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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.
