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Parte 2 PDF
Depression in Canada
Key question: What were the causes and effects of the Great
Depression in Canada?
How far was the onset The causes of the Great Depression
of the Great
Canadian prosperity in the 1920s, while real at the time for those who
Depression based on
weaknesses in the enjoyed its benefits, was based on weak foundations. There was an over-
Canadian economy? reliance on staple exports such as wheat, industries began to overproduce
and supply exceeded demand. In addition, the stock markets were involved
in the same unstable practices as in the USA and the effects of the Wall
Street Crash soon spread over the border, leading into depression. In this
section we will consider the underlying causes of the Great Depression:
l over-reliance on staples for export
l overproduction
l stock market collapse.
KEY TERM
Over-reliance on staples for export
Staple exports Exports of Canada depended on a reasonable price level and active demand for staple
primary products such as exports. In the 1920s, 25 per cent of Canadian gross national product (GNP)
wheat and timber. was derived from exports. The collapse in the price of and demand for wheat,
for example, hit Canada hard. Already it was facing increased competition
from Australia and Argentina at a time when global demand was falling due
to on-going economic problems resulting from the First World War. As a
result, the global surplus was 12,000 million bushels in 1934, a rise of more
than 50 per cent since 1925. Moreover, attempts in fascist countries such as
Italy to develop self-sufficiency in food production also drove the value of
Canadian exports down. The reduction in demand was compounded by the
prohibitive Hawley–Smoot Tariff in the USA in 1930 (see page 65). As
countries looked to protect their own economies, countries such as Canada
that relied heavily on exports were particularly badly affected.
Wheat production in Canada had peaked at 567 million bushels in 1928; by
1934 it was down to 276 million bushels. Prices meanwhile fell from $1.66
per bushel in 1929 to 33 cents in 1932. Many farm incomes fell by 75 per
cent. As we will see (page 152) this was compounded by a series of natural
disasters such as the Dustbowl, drought and crop failures.
Indeed, part of the wheat crop of 1928 had been stored rather than sold in
the hope that prices would rise. The ploy failed: all this meant in effect was
that buyers bought wheat from other countries such as Argentina.
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Chapter 5: The Great Depression in Canada
Overproduction
Canada suffered from the same overproduction problems as the USA (see
page 35). Studies show that increasingly the working classes could not afford
to meet the demand for the volume of goods being produced as incomes
lagged far behind the availability of new goods. This meant that firms had to
cut production and lay off workers, thereby adding to unemployment and
exacerbating the problem.
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Fall in demand
The collapse in demand for wheat had significant knock-on effects: the
income from railroads for example fell by 50 per cent and the annual deficit
in the Canadian National Railway rose to $560 million. This was largely for
two reasons:
l The collapse in demand for wheat meant railways were not carrying so
much freight.
l Increasing poverty in the prairie states meant there was less demand for
goods so less for the railroads to carry out to consumers.
Demand for consumer goods plummeted because of increasing poverty and
unemployment. By 1932 industrial production fell to 58 per cent of that of
1929. Unemployment stood at 33 per cent; in 1929 it had been three per
cent. Worse, when Canada was a developing nation during the nineteenth
century, if people were thrown out of work in the cities during cycles of
economic downturn, they could return to their rural roots in the hope of
finding employment; with depression throughout all sectors in the 1930s,
this was no longer possible.
Source A
Rewrite Woodsworth’s Extract from a speech by the radical MP J.S. Woodsworth in the House of
statement in Source A in Commons. Woodsworth was commenting on the hopelessness
your own words. engendered by the Depression.
In the old days we could send people from the cities to the country. If they went
out today, they would meet another army of unemployed coming back from the
country to the city; that outlet is closed. What can these people do? They have
been driven from our streets; they have been driven from our buildings; and in
this city [Ontario] they actually took refuge on the garbage heaps.
Farmers
In the 1930s farmers were effectively crippled by the combination of two
factors: the collapse in wheat prices and crop failures. Wheat exports
dropped by 75 per cent and the prairies became a barren, windswept
landscape. The drought had begun in the 1920s; much of the soil was already
fine and dry. As in the USA (see page 115), the Dustbowl struck: high winds
blew the topsoil away, leaving many farmers destitute. The problem was
compounded by an epidemic of grasshoppers for which the hot, dry
conditions made ideal breeding conditions. There are tales of poor families
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Chapter 5: The Great Depression in Canada
An excerpt from Mackenzie King’s speech in Parliament, 3 April 1930. What can you infer from
Every winter in this country, ever since there was a winter in Canada, there has Source B about Mackenzie
been unemployment and there always will be … we have no right to say there is King’s attitude towards:
any national unemployment problem in this country … I might be prepared to a) the Depression in
go to certain lengths possibly in meeting one or two western provinces that have Canada?
progressive premiers at the head of governments. With respect to giving moneys b) the possibility of federal
out of the federal treasury to any Tory government in this country for these relief programmes?
alleged unemployment purposes, with these governments situated as they are c) co-operation with other
today with policies diametrically opposed to those of this government, I would political parties?
not give them a five cent piece.
The provinces initially tried new forms of taxation such as a tax on company
profits. By 1940, every provincial government did this and four had
introduced the income tax. Provincial taxes on petrol rose by 50 per cent.
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However, it was insufficient to meet the demand for relief. In effect,
therefore, the provinces passed on the burden of welfare to the
municipalities. Their tax revenues had fallen because of unemployment but
they were expected to find more from diminishing returns to give relief to
the growing numbers of unemployed. As a result, they faced financial
problems: the municipality in Burnaby, British Columbia was facing tax
arrears of 72 per cent of taxes levied, while North Vancouver District
overspent by 144 per cent. By 1933 one and a half million Canadians were
dependent on some form of direct relief.
In Newfoundland, semi-independent from Canada, it was even worse. In
1933, bankrupt and with a government that was hardly functioning, it had to
submit to an emergency commission administered by Britain as the colonial
power.
As a result there were thousands of homeless, unemployed people.
Source C
What are the advantages and Extracts from two accounts of life in Vancouver in the 1930s, from The
disadvantages of the kind of Chuck Davis History of Metropolitan Vancouver by Chuck Davis published
oral histories as seen in in 2011 (see also www.vancouverhistory.ca). This book contains primary
Source C? sources from every year in the history of Vancouver.
About 1,000 homeless people occupied four east-end hobo jungles. One jungle
bordered Prior Street, close to Campbell Avenue and the Canadian National
Railway yards. Another existed under the Georgia Street viaduct, a third was
located on the harbour at the end of Dunlevy Avenue, and the fourth was
situated at the Great Northern Railway sidings. Shacks were built from boxes,
boards and old cars.
The Great Depression had settled like a sodden shroud on the city. Thousands of
us were on relief (34,000 at the peak), and hundreds more were riding the roads
into town on every freight train. (The author’s father was one of them.) The
Sun’s Alan Morley counted 1,250 men in the breadline at First United Church.
The city’s relief cost for the 1931–1932 year was over $1.3 million. A symbol of
the economic downturn: the unfinished form of the Hotel Vancouver.
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Chapter 5: The Great Depression in Canada
Overproduction
Causes of the
Depression in
Canada
Stock market collapse
Fall in demand
Effects of the
Depression in
Canada
Human costs
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