depression wore on, the federal government, under the leadership of R.B. Bennett, began to take a more active role, but this was often met with resistance from provincial governments that were wary of federal encroachment into areas of provincial jurisdiction. This dynamic set the stage for ongoing negotiations over the division of powers and financial responsibilities that would eventually lead to a more robust federal role in social policy, as exemplified by later developments such as the introduction of unemployment insurance and health care.
The policies enacted during the Great Depression in Canada led to several long-term legislative and institutional changes. The period saw the creation of the Bank of Canada in 1934, which provided the country with a central monetary authority to better manage the economy and currency. This was a significant departure from the previous system where Canada's monetary policy was more directly influenced by British and American financial interests. Another major outcome was the introduction of the Unemployment Insurance Act in 1940, which institutionalised the concept of government support for the unemployed, a notion that had gained traction due to the hardships of the Depression. These changes reflected a shift in Canadian policy towards Keynesian economics and the acceptance of government intervention as a means to mitigate economic downturns and provide a social safety net.
Regional responses within Canada to the Great Depression varied significantly, as the country's vast geography and diverse economies meant that the impact of the crisis was not felt uniformly. In the prairies, for instance, drought conditions compounded the economic difficulties, leading to increased migration and demands for government assistance. In industrial regions like Ontario and Quebec, the focus was on supporting manufacturing through tariffs and other protective measures. Meanwhile, in the Maritimes, the traditional fishing industry faced its own unique challenges, leading to increased calls for federal relief programs. Each region developed its own set of responses, including cooperative movements in the West and demands for increased infrastructure projects in the more industrialised provinces, reflecting the multifaceted nature of the economic crisis in Canada.
The global economic context, particularly the United States' economic downturn, heavily influenced Canadian economic policies during the Great Depression. Canada's economy was deeply intertwined with international trade, especially with its southern neighbour. As demand for Canadian exports plummeted, the federal government initially adopted protectionist policies, including the raising of tariffs under Prime Minister R.B. Bennett, in an attempt to shield domestic industries. This mirrored similar policies enacted in the U.S. and elsewhere. However, these protectionist measures proved to be double-edged, as they also contributed to the decline in international trade, further deepening the economic crisis. Canada's policies were reactive to global trends, demonstrating the country's vulnerability to worldwide economic shifts and the necessity for international cooperation, which was lacking during the early years of the Depression.
Practice Questions
Bennett's 'New Deal' was a bold initiative that marked a significant shift from previous laissez-faire approaches to a more interventionist stance. Its effectiveness, however, was limited by several factors. The policies were introduced late into his term, giving them insufficient time to be implemented and to exhibit tangible results. Moreover, the proposals faced strong opposition from businesses and the provincial governments, leading to legal challenges that further impeded their application. An excellent student would acknowledge that while the intent behind the 'New Deal' represented a progressive step, the practical outcomes were less significant due to these challenges. Ultimately, Bennett's 'New Deal' laid foundational ideas for future welfare policies, but its immediate impact was minimal in alleviating the Depression's economic hardships.
King's economic policies during the Great Depression, characterised by minimal government intervention, had significant political consequences. His initial inaction and reluctance to provide direct relief to the unemployed eroded public support and contributed to the Liberal Party's electoral defeat in 1930. An excellent student would critically assess the longer-term consequences of King's policies, noting that, while they were politically damaging in the short term, they contributed to a wider public discourse about the role of government in economic management. King's eventual return to power in 1935 with a more interventionist approach indicated a political shift towards a greater acceptance of federal involvement in social and economic issues. This re-election reflected a changing political climate that favoured more direct government action in the face of economic crises.
