Worst Since the Great Depression

I've read a few headlines that state something like "Worst Unemployment Since the Great Depression" or "Largest drop in Economic Activity Since the Great Depression". Comparing today to the Great Depression is frightening. I wasn't sure if these headlines were alarmist for the sake of driving clicks or if we are really in for a period as bad as the 1930s. To help assess this I decided to read Pierre Berton's "The Great Depression". This book explores the Great Depression in Canada. It's organized chronologically by year. I found it to be a good read and I would recommend it to anyone looking to learn about Canada's history.

How bad was the Great Depression in Canada?

It was really, really bad. Some of the stories are horrific. General destitution, starvation, and suicide. I won't go into writing some of the stories here because it's honestly not something that I think people want to read unless they are prepared for it. I suggest reading the book or taking my word for it, the average person's experience was really bad. Unfortunately, it was also largely self-inflicted by misguided and irresponsible government policy. There was a common saying at the time: "starvation in the land of plenty".

Why was the Great Depression so bad?

The primary reason is that there was no organized federal response. Throughout the decade, the federal government refused to take responsibility for economic relief. The responsibility for relief was delegated to the provinces and municipalities. At the earlier stages (the first several years) of the Depression it was delegated also without funding from the federal government. The lower levels of government were left to fend for themselves and make their own rules.

Lower levels of government didn't have a way of funding the relief programs. Western provinces were less developed at the time than the eastern provinces. To put things into perspective, at that time there was no Trans-Canada highway to connect the country (there was no need, cars were just gaining popularity in the 1920s). The main mode of east-west travel was the railway. 

They couldn't raise the funds required so they put in place eligibility rules. In many jurisdictions, you couldn't receive relief unless you had lived there for 6 months or a year. The problem is people would move to find work hoping that there would be work somewhere else. They ended up stranded without work and without relief.

Aside from poverty and destitution, there was a ton of bigotry. Government, civil servants and the general population blamed all sorts of people for the economic despair to try and shirk responsibility. The groups of people who were targeted and persecuted in Canada during the 1930s include:

• People who supported communist policies
• People of Non-British and Non-French Heritage
• Indigenous people
• Poor people
• Uneducated people
• Jewish people
• People who supported socialist policies
• Immigrants
• People who supported labour unions

This is not by any means a complete list. Most peoples were blamed for the poor economy. Candidly, it appears that you were only exempt from blame if you were white, with British or French heritage, protestant or catholic and wealthy. Or, if you supported Fascism in the late 1930s, that could have given you a pass. Fascism was on the upswing in Canada in the late 1930s due to the success of Germany's economic recovery.

To give you a flavour of the bigotry that was happening, I've copied an excerpt from a chapter called "Shoveling out the unwanted" below. The chapter covers Canada's deportation of immigrants in 1932. Between 1930 and 1935, Canada deported more than 28,000 men and women.

Danny Chomiki has come to Canada with his Polish parents as a child in 1913, a time when the country was luring eastern Europeans with an unprecedented advertising campaign. Now he had a Canadian name, Holmes, a Canadian wife, and a Canadian-born child. That made no difference. He was spirited away to Halifax without his wife's knowing what happened to him. When his lawyer asked to see the warrant for his arrest, he was refused. When J.S. Woodsworth took up the case with the immigration department, the civil servants fobbed him off on the minister who claimed to have no knowledge of the matter. In December, Danny Holmes was shipped back to Poland - a country he could scarcely remember. When he had left it two decades before, it was part of Austria.

One Manitoba politician actually boasted that "in our town [Winnipeg], when those foreigners from across the tracks apply for relief we just show them a blank application for voluntary deportation. Believe me, they don't come back. It's simple but it has saved the city a lot of money."

How did Canada recover from the Depression?

In short, we didn't choose to recover and the situation would have dragged out longer. Canada was forced out of the depression by the Second World War. Despite changes to federal leadership, up until the war started there was no organized federal response to the depression. The irony is that the war mobilization was done through federal government deficit spending: the deficit spending, that the federal government said was impossible for 10 years while its people starved to death, suddenly became possible.

War mobilization created new industry and the employment rate dropped from 11.4% in 1939 to 1.4% in 1944. The result of deficit spending was the introduction of income tax to pay for the war effort.

What conclusions did I draw from reading this book?

1) I am really happy to see federally organized economic relief provided to Canadians (CERB). As a result economic activity can continue, having no purchasing power is infinitely worse than having some purchasing power.

2) There could always be fair arguments over a) how much relief, b) for what period of time and c) in exchange for what activity. I'm going to put emphasis on the "in exchange for what activity" here. At this time our government relief is in the form of a no-strings-attached cheque. I believe that makes sense during a short downturn to bridge to a renewed level of economic activity. However for a longer period of economic recovery it would be better to provide economic relief in exchange for efforts towards societal issues such as improving the environment and/or building infrastructure. This is not a new idea: it's what Roosevelt did when he introduced the Civilian Conservation Corps.

3) Even when our current downturn started, we had far greater systems in place to manage through a severe economic downturn. Just to name a few:

• During the 1930s, communication across the country was difficult so there is an argument that the federal government didn't really know how bad things were. Surely that excuse doesn't extend to 10 years of foot-dragging though.
• The labour union was just then painfully coming into existence. Police were inciting violence to put down labour movements and arrest peaceful protesters.
• There was no unemployment insurance.
• There was no maximum hours your employer could force you to work.
• There was minimum wage for women but not for men. This sounds great for women however it meant that men were employed because they could work below minimum wage and women weren't hired.
• There was no universal healthcare (which, candidly, seems to be a pretty awesome institution to have during a pandemic).

Generally, the conclusion I derived from observations 1-3 above is that we are much better off today than at the beginning of the Great Depression. Although we have unemployment levels and a drop in economic activity not seen since the Great Depression, I'm optimistic that we have much better systems to deal with the problems and it also appears that we have a government ready to take on the responsibility of a difficult recovery.

4) Greater taxation will follow. There is no way around this, we will need to pay the debts that are being accrued. There is, however, no alternative aside from optimizing on the parameters above (amount of relief, period of time and what we put our efforts towards during that time).

5) It's really strange to hear people argue that we don't have systemic racism in Canada. There are examples of bigotry and racism in practically every book I've read about Canada's history. It doesn't really seem to matter what the time period is. The 1930s were polarizing so there are more examples during that time. However, if you were to pick any time period (even very recent ones, e.g. the Sixties Scoop continued on until 1996...) there are wild and crazy examples of racism and bigotry. If you believe Canada doesn't have systemic racism I would ask you to stop confusing what we aspire to be for our track record. Canada is a great country and I can't say enough good things about it. I feel lucky to live here. However let us not deceive ourselves, we should accept our track record and start doing better. 

6) For people from Waterloo/Kitchener: A. R. Kaufman (i.e. Kaufman rubber) was a pioneer in birth control. He fought to secure laws that protect the sale and distribution of contraceptives in Canada. Unfortunately he also was an advocate for eugenics. Oh well, nobody's perfect.