The conditions sounded similar to today's news. Stock markets dropped dramatically, new housing construction and home sales were at a standstill, jobs were lost, businesses struggling. The great, upward bubble burst. But while the Canada's economic problems of this year are difficult, the financial successes of 1929 turned to devastating losses for Canadians.
Canada was prospering in the 1920s with one of the fastest growing economies in the world. Incomes were growing, business was booming and international markets were eager to buy the country's resources. But the world was about to change in several sectors.
Wheat Markets Plunged
Russia re-entered the wheat market after years of recuperating from the Russian Revolution, taking a large portion of Canada's 40% world market share. With much more supply available, wheat prices plummeted and the prairie markets sank. Adding to the prairie farmers' distress, drought wiped out the crops for several years in a row, the dry wind leaving the once-fertile farms mere dustbowls.
In early 1929, stock market values in Canada and the United States were soaring, flourishing with the prosperity of the decade. “From 1925 to the third quarter of 1929,” according to Eh.net, “common stocks increased in value by 120 percent in four years, a compound annual growth of 21.8%.” Loans were easy to get, money was available and market speculators were having a great ride. Suddenly on October 24, 1929, the American markets became unstable, dropping 9% in one day. Investors became nervous and began dumping stocks in panic sell-offs on what became known as Black Thursday. On October 29th, Canadian markets were hit in the same manner, the day dubbed Black Tuesday. It was the beginning of a new, desperate era. Markets around the world also suffered.
Millions Without Incomes
Natural resources were Canada's bread and butter in the marketplace of the world. After Black Tuesday, the world was plunged into long-term dire straits, unable to afford the wheat, lumber and minerals produced by Canadians. “Factories closed. Construction of new homes and buildings stopped. There was no unemployment insurance,” said Canadian Encyclopedia, “no welfare, no medicare, no job-creation programs.” Working-class citizens suffered most, with wages cut and job losses. There were over 1.5 million people without incomes, and unemployment rates rose to 23 percent by 1933. Canada was deep into the Great Depression.
Soup kitchens and food banks opened to provide sustenance to people with no money to purchase food. Farms and homes were repossessed, bank accounts drained, investments lost; the lives of Canadians were in chaos. The government opened work camps across the nation to provide some employment but the work was not always of a long-term or valuable nature; others left their families behind and travelled from province to province looking for work, but rarely found it. Hungry, penniless and distraught, people rioted out of frustration.
New Policies Instituted
The Canadian government of the 1920s had a policy of non-intervention, leaving markets to rise and fall without interference. After the market crash, several policies were changed to improve conditions of the average Canadian. The Bank of Canada was opened in 1934 to regulate the country's financial system. The Unemployment Insurance Act was passed under the government of Mackenzie King in 1941 to provide a safety net against job losses.
After ten years of decline and misery, Canada was pulled out of the Great Depression by the call of war in 1939: World War Two. Soldiers and workers were urgently needed, factories opened to manufacture munitions and war supplies. A new era of prosperity had begun and hard economic lessons had been learned.
Susanna McLeod - Intriguing Canadians, the art of cartoonists, and fascinating moments in Canada's history have kept Susanna McLeod writing for 16 years.
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