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Maturing in Hard Times

Maturing in Hard Times: Canada's Department of Finance through the Great Depression

Copyright Date: 1986
Pages: 320
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  • Book Info
    Maturing in Hard Times
    Book Description:

    Focusing on the causes and extent of the Depression of the 1930s and its impact on a wide range of governmental policies, Bryce describes the department's increasing involvement in the formation and conduct of economic policies. The department was involved in events ranging from the collapse of the gold standard in 1931, to the possible default of the governments of the western provinces, to the introduction of federal unemployment and housing policies, to the founding of the Bank of Canada.

    eISBN: 978-0-7735-6110-6
    Subjects: Political Science

Table of Contents

  1. Front Matter
    (pp. i-vi)
  2. Table of Contents
    (pp. vii-vii)
  3. Tables and Charts
    (pp. viii-viii)
  4. Preface
    (pp. ix-x)
  5. Acknowledgments
    (pp. xi-xii)
  6. Chapter One Evolution of the Department to 1920
    (pp. 1-21)

    In July 1867 the Department of Finance of the new Dominion of Canada was formed. Under a provision of the British North America Act, some of the officers and clerks from the former united Province of Canada were transferred to the service of the Dominion. Others remained in the provincial services. The department so formed was made up of two parts, both under the minister of finance. One, directed by the deputy inspector general, had responsibilities for keeping the government’s books and for approving and signing cheques, debentures, and currency notes. The other smaller part, the Audit Office, was under...

  7. Chapter Two Performance of the Department in the Twenties
    (pp. 22-38)

    After a sharp inflationary boom in 1919–20, Canada’s economy experienced a recession in 1921. Unemployment among trade union members during the spring reached 16 percent, and net domestic income for the year was 24 percent less than that in 1920.¹ Conditions improved in 1922: exports were up, imports were down. Farm prices remained low, but the wheat crop was larger. Construction was increasing.

    The year 1922 also saw a new government in power and the return of a very experienced minister of finance. Mackenzie King’s first government took office December 29, 1921, and his finance minister was Sir William...

  8. Chapter Three The Economic Course and Impact of the Depression
    (pp. 39-66)

    The problems and performance of the Department of Finance during the 1930s can be understood only with some knowledge of the almost worldwide Depression that developed quickly in 1930 and persisted throughout the decade.

    The second half of the 1920s was a period of prosperity and development in most countries, particularly in the United States, Canada, Australia, and Italy.¹ There were notable exceptions, such as Great Britain, whose traditional export industries were growing old and uncompetitive and were handicapped by the re-establishment of the gold standard in 1925 with the pound at its old parity, which was too high. The...

  9. Chapter Four Bennett and the Department’s Interregnum
    (pp. 67-85)

    At the beginning of 1930 the Department of Finance was in disarray. C. A. Dunning had just been appointed minister, following the death of Robb in November 1929. Deputy Minister Saunders was ill and entered hospital in January; three months later he died. Assistant Deputy Minister Hyndman was in the process of being convicted of stealing bonds and money from the department. For the next two and a half years the department was without a deputy minister and was run, nominally, by a five-man committee during the crucial period of having to cope with the impact of the Depression and...

  10. Chapter Five Tariff Policies and Negotiations
    (pp. 86-102)

    Canada entered the 1930s without tariff agreements with either the United Kingdom or the United States, its two main trading partners. Most Canadians still regarded the country as part of the British Empire, and Britain, its keystone, predominantly still followed a free trade policy initiated almost a century earlier. Towards Britain Canada had voluntarily extended a system of tariff preferences, which applied also to the other dominions, India, and the colonies, but were modified in some cases by bilateral agreements. With the United States, reciprocity in the trade of natural products had once existed, but had been jettisoned in the...

  11. Chapter Six Budgets, Taxes, and Fiscal Policy
    (pp. 103-121)

    The budget has traditionally been the annual highlight of the work of the minister of finance and his department. Although the archives relating to the budgets of the 1930s are scant, an account of the activities of the Finance Department can be reconstructed from the budget speeches and debates, the legislation enacted, and the knowledge and comments of the few surviving officials of the department. One official has said that Bennett in fact gave orders that the papers used in the preparation of the budgets should be destroyed after the debates and legislative actions were finished.¹ This may have been...

  12. Chapter Seven Monetary Measures and the Bank of Canada
    (pp. 122-144)

    It was in the monetary field that the activities of the Department of Finance and its ministers showed the greatest change from the 1920s to the 1930s. Indeed the change began immediately, despite the illness and death of the deputy minister early in 1930 and the absence of the former assistant deputy minister. Dunning, it will be recalled, had placed Watson Sellar in charge of the department. Sellar was no monetary expert but neither had been Saunders, deputy minister during the 1920s. Moreover, Sellar had a more realistic knowledge of the limitations of C. S. Tompkins, the inspector general of...

  13. Chapter Eight Expanding Traditional Activities
    (pp. 145-158)

    Although borrowing and debt management had always been the responsibility of the Finance Department, before 1914 the government’s fiscal agents in London had carried out nearly all of these duties. The Post Office and other savings banks, described in chapter 1, had handled most of the rest. These activities increased greatly in importance during the war of 1914–18 when Sir Thomas White was finance minister.¹ It was at that time, with the sale of large public war loans and victory loans, that the bond market in Canada was really established. During the 1920s both the total debt and the...

  14. Chapter Nine New Programs: Debt Adjustment and Housing
    (pp. 159-171)

    The widespread severe hardship caused by the Depression led the Dominion government to take on new responsibilities and to expand the scope of its involvement in the economy. One was the adjustment of outstanding farm debt that was beyond the ability of farmers to pay during the Depression. Canadian farmers were hit hard by the Depression; the severe decline in farm prices and incomes made the payment of debts a difficult and often impossible task.¹ Although this problem was most acute in western Canada, many farmers throughout the country found themselves in the same situation. In fact often they were...

  15. Chapter Ten Dominion-Provincial Discussions and Disputes
    (pp. 172-198)

    Relations between the Dominion and provincial governments in the 1930s were of unprecedented importance and left a legacy of interdependence and contention that has continued to the present. During the decade these relations centred mainly on the problem of unemployment relief (including farm relief) and its financial implications. The controversy began with Prime Minister King’s famous House of Commons speech of April 1930 in which he said, most imprudently, under fire from the Opposition, that he would not give "a five cent piece" to provincial Tory governments for "these alleged unemployment purposes."¹ At the end of the decade the financing...

  16. Chapter Eleven The Emergence of Tax Collection Agreements
    (pp. 199-211)

    Tax collection agreements, now a commonplace feature of federal-provincial relations, were first reached in 1936. The concept owes its origin in federal circles, not to the Rowell-Sirois Commission, but to W. C. Clark. It was developed after Clark became deputy minister of finance in early November 1932 and after R. B. Bennett announced in the House of Commons on November 22, 1932, that a Dominion-provincial conference would be held in January 1933. At that time Bennett indicated that the conference agenda would include the intergovernmental division of the fields of taxation. Preoccupied with imperial trade matters and a December trip...

  17. Chapter Twelve The Royal Commission on Dominion–Provincial Relations
    (pp. 212-219)

    The final episode in Dominion-provincial relations in the thirties was played out, not by governments, but by the Royal Commission on Dominion-Provincial Relations. The minister of finance, his department, and the Bank of Canada were instrumental in the creation of that commission, as described in chapter 10. In the early years of World War II, the department, a subsequent minister, and the prime minister were to agonize over what should be done about the commission’s proposals. While the deputy minister of finance helped to steer the commissioners along what he considered the right lines as they planned their work, he...

  18. Chapter Thirteen Organization, Management, Recollections, and Reflections
    (pp. 220-234)

    When W. C. Clark took charge in November 1932, it does not appear that he had any plan for reorganizing or strengthening the Finance Department, apart from establishing a central bank to take over the monetary functions.¹ But he knew that the Canadian economy was in desperate straits, that more than monetary policy would be needed, and he expected to play a role in advising on policy and possibly in putting it into effect. His actions in organizing and staffing the department evolved from these beliefs, from the decisions of the government affecting the department, and from the problems he...

  19. Appendix
    (pp. 235-236)
  20. Notes
    (pp. 237-270)
  21. Index
    (pp. 271-278)