History 1114
R.B. Bennet, Mackenzie King and the Depression Did the Politicians Prolong the Misery? Hasan Tahir #100217025
11/09/2010
In the 1920s and just after Worl d War I, Canada experienced economic prosperity but a decade later it would all come crashing down. The following decade would come to be known
as the Great Depression. In the time of the Great Depression Canada underwent two political regimes which seemingly did nothi ng to help the country get out of the depression. What makes this more astounding is the fact that these two re gimes were at the opposite e nds of the Canadian political spectrum yet neither perspective yielded a clear framework for lifting Canada out of the depression. The decade preceding the Great Depression was a time of economic prosperity for Canada. Due to a boom i n construction coinciding with the introduction of mass production, a cultural shift towar ds consumerism was bor n. Thus, the 1920s were a very successful period of
economic growth, with working and living standards improving remarkably and making Canada one of the fastest growing economies in the world (Soule 1947). However, this period of prosperity would be short-lived. On October 29, 1929, a day that woul d become to be known as Black Tuesday, the U.S. stock market crashed causing a ripple effect throughout the worl d particularly industrialized nations as ma ny other stock markets around the world also crashed soon after. Stock prices plummeted on that day, and continued to fall at an unprecedented rate for a full month (Hakim 1995). It is to this day regarded as the most devastating stock market crash in not only U.S. history but worl d history (Smith 2008). This of course had a great effect
on Canada as it was simulta neously thrust i nto a depression with the U.S. because of its hi gh level of dependency on the U.S. During the roaring twenties Canadians had bought too much on lease and credit, including stocks. Therefore when the stock market crashed, many Canadians were thrust into instant debt and faced a difficult time as they attempted to sell their
personal belongings, and had other partly-paid purchases repossesse d (Amaral and MacGee 2007). Furthermore, a decrease in demand of natural resources created a substa ntial drop in Canadian sales as these were the primary exports for Canada. It did not help that Ca nada had a lack of variety of exports and that there were high tariffs on exported goods thus enabling many competing sellers from countries with lower tariffs for the t he same exports to take over a ny trade advantages that Canada had. Also, many Canadian companies had expanded their industries in the 1920s so they could generate more profits , but economic activity obviously shrunk in the depression, and companies were left exposed with heavy debt and a lack of cash flow (Berton 2001). Something that made Canadas depression uniquely different from the U .S. was the devastating impact that not only the economy ha d in the Prairie region but also the weather conditions of that time. The Prairies were hit extremely hard during this period by several years
of drought. This created massive dust storms that swept a cross the prairies , making it impossible for farmers to grow the abundant qua ntities of wheat they needed to provide for the markets. The wheat that did survive the dust storms was of very poor quality as it could not grow tall a nd healthy due to the lack of rain. Since many farmers ha d frequently bought their
seed and machinery by using credit they were often bankrupted when they couldn't pay off their debts (Francis, Jones and Smith 2008). In Saskat chewan alone over 200,000 people were forced to leave their farms and 70% of their populatio n was dependent upon very basic forms of social assistance (Berton 2001).
At the start of the Depressio n, the provincial governments were alrea dy in debt after a n over-expansion of infrastructure and education during the 1920s. It thus fell to the fe deral
government to try to improve the e conomy. At the beginning of the Great Depressio n William
Lyon Mackenzie King was the Prime Minister of Canada. He, like many political leaders at the time, was totally u nprepared for the depression and thought of it as just a perio dical phase and in the early stages he truly believed it would be short a nd come to pass very quickly on its own without any influence from the federal government and without the necessity of resorti ng to drastic or ra dical measures . Instead, King believed, in a very apathetic manner, that it was up to
the individual provincial governments to aid their own citizens. He was so oppose d to federal relief , that he made the in judicious statement that he woul dnt give a five-cent piece to any province with a Conservative government in regards to unemployment relief (Neatby 1972). King believed it was not the federal governments obligation under the British North America Act to provide unemployment relief to the individual provinces but rather the provi nces themselves were responsible for their citizens welfare (Neatby 1972). Because of his lack of action and apathetic manner towards the plight of Canadians it was u nanimous across the country that Canada needed a change in government.
After Mackenzie King proved to be an abject failure in getting Canada out of the depression the citizens looked instead toward the Conservative party and its leader, R.B.
Bennett, who promise d aggressive actions against unemployment. Given his rags to riches humble beginnings, Bennett believed in capitalism and the free-enterprise system which was essentially the same e conomic principle that Mackenzie King believed in during his regime as Prime Minister. Bennett began his term in office by first instituting a repressive policy toward labour u nions, radical periodicals and unemployed demonstrationists. Bennett also instituted a steeply raised tariff to a n unprecedented level, which was suppose d to blast the way i nto world
markets and provide protection of Canadian industry as Canadians would now be forced to buy Canadian goods since foreign goods would be too expensive and Canadian factories and businesses would benefit. However this would backfire as Canadas trade partners began to trade even more with competing countries with lower tariffs essentially freezing out Canada as a trade partner (Safarian 1959). This policy further restricted Canadian export trade and increased the burden of the Depression on those who alrea dy felt it most. He also took emergency measures, unlike the King regime, using twenty million dollars, an enormous sum at the time, for public works and unemployment relief . However, it was not enough to stimulate the economy or lower the unemployment rate by a si gnificant amount (Berton 2001). The government's strategies were ineffective and, as the Depression worsened, Canadians began to
lose confidence in the capitalist system, which had caused such an economic disaster, and in the government which seemed powerless to pull Canada out of it . Resentment was intensely focused on Bennett. He had promised decisive action, but his policies had done little to improve the situation.
Canadians grew increasingly frustrated with the la ck of action from Bennett and their government and they decided to show their displeasure. On June 3, 1935, about a thousa nd
relief camp workers boar ded boxcars and headed east in what woul d become known as the On-to-Ottawa Trek to protest the dismal working conditions in the relief camps throughout the country (Waiser 2003). When the train reached Regina, the number of protesters ha d doubled. Fearing a huge protest in Ottawa, R.B. Bennett stopped the train in Regina and tried to st
negotiate with the protestors (Waiser 2003) . On July 1 , 1935 a riot broke out as the RCMP
tried to arrest the or ganizers of the protest. A Regina police officer was killed and 130
protesters were arreste d with this the On-to-Ottawa trek was offi cially over but the message had been sent that it was time for a change in the upcoming elections (Waiser 2003).
In the time of the Depressio n it wasnt just RB Be nnett and Mackenzie King who offered
their solutions in solving the problems of the e conomy, many others offere d their own ideas. In the West, two protest parties emerged as major political forces: The Social Credit Party in Alberta, and the socialist Co-operative Commonwealth Federation (CCF) in Saskatchewan. Bill Aberhart , was the leader of the Social Credit Party , he believed that the Depressio n was caused by people not having enough money to buy goods and services especially farmers. His solution was to give every citizen $25 per month, a prosperity certificate so people could buy more products and help the e conomy. His party was asto nishi ngly in power for a long time in Alberta (Elliott and Miller 1987) even though it was u nable to implement much of its party platform since the social credit concept relied heavily on control of the money supply and of the banks, both of which are a respo nsibility of the federal government of Canada under the British North America Act (Irving 1959). J.S. Woodsworth, the leader of the CCF, believed that the free enterprise system ha d failed the people during the depression and that the government needed to take a greater role in the economy during the depression (McHenry 1950). He
proposed the institution of many social policies such as: unemployment insurance, free medical care, family allowances and old age pensions (McHenry 1950). In Quebec, the Depression had
an added nationalist dimension, as business interests were predominantly English-speaking, and wage earners French-speaking. The economic problem of unemployment in Quebec therefore became a cultural problem, and in 1936 the Depression would bring the Union Nationale and its leader Maurice Duplessis to power . Duplessis blamed the existence of the
Depression on the fact that ma ny of Quebecs industries were owned by Americans and English speaking Canadians. He formed the Union Nationale so that Quebe cers would have more control over their economy (Black 1977).
Increasingly, from all parts of the country, there were calls for fundamental change in
the role of government to ensure social and economic welfare. At the time, the monetary theories of the British e conomist, John Maynard Key nes, attracted considerable attention. According to Keynes, the Great Depression could only be vanquishe d if governments deliberately incurred deficits by cutting taxes to increase purchasi ng power , and by spending on
public works and other large-scale investments to stimulate industrial activity (Neatby 1972). Fearing political unrest, Bennett surprised many Canadians and even some members i n his own party with a series of ra dio broadcasts in January of 1935 in which he admitted that there were holes in the capitalist system and announced a New Deal for Ca nada which would result in greater social justice (Bliss 1994). Bennett propose d reforms such as: unemployment insura nce,
maximum hours of work and minimum wages in industry, extension of farm credit, and a natural pro ducts marketing board (Bliss 1994). However, Canadians were not convinced of the
Prime Minister's sincerity feeling as if they had heard this song and dance before, and in the election of 1935 the Conservatives were soundly defeated. The Liberals, with the slogan King or Chaos, returned to power after a five-year abse nce with the largest majority in Canadian history up to that time (Neatby 1976) .
With the great depression still going on, Mackenzie King decided to take a softer sta nce on social reform in his return to office to try to ultimately boost the e conomy. Mackenzie King
proceeded cautiously in his second regime. He had questioned whether the fe deral government had the jurisdiction to pass the New Deal reforms , and referred the matter to the courts for decision (Neatby 1976). The Judicial Committee of the British Privy Council, the highest court of
appeal for Canada, declared most of the propose d legislation beyond the federal powers (Neatby 1976). To his credit, Mackenzie King believed in the remedies proposed by John Maynard Keynes, debt reduction, low taxes and moderate tariffs. Deficit spending however was, in his view, undesirable. He was hesitant to intervene in the social order. However, the unity of the country, always his prime goal, was at stake , and he adapted to the rising demand for social welfare (Neatby 1976). The citizens in the Prairies however, preferred solutions from the CCF and Social Credit Party leading King to call the region a "part of the U .S. desert area. I doubt if it will be of a ny real use again. (Neatby 1976) King instead focused his efforts on the
provinces of Ontario and Quebec and the industrial sector more specifically regarding the proposed St. Lawrence Seaway project with the U nited States. Promising a much-desired trade treaty with the U .S., the King government passed the 1935 Reciprocal Trade Agreement. It marked a turning point in Canadian-American economic relations, lowering tariffs, and yielding a dramatic increase in trade (Boucher 1985-1986). By this time, the worst of the Depressio n had passed and the economy was tre nding upward albeit at a s nail-like pace. By 1939, Canada was in the first prosperity period in the business cycle in a decade. This coincided with the recovery in the American economy, which created a better market for exports a nd a new inflow of much needed capital.
Mackenzie King and R.B. Bennett sought to bring Canada out of the great depression yet their policies proved to hinder the economy instead of helping it. It ultimately took until 1939
and the outbreak of Worl d War II for the Canadian economy to return to the levels it was at i n the 1920s. However, one of the most importa nt lasting effects of the Depression was the new role of government. Under RB Bennett and Mackenzie King the first elements of Canada's welfare state were created, and the size and role of the government began to grow immensely over the next decades (Bliss 1994). The Great Depression had served as the catalyst for many fundamental reforms such as: the Unemployment Insurance Act, the Family Allowances Act, the Old Age Security Act of 1951, the Canada Pension Plan of 1964, and the Canada Health Act of 1966. The Depression revealed the economic inse curity of modern society and lead to the expansion of federal government activity in assuming responsibility for major social welfare services.
Works Cited
Amaral, Pedro, and James C. MacGee. The Great Depression in Canada and the United States: A Neoclassical Perspective. Kehoe: Prescott, 2007. Berton, Pierre. The Great Depression: 1929-1939. Doubleday Canada, 2001. Black, Conrad. Duplessis. Toronto: McClelland & Stewart, 1977. Bliss, Michael. Right Honourable Men: The Descent of Canadian Politics from Macdonald to Mulroney. Toronto: Harper Collins, 1994. Boucher, Marc T. "The Politi cs of Economic Depression: Canadian-Ameri can Relations in the Mid-1930s." International Journal , Journal , 1985-1986: 41-51 .
Elliott, David R., and Iris Miller. Bible Bill: A Biography of William Aberhart. Edmonton: Reidmore Books, 1987. Francis, Douglas R., Richard Jones, and Donald B. Smith. Destinies: Canadian History Since Sin ce Confederation 6th edition. Toronto: Nelson Education, 2008.
Hakim, Joy. A History of Us: War, Peace and all that Jazz. New York: Oxford University Press, 1995. Irving, John A. The Social Credit Movement in Alberta. Toronto: University of Toronto Press, 1959.
McHenry, Dean E. The Third Force in Canada: The Cooperative Commonwealth Federation, 1932-1948 1932-1948 . Toronto: Oxford University Press, 1950. Neatby, H. Blair. The Politics of Chaos: Canada in the Thirties. Toronto: Macmillan, 1972. . William Lyon Mackenzie King: 1932-1939: the Prism of Unity. Toronto: University of Toronto Press, 1976. Safarian, A.E. The Canadian Economy in the Great Depression. Toronto: University of Toronto Press, 1959. Smith, David. The Sunday Times: America gets depressed by thoughts of 1929 revisited. March 28, 2008. http://busi ness.timesonline.co.uk/tol/busi ness/economics/arti cle3602690.ece (accessed November 3, 2010). Soule, George Henry. Prosperity Decade: From War to Depression: 1917 - 1929. Rinehart, 1947. Waiser, Bill . All Hell Can't Stop Us: The On-to-Ottawa On-to-Ottawa Trek and Regina Riot. Calgary: Fifth House, 2003.
