"Never will I or any government of which I am part put a premium on idleness." - Prime Minister R.B. Bennett
When Canada and the world plunged into an economic free-fall in the late 1920s, nobody was prepared for the intensity or the duration of the crisis, certainly not the political leaders.
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Jobless men become militant when the government shuffles them off to work in the Canadian wilderness
Dear Mr. Prime Minister
R.B. Bennett personally answers hundreds of letters from desperate Canadians during the Depression
Canadian Prime Minister Mackenzie King had led the country through the prosperous 1920s. At the onset of the Great Depression, he did little to acknowledge the growing economic crisis. King's government believed that market forces would bring back prosperity in short time.
R.B Bennett, the Conservative opposition leader and a tough-talking millionaire, seemed to offer Canadians more hope. He defeated King in the 1930 election and faced a nation in crisis.
Once in office, Bennett had little vision for drawing Canadians out of the Depression. True to conventional political theory of the time, he believed governments should interfere as little as possible in the free enterprise system.
By 1932, almost a quarter of workers were jobless and Bennett was forced to adopt less traditional economic measures. The federal government gave the provinces $20 million for relief programs. Bennett also created labour camps to provide unemployed single men with a subsistence living. Men lived in bunkhouses and were paid 20 cents a day in return for a 44-hour week of hard labour.
Canada's new deal
In 1935, Bennett shocked Canadians when he proposed a socially progressive "new deal" program. Though less ambitious than U.S. President Franklin Roosevelt's New Deal, Bennett's plan still promised more progressive taxation, unemployment insurance, health insurance, closer regulation of working conditions and social reforms.
Bennett’s new program did not impress the voters and Mackenzie King won the 1935 election with a large majority. The Supreme Court of Canada later found the most important parts of Bennett's new deal were unconstitutional.
But Bennett's "new deal" did signal a change in government thinking. At the time, the economic theories of British economist John Maynard Keynes were gaining popularity. According to Keynes, a government had to play an active part in the management of the economy.
The Second World War eventually brought Canada out of the Depression. From the start of the war, the country quickly went from an economy in crisis to an economy of war.
But the Great Depression demonstrated the failing of liberalism, and the incapacity of the capitalist system to correct itself. State intervention as a regulatory agent for the economy began to take hold in Canada and around the world.