Canada and the Depression- 1929-1939


- After the stock market crash in 1929, many people became unemployed and were looking for relief from the government
Depression Soup Kitchen in Montreal in 1931. Many churches and charities organized soup kitchens for the unemployed (2)
Depression Soup Kitchen in Montreal in 1931. Many churches and charities organized soup kitchens for the unemployed (2)

- The Prime Minister during the Great Depression was R.B Bennet who was elected in 1930 on a platform that included make-work projects to provide relief for the unemployed
- Bennet was the leader of the Conservative Party and believed in laissez-faire policies and cut government spending
- Exception was the Bank of Canada that took over country’s money supply and used interest rates to regulate economy
- When Bennet realized that economy wasn’t recovering, he tried to introduce programs in 1935 like in Roosevelt’s New Deal such as minimum wage and unemployment
- When the economy still didn’t recover after the introduction of the programs, Bennet lost the election in 1935 to William Lyon Mackenzie King
- The Mackenzie King government, being a Liberal party, was much more involved in the economy and created many public institutions and social programs which are characteristic of a modern welfare state and a modern mixed economy
- C.D. Howe was known by the public as the “Minister of Everything”. Some of his achievements are using unemployed workers to build airstrips across the country, establishing Trans-Canada Airlines as a Crown corporation, creating the National Harbours Board which centralized the administration of Canada’s ports, reforming the Canadian National Railway, and helping to create the Canadian Broadcasting Corporation.
- Howe's most important contribution was being involved with the government establishing 28 Crown corporations to produce goods for the war. 80% of the goods went to the Allied countries which contributed to the war success and also boosted Canada’s economy. During the war, employment in manufacturing increased 50%
- Communism was a taboo at the beginning of 1931 and 9 members of the Communist Party were arrested and convicted under the Criminal Code of Canada for unlawful association
- The Quebec government also tried to suppress communist activities by locking any buildings used for comunist meeting and activities through the passing of the Padlock Law [1] [2]

Significance to Liberal Economics


The significance of Canada during the Great Depression to Liberal economics is that the government found the economics principles of laissez- faire to be ineffective when trying ways to stimulate the economy once again. The government realized that they had to take action by controlling Canada’s money supply, introducing unemployment relief programs and other social programs, and investing infrastructure. Keynesian economics seemed to be the method for stimulating the economy once again and the Canadian government’s response shifted Canada more left on the economic spectrum than classical liberalist principles. Even though Canada used interventionist policies, it still opposed Communism to the extent that Communist activities were banned in the country this shows that Canada still believed in capitalism which is a principle in Liberal economics.

References


1. Christison, Fielding, Harding, Meston, Smith, Zook, (2009). Perspectives of Ideology (pp. 210-212)
Canada, Ontario: Oxford University Press.

2. Struthers, J. (n.d.) Great Depression In The Canadian Encyclopedia
Retrived from http://www.thecanadianencyclopedia.com/articles/great-depression