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October 29th, 1929 has come to symbolize the
end of the roaring 20's and the beginning of the great
depression. Although the slow down of the economy occurred over a
period of many months, it was the shock of collapsing markets
and the realization that many investors were cleaned out, many more had
lost a sustainable proportion of their assets and some even
committed suicide rather than face their complete ruin, which
hit the front pages of the newspapers and lead the newscasts on
the radio. It was one of those days where many alive at the time
can remember exactly what they were doing and how they
reacted to the news.
Canada had become heavily reliant on the cash
generated from exports to the U.S. and most of the money
raised for investment in Canadian industry was from U.S. financial
institutions. Canadian industry
and manufacturing sectors had expanded their capacity at
breakneck sped during the 20's in order to keep up with demand
but by 1929 demand had slowed down and even dropped off. This
created a situation where many companies were producing product
that was not being sold and accumulating in the warehouses. This
lead to a retrenchment of industry which stopped hiring workers
and even began to lay off workers.
On he prairies the wheat crop of 1928 was
held back in anticipation of higher prices which did not come
and then other producers, such as Argentina, picked up some
traditionally Canadian markets. The Canadian wheat continued to
fill the grain elevators and could not be sold. As the grain
stopped moving, the railways lost business and their support
services slowed down. Men were let go, money froze and business
impacted drastically. People began to fear the future and
stopped spending which matters even worse.
One of the first reactions to the economic
slow down was for governments worldwide to raise tariffs in
order to protect domestic producers and as the U.S. instituted
these actions, Canadian products could not compete in that
market leading to another downward spiral in the economic health
of Canada.
Between 1928 and 1932, per
capital income in
Saskatchewan dropped 72 percent, and that of Alberta 61% while
Ontario and Quebec both dropped by 44 %. As the slowdown
trickled through the rest of the economy, very few were spared
the wrath of financial devastation with plant closings, massive
layoffs, no new initiatives launched. Wheat exports dropped by
25%, Ford stock prices by 50%
The government reaction to the crisis was to
cut spending in order to balance the budget. No one had any idea
how long the depression would last and some even felt that it
was just a temporary slowdown which would end soon. It did not.
Wheat exports dropped
by 75% and the nature struck he prairies. Hot weather
scorched the farms, soil was blown away and huge dust
storms swept across the west creating deserts and dunes
in the most unlikely places. Conservation and proper
agricultural practises were not practiced by many farmers
because the unique climatic conditions which effect the
west during the depression had not occurred in living
memory of the population of the area.
The deflationary
spiral soon began to effect the prices of commodities and
products by driving down their prices but by this time
those with jobs and a little bit of money still could
not afford the standard of living which they had
previously been used to. The 1930 election was fought
over what the government was going to do about the
slowdown.
Mackenzie King made a
speech on April 3, 1930 in which he stated
"Every
winter in this country, ever since there was a winter or
a Canada, there has been unemployment and there always
will be...we have no right to say that there is any
national unemployment problem in the country....I might
be prepared to go to a certain length possibly in
meeting one or two western provinces that have
Progressive premiers at the head of governments... With
respect to giving moneys out of the federal treasury to
any Tory government in this country for these alleged
unemployment proposes, with these governments situated as
they are to-day, with policies diametrically opposed to
those of this government, I would not give them a
five-cent piece."
That speech was seized
upon by the Conservatives and used to win the election.
Governments spoke of a rebound being around he corner,
conditions would soon improve, the worst was over, but
the depression was to last until the late thirties when
world events started to take precedence and the
economies began to grow once again.
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