History

Differences in Political Responses to the Great Depression and the Recession of 2008 in Canada

I wrote this essay for my history class a year ago in grade 10, back when we studied the 20th century. There were several prompts to choose from, and I ended up writing about the changes or improvements in the political responses towards the Great Depression as opposed to the more recent Recession of 2008. I had a lot of fun investigating this topic, and learned a lot from it!

Note: I decided not to edit it (though there certainly are some changes I would make now, a year later), in order to preserve the original work. That way, I can look back and see how my writing has changed over the years.

Here it is, hope you enjoy!


“A recession is when your neighbor loses his job; a depression is when you lose yours.”

In the early 1900s, many governments believed in the classical theory that the economic system was self-balancing. As a result, when the Great Depression began in 1929, it was expected that the crisis would eventually end by itself and that there was little to be done by the government. Although the Provincial and Municipal governments were already in debt due to the many development projects undertaken during the 1920s, the federal government offered them minimal aid. Bennett’s conservative government also ignored a lot of the struggles that were going on in western Canada, instead focusing their political and diplomatic agendas towards satisfying its largest voter base, which was situated in eastern Canada and was primarily urban. There was a serious imbalance in conditions throughout Canada, with a shocking 2/3 of the rural and prairie farming population dependent on the meagre government assistance they were receiving, compared to the 1/5 of the population that was struggling in other areas of Canada. The government’s initial support for these issues was minimal, costing them valuable years at the onset of the Great Depression.

On the other hand, the Canadian response to the 2008 recession almost a century later was a great deal more educated and knowledgeable. By this point, the Keynesian theory, which was introduced by John Maynard Keynes in 1936, had been popularized as an effective way of dealing with recessions. Hence, as per the Keynesian theory, Canada reacted to the recession by modifying its fiscal policy. The government lowered taxes and interest rates and increased funding for social programs, which was nearly the exact opposite of what was done during the Great Depression, when even school budgets were cut, the national income was 55% of what it had once been in the Roaring Twenties, and tariffs were raised to retaliate against the US’ raised tariffs and satisfy the protectionist population.

Eventually, however, the government during the Great Depression began to attempt to adopt relief programs. It started a Canadian “New Deal” type of relief that was very similar to that of Franklin D. Roosevelt. Its goal was to provide the three “R”s: relief from the current situation, recovery to stabilize the economy and reform to ensure that such a depression does not repeat. Canada also attempted to pass an Employment and Social Security Act which promised minimum wage, regulation of working hours and conditions, and insurance. However, the act was not in line with the British North America Act and was thus dismissed as “unconstitutional”. Other relief programs such as the National Housing Act and National Employment Commission were successful, but did little to improve the bleak economic conditions. Unions in turn failed to influence employers, who were facing dire financial situations as well, and as a result communist-led strikes were held instead. The government responded with police and RCMPs, escalating the conflicts into ones that often ended in violence, as was the case with the Estevan Riot in Saskatchewan, and provoking criticism regarding police brutality in dealing with these conflicts. One successful endeavor was that of the World War 1 veterans, who fought for more recognition and social security programs from the government. Their efforts played a vital role in establishing the social security net we have today. Unfortunately, in the years of the Great Depression, efforts to create make-work programs put the federal government into serious debt, and were revoked quickly by the inexperienced government. Taxes were raised yet again, this time in an attempt to balance the budget of the Provincial governments. All of these mistakes ultimately functioned to deepen the depression.

The recession of 2008 was significantly better managed by the government. Going into to 2008, Canada had a weakened social security net in which 60% of jobless Canadians did not receive Employment Insurance and personal debt was extremely high, with an average of $1.40 owed on every dollar of income. Nevertheless, banking systems, like they were during the Great Depression, were very stable in Canada, preventing banking crises. The US fell into the recession about a year before Canada did, and when she did, the government acted quickly. They created tax cuts of about $60 billion to companies, pushed credit programs to create economic stimulus, and put spending programs into play by undertaking many government-funded projects to kick start the economy and provide jobs. Canada today is a welfare state, and provides various insurances, support for unemployment, publically funded health care, provincially-funded education, mortgage insurances, Old Age security, low income support, and child welfare programs. Most of these programs were provided by charities and private groups before the Great Depression. The government has come a long way since the 1930s.

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