A Short History of Canada by Desmond Morton

Author:Desmond Morton [Morton, Desmond]
Language: eng
Format: epub
ISBN: 978-1-55199-142-9
Publisher: McClelland & Stewart
Published: 2008-11-19T05:00:00+00:00

THE DEPRESSION 5

Great events have complex causes. Few now date the Great Depression of the 1930s from the Wall Street Crash of October 1929. Although the slump was a symptom of a much wider sickness, there are not many who still believe the contemporary preachers who blamed it on rising skirts, falling morals, lack of prayer, and a self-indulgent insistence on living beyond one’s means.

In 1929 it cost over $10,000 a year to live the resplendent life depicted in the rotogravure supplements; only 13,477 Canadian families acknowledged such an income. The federal Department of Labour insisted that a family needed $1200 to $1500 a year to maintain a “minimum standard of decency.” Sixty per cent of working men and 82 per cent of working women earned less than $1000 a year. By any definition, most people were as poor as Canadians had been for generations. Depressions did not occur because ordinary people lived beyond their means. In fact, a British economist, John Maynard Keynes, would soon argue that the economy shut down because too many people had no means to buy what it could produce. Most Canadians fitted this category.

In Canada, the immediate cause of the Depression was not the Wall Street Crash but an enormous 1928 wheat crop. A decade of immigration had filled the last, most infertile prairie land. As times improved, prairie farmers had forgotten politics. Instead, they listened to a persuasive American lawyer named Aaron Sapiro. Rather than going to the Wheat Board or the Grain Exchange, Sapiro said, why not pool the wheat harvest and sell it with the bargaining power of any good cartel? Thousands of farmers joined the Wheat Pool, prospered, and added to their acreage. The idea worked brilliantly – as long as there was no glut and no serious competition. By 1928, there were both: 567 million bushels at a Pool-guaranteed price of $1.28 a bushel, to be sold in a world that could now buy much more cheaply from the United States, Argentina, Australia, and even the Soviet Union.

Of course, no one worried too much in 1929. Prosperity now seemed permanent, though, as some brokers warned their clients, the market needed just a tiny “correction.” Inventories were too large. Capital investment was a trifle optimistic. On the prairies, salesmen confessed that orders were down. Business prophets cautiously reminded their customers that economies, like people, needed an occasional rest. Slowly, and then irreversibly, an economic system based on credit, confidence, and massive resource exports began running down the cycle. Far away, buyers cut or cancelled orders for timber, fish, and base metals. Construction slowed. Industrialists checked their shrinking order books, and ordered wage cuts, half-time work, even a temporary shutdown. No one could be astonished; a prosperous decade had already experienced two depressions, in 1920 and 1923.

Politicians in the 1920s were seldom faced with economic indicators or unemployment statistics. The few available figures were collected by the Department of Labour through a haphazard system of local reports and published monthly in its Labour Gazette.

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