The Great Depression crisis began with the infamous stock market crash of October 1929, which lasted for a decade. During this period, Canadians were suffering the effects of the worst economic crisis the country has ever known. It was a time when most factories and industries preferred women over men as employees as they could be paid lesser.
The unemployment rate increased from 4.2% in 1929 to about 27% in 1933 in Canada, as the aftermath of the market crash unfolded itself. The crisis affected everyone at each level of the society. Wages were cut down, production dropped by 45% and the food was scarcely available. In 1931, nearly a third of the population in Montreal depended on the assistance of $ 3.16 per week for a family of two.
The poverty and desolation of the 1930s, resulting from unemployment, drought and the lack of a social safety net, completely transformed the welfare system in Canada.
Causes & Effects of the Great Depression in Canada 1929
Emergence of new industries: One of the first major causes of the great depression in Canada was the fast growth of the new industries. These companies could not cope up with this excessive growth when the stock markets crashed in 1929. They failed to pay their debts and also the employees, which left a massive crowd of the unemployed.
Increasing banking interest rates: The First World War crisis left many countries including Canada in poverty. Banks had to force the industries to pay the debt back by increasing interest rates. Higher interest rates made it further more difficult for industries to manufacture, supply and trade. This led to a monstrous decrease in the product supply in the country.
Purchase credit, the necessary evil: The growth of an economy demands investment on credit. Leveraging is a good thing unless you are unable to pay the credit back. This is what happened with Canadians. During the Great Depression, people purchased on credit, but when the markets collapsed they lost their jobs, thus failing to pay the credit back. In return for the credit, people lost their house and every other asset they owned.
Increase in tariffs on trade: Canada primarily trades fish, food, minerals and wood with other countries. During the depression, the increased tariffs resulted in the falling momentum of trades with other countries. Canada had a huge supply of raw material that it could not sell.
Moreover, Canadians could not buy these oversupplied commodities due to the unemployment, which rendered the excessive production useless.
How did the great depression affect Canada?
33% of people in Canada were unemployed by 1933 because of the great depression crisis. Many people had to depend on the government help to survive every day. Students were forced out of schools because they could not pay the fees. Canadian exports were cut by 50% because of tariffs.
- Development of labor camps: In the 1930s, the increasing unemployment caused a stream of vagrants wandering around the country in search of shelter and food. The government built them labor camps where they were fed and dressed like soldiers. This labor worked on government projects of building bridges, roads and other construction.
- Increasing protests in the country: The people in the labor camps soon seemed dissatisfied with their living and working conditions, including their wages. Thousands of people from British Columbia marched towards Ottawa to protest but had to confront the law in between. This resulted in riots around the country which were getting harder to control.
- Bennett’s New Deal: Prime Minister RB Bennett introduced a policy while trying to improve the crisis of the great depression. The idea of the policy was suggested by the US President Roosevelt. This policy included a more progressive tax system, a minimum wage for all employees and a week of work with a maximum of hours of work. It also introduced insurance for unemployment, health and accident.
Although these are the major effects of the great depression in Canada, there are many other indirect ways that the crisis hit the people and the economy. Students can use a custom essay writing service or write my essay service to get homework help online with more complicated topics.
How did Canada recover from the great depression?
The 1929 crisis is a cataclysm of unprecedented magnitude.Although the employment in Canada recovered quickly, the production remained suppressed due to the reduction in international trade.
To regulate the currency and credit, the Bank of Canada was founded in 1934 and was nationalized in 1937. The Canadian Radio Broadcasting Commission (CRBC) was established in 1932to keep the country connectedand motivatedduring the economic depression.
The outbreak of WWII is what pulled the economy of Canada out of the great depression. The increased demand in Europe for raw material helped in creating large capital inflow. The military provided the much required employment for war. Along with the recovery og the American economy, Canada established a better exports market.