Government Response to the Great Depression

Government Response to the Great Depression

Government Response to the Great Depression Downward Economic Cycle The prosperity of the 1920s was based on false optimism the global economy was very weak Easy access to credit made the economy appear stronger than it was From Recession to Depression The Psychological Effect A weakening economy can have a powerful

psychological effect on consumers Fear of job losses and decrease in value of goods and stocks consumers save decrease demand Government Response The Failure of Ideology Most governments believed in laissezfaire economics

leave it alone The economy will regulate itself government regulations will make things worse Prime Minister Mackenzie King did nothing to correct the situation economy would eventually correct itself King, and other world leaders, failed to grasp that the sharp decline in prices and rising #s of unemployed were not part of normal business cycle

From Bad to Worse R. B. Bennett Mackenzie King lost the election of 1930 to Richard Bennett (conservative) Bennett promised to take action to solve economic crisis: Rise tariffs against countries that riased tariffs against Canadian products (USA) Millions of $ for building

projects Relief for unemployed And Worse Bennett also promised to decrease tariffs on countries that would decrease tariffs on Canadian products (USA) USA not interested in Free Trade Canada had little economic influence and were deeply

dependent on global trade Canadian economy continues to worsen And Worse British economist John Maynard Keynes suggested government should go into debt and spend $$$ - build infrastructure - to put people back to work

and stimulate the economy And Worse Bennetts ideas were good but he rejected the idea of government debt therefore his government did not take any direct action to solve the problem Result: families evicted

to streets, unemployment @ 30% of work force! Unemployment 1933 1.5 million Canadians depended on government relief Government gave unemployed relief vouchers must prove you had no $ to qualify Store owners did not

like to take vouchers government would take a long time to pay The unemployed drifters travelled around looking for work - they were viewed with suspicion Living Condiditons

Top Picture: Bennett buggies people could not afford gas reverted to hooking a horse or ox to their car Middle: Riding the rails unemployed men would hitch rides

on open freight cars to travel around looking for work Bottom: Hobo jungles or shanty towns Relief Camps 1932 Bennett establishes work camps to offer relief to the unemployed Really, government feared

communism would spread amongst unemployed Camps were established in isolated locations under the control of the army Workers worked for 20 per day Protest: On to Ottawa 1935 relief camp workers went on strike 1000 strikers boarded freight

trains and headed for Ottawa take their demands to Bennettt Eventually over 2000 Trekkers joined the movement Government feared a Communist revolution RCMP stops the strikers in Regina riots break out, the strike leaders are arrested The Dust Bowls

The economic collapse coincided with a natural disaster in the prairies A severe drought would begin in 1929 and last

10 years The rich fertile land bread basket of Canada turned into a virtual desert And Locusts If the drought wasnt bad enough, the 1930s also saw a plagues of locusts (large grasshoppers) that

would destroy what little crops farmers did manage to harvest! And worst of allthe bankers! Due to these natural disasters many farmers were not able to make their mortgage payments bankers would seize their farms and sell them

250,000 farmers abandoned their farms between 1931-1941! The Great Depression: Alternative Solutions New Political Parties Alternate Solutions Although Bennett had some good ideas about solving the Great Depression he was not prepared to go into debt to spend his way out

of the recession He would occasionally send his own money to people who asked for assistance but this was not solution Many people began to look for radical solutions to the problem The Communist Party of Canada Most radical political party Committed to a workers revolution to overthrow democratic government

Eliminate private property and business and banks Leader, Tim Buck, was arrested and convicted of plotting to overthrow government of Canada sent of Kingston Penitentiary The Co-operative Commonwealth Federation (CCF) Leader: James S. Woodsworth Democratic Socialism

Believed in democracy and supported private private property Big business, utilities and banks should be owned by the government 1944 Tommy Douglas elected as Premier of Saskatchewan introduced health care, human rights laws and government run hydro electricity In 1961 CCF joined with the the Canadian Labour Congress to form the New Democratic Party

James S. Woodsworth The Social Credit Party Began in Alberta Leader: William Aberhart Solution to GD give people money sitting in banks Government would use its credit to print money & give $25 to every adult per

month Federal government vetoed this idea Union Nationale Quebec based party Leader: Maurice Duplessis Promised higher minimum wage, workers compensation & government owned hydroelectricity Duplessis won election of 1936 but failed to bring in reforms

Allowed Roman Catholic Church to influence social policy & English protestants to dominate business Government plagued by corruption

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