The Great Depression in the 1930s was the worst economic crisis of the 20th century. It brought out the failings of the capitalist system and economic liberalism. Seen as the cause for the crisis, more people began to criticize economic liberalism as the Depression dragged on. People became interested in new social, political and economic ideologies that were different from capitalism and liberalism.
The economic and social consequences of the Great Depression changed Canadian and Quebec politics. Some Canadians rejected traditional political parties such as the Liberal Party and the Conservative Party. Many citizens blamed these parties for the crisis and then for the lack of effective solutions to resolve it. This resulted in new socialist, communist and even fascist parties emerging during the Great Depression with the aim of significantly changing their societies. However, these new parties did not flourish.
In 1936, the desire for reform and change encouraged Quebec citizens to elect a new political party called the Union Nationale, led by Maurice Duplessis. This election marked a departure from the traditional parties.
On the heels of the major economic crisis, British economist John Maynard Keynes proposed a new economic system called Keynesian economics. It was based on the capitalist system, but gave the government a more active role. This economic system gave rise to a school of thought: interventionism.
Capitalism is characterized by economic cycles of growth and slowdown. According to the theory of economic liberalism, during periods of crisis, wages and prices should fall and stabilize naturally, without the need for government intervention.
However, Keynes argued that this was not the answer. Instead, he proposed government intervention to reduce and prevent irregularities in the capitalist system. The idea was that government would stabilize the economy by promoting spending and boosting employment and production.
Some provincial governments began to intervene in the economy and in society to pull the country out of the Great Depression as quickly as possible and to prevent a repeat catastrophic crisis.
In the United States, President Franklin D. Roosevelt applied the concepts from Keynesian economics when he implemented the New Deal program to combat the effects of the Great Depression. The New Deal was enacted between 1933 and 1938 to fight poverty, unemployment, failing businesses and poor working conditions. Unemployment insurance and a fixed minimum wage were introduced and working hours were limited to 40 hours a week. Roosevelt’s administration funded major public works such as roads, hydroelectric dams and bridges to create new jobs. The famous Golden Gate Bridge in San Francisco was built during this time.
As early as 1930, Canadian Prime Minister Richard B. Bennett applied Keynesian economics to restore the economy during the Great Depression. For example, it gave an average of $30 million a year to the provinces to fund public works and provide financial assistance to unemployed people. He also created the Bank of Canada in 1935 to have better control over Canada’s financial and monetary system.
During the 1935 federal election, Bennett modelled his own economic stimulus plan on Roosevelt’s New Deal. He used the radio, a very popular form of media at the time, to publicize his project. It promised mandatory unemployment insurance, health insurance and a minimum wage, among other things.
Quebec and several other provinces opposed these reforms because they affected elements under provincial jurisdiction, not federal. Bennett lost the 1935 federal election and his Canadian New Deal did not see the light of day.
