Imagine a wheat farmer near Moose Jaw in 1928. Prices are good, so they borrow money to buy more land and a new tractor. Five years later, wheat sells for a fraction of what it did, the rain has stopped, the topsoil is blowing away and the bank wants its loan repaid. Now imagine a factory worker in Hamilton who loses their job because nobody is buying the farm machinery they build. Between 1929 and 1933, Canada's total spending (its gross national expenditure) fell by about 42 per cent, and by 1933 somewhere between about one-fifth and nearly one-third of the labour force was out of work (estimates range from about 19 to 30 per cent, depending on how unemployment is measured and who is counted). This was the Great Depression: a long, deep collapse in economic activity that shaped a whole generation of Canadians.
Why the boom ended: the causes
No single event caused the Depression. Historians separate long-term causes (weaknesses that built up through the 1920s) from the trigger (the stock market crash of October 1929) and from aggravating factors that made things worse once the slide began. Canada was especially exposed because its economy depended on selling a few raw materials, called staples (wheat, newsprint, lumber, minerals and fish), to other countries, above all the United States and Britain.
| Cause | What happened | Why it hurt Canada |
|---|---|---|
| Overproduction | Farms and factories produced more wheat, cars, newsprint and goods than people could buy | Unsold goods piled up, prices fell, and businesses cut production and workers |
| Buying on credit and on margin | Consumers bought cars and appliances on instalment plans; investors bought stocks with mostly borrowed money | When incomes or stock prices dropped, people could not repay debts, and spending collapsed |
| Stock market crash (October 1929) | Prices on the New York and Canadian exchanges plunged, worst on Black Tuesday, October 29, 1929 | Savings were wiped out, confidence vanished, banks and businesses stopped lending and investing |
| Dependence on a few exports | Canada relied on selling staples abroad, especially wheat | When world demand and prices fell, whole regions lost their income at once |
| High tariffs | The US Smoot–Hawley Tariff (June 1930) raised taxes on imports; Canada and other countries raised their own tariffs in response | Canada's biggest customer bought less from it, and world trade shrank |
| Drought on the Prairies | Years of drought, heat, dust storms and grasshoppers through much of the 1930s | Crops failed just as prices collapsed, so Prairie farmers had little to sell and earned little for what they did sell |
The downward spiral
- Prices and sales fall, so businesses earn less.
- Businesses cut production, lower wages or lay workers off.
- Unemployed and poorer workers spend less on goods and services.
- Other businesses lose customers, so sales fall even further.
- The cycle repeats: more layoffs, less spending, more business failures and unpaid loans.
A crisis that hit regions and groups unequally
| Region or group | How the Depression hit |
|---|---|
| Prairies | Hit hardest. Wheat prices collapsed while drought turned fields to dust in the "Dirty Thirties". Saskatchewan's income per person fell by about 72 per cent from 1929 to 1933, and about two-thirds of its rural people needed relief at some point. |
| British Columbia | Lumber, mining and fishing exports fell. Its mild climate drew thousands of unemployed single men from across Canada, which made Vancouver a centre of protest. |
| Ontario and Quebec | Factories closed or cut shifts; cities such as Montreal, Toronto and Windsor had very high urban unemployment. Their more varied economies recovered somewhat sooner than the Prairies. |
| Maritimes | Already struggling in the 1920s; fishing, coal and steel declined further, though many families could grow some of their own food. |
| Single unemployed men | Often refused local relief, many "rode the rails" on freight trains looking for work, and many ended up in relief camps. |
| Recent immigrants | Often the first fired. Immigrants who went on relief could be deported: more than 25,000 people were deported between 1930 and 1935, and immigration was cut sharply in 1931. |
| Women | Women's wages were lower and married women were often pressured to give up paid jobs to men; many worked as domestic servants or stretched tiny budgets at home. |
| First Nations, Métis and Inuit | Fur prices collapsed, seasonal jobs disappeared, and relief on reserves, controlled by Indian agents, was often meagre. Many northern families relied more on trading-post credit and goods. |
On the Prairies, the farm economy and the weather failed together. Dust storms buried fences, grasshoppers ate what crops survived, and families who could not pay for gasoline hitched horses to their cars, which people mockingly called Bennett buggies after Prime Minister R. B. Bennett. Tens of thousands of people left the dried-out areas of the southern Prairies for the northern parklands or for cities. Meanwhile, in cities, families lined up at soup kitchens and relied on relief (government assistance), often paid as vouchers for food and rent rather than cash, which many people found humiliating.