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Vivian Yang

Canadas Post-War Economy


1. After the end of the Second World War, the federal government changed its attitude
towards veterans, provincial governments, and manufacturing, in order to avoid a post-War
recession like that after the First World War. New laws ensured returning veterans got their
old jobs back if they wanted them, and counted their years at war as years of service on the
job. Government policies compelled women to leave factories to make room for men.
Veterans were given free tuition and living allowances for university or trade school, and the
Veterans Land Act offered them mortgages at lower rates. Veterans and war widows were
also preferred for government jobs. Canada thus avoided the problems it faced after the First
World War with regards to veterans a lack of steady pensions, a lack of special medical
services, and a lack of jobs. Furthermore, as a wartime measure, the provinces had transferred
their economic powers to the federal government. Prime Minister Mackenzie King wanted
these transfers to become permanent, but the provinces objected to the removal of their
Confederation-guaranteed powers. Ultimately, the provinces conceded to transfer taxation
powers to the federal government, in return for grants for social services such as health care
and education, and equalization payments, transferring money to poorer provinces. Lastly, C.
D. Howe, the Minister of Reconstruction, Trade, and Commerce, made changes to
manufacturing. He gave economic incentives, such as tax breaks, to private industry.
Factories thus boomed and produced items that were in demand, such as washing machines
and cars, and this caused Canadas economy to boom overall. These three categories of
changes ensured that after the end of the Second World War, Canadas economy was in a
booming state instead of a recession.

2. Canadas traditional resource industries grew after the Second World War; this, however,
caused some problems for the workers in artificially created boom towns and led to some
resentment between provinces. Traditional industries such as mining and forestry were very
important to the post-War Canadian economy. Massive development of mines, forests, and
smelters encouraged the economic boom of the post-War period, and the discovery of oil at
Leduc, Alberta in 1947 was Canadas entry into the international oil market. Manufacturing
also grew in southern Ontario by the 1950s, more than half of the nations factories and
plants and 99 percent of its automobile industry were located in Ontario, close to

transportation routes and markets. Despite this economic growth, growth in these sectors
gave rise to problems. Boom towns created in the wilderness by resource companies hired
mostly single men as workers, and they were starved for distractions, leading to chronic
gambling addiction and alcoholism. Furthermore, when resource industries outside of Ontario
were in the bust period of the boom and bust cycle, Ontario was still doing well. Other
provinces resented Ontarios privilege and seeming immunity from economic downturns.

3. Megaprojects are large-scale construction projects that require a huge capital investment.
St. Laurents government enthusiastically undertook megaprojects that changed the face of
the Canadian landscape.

The Trans-Canada Highway megaproject was a 7821-kilometre road from St. Johns,
Newfoundland to Victoria, British Columbia the longest national highway in the world. Its
construction began in 1950 with huge government investment to upgrade and pave roads
along the Trans-Canada Route.

The Trans-Canada Pipeline was a natural gas pipeline to carry gas east from Alberta to
Quebec, and was completed in 1958.
The St. Lawrence Seaway, built cooperatively by Canada and the United States between 1954
and 1959, was a system of locks that would allow large ships from the Atlantic to travel to
Lake Superior. It meant that prairie grain could be loaded directly onto Europe-bound ships at
Thunder Bay, cutting back on the cost of rail transportation. The project resulted in business
increasing in inland ports and hydroelectric power plants developing at dam sites.
The Kemano Project was created to generate hydroelectricity to support aluminum smelting
in the town of Kitimat. It diverted the Nechako River into the Nechako Reservoir behind the
Kenney Dam, completed in 1952, which resulted in the flooding of land within the territory
of the Dakelh First Nation.

4. To what extent did these megaprojects have both positive and negative effects on Canada?
The megaprojects undertaken by St. Laurents government changed the face of the Canadian
landscape. On the positive side, paying money to construction companies to improve
infrastructure created more jobs and stimulated the economy as workers spent their wages.
On the other side, the projects and industrial process had environmental costs, as industry
simply wanted high productivity and low costs. First Nations land was flooded as a result of
one such megaproject, the Kemano Project. Solid industrial wastes were simply buried,
creating toxic landfills on which housing, schools, and playgrounds were sometimes built.
Pulp and paper and petrochemical plants dumped wastes directly into streams, contaminating
lakes and rivers. Farmers pumped weedkiller and chemical fertilizers into the soil and,
indirectly, into the groundwater. Homeowners casually used DDT around their houses and
yards. This all led up to a high degree of pollution, but the word itself did not even become
common until the late 1960s.

5. The United States saw Canada as a storehouse of minerals and other natural resources, and
Canadians recognized that they needed investment to extra those resources. Thus, by 1957,
Americans controlled much of Canadian oil and gas investment, mining and smelting, and
manufacturing, in addition to opening numerous branch plants in Canada.

The benefits were that branch plants provided many Canadians with good manufacturing
jobs, and that Canadian industries benefitted from American technology. Despite these boons,
negatives were that profits from the branch plants went back to the American parent
corporations. Thus, it looked as though Canada was losing control of its economy. The debate
continued for decades until NAFTA was established in 1994, which brought about a new
economic relationship.
6. In the post-War boom, members of trade unions fought for workers rights. In 1946 and
1947, strikes were frequent as workers fought for the right to form unions and pressed for
adequate wages. As a result, wages rose from $0.67 per hour in 1945 to $0.95 per hour in
1948. Workers also established the 5-day, 40-hour workweek and increased fringe benefits
such as paid vacations. These eventually became standard for many workers across the
country. As a result, Canadian workers had more money and more leisure time to enjoy their

wealth, which also benefitted businesses through increased consumer spending. Nonindustrial unions also grew rapidly, including organizations for teachers, nurses, civil
servants, postal workers, and police.
Some groups, however, did not share the prosperity of the times. The working poor in cities,
many of whom were immigrants, washed dishes, cleaned offices, sweated in meat-packing
plants, or toiled at sewing machines under miserable conditions. Women who could not
afford to be stay-at-home wives and mothers were particularly disadvantaged; they were
made to feel guilty by a society that condemned mothers who went out to work, and they
were legally discriminated against by employers, who paid women less than men for the
same work.
7. A variety of factors caused the economic crisis, but one of the most important was an oil
embargo imposed in 1973 by the Organization of the Petroleum Exporting Countries. War
broke out in that year between Israel and its Arab neighbours, with many Western countries,
including Canada, supporting Israel. In retaliation, OPEC refused to sell oil to these
countries, causing oil and gas prices to jump 400 percent almost overnight. This started a
round of inflation that lasted most of the 1970s prices of all manufactured products rose
sharply, and the purchasing power of the Canadian dollar fell steadily. This rise in prices also
caused Canadian workers to begin to demand higher wages, which started a cycle of rising
wages and rising prices, all while demand for products was low. As a result, unemployment
rates rose from an average of three to five percent in the 1950s and 1960s to a high of 12
percent by 1983. In addition, stretched household budgets increased the need for women to
enter the workforce, and dual-income families became common. Ultimately, by 1978, the
average familys buying power had fallen for the first time since the end of the Second World
War.
8. Regionalism caused two economic problems that had plagued Canada in the past to
resurface. Regional disparity, or the economic gap between the poorer and more prosperous
regions of Canada, caused certain regions to be hit harder by the recession in the 1970s than
others. The industries based on natural resources, such as the fishing industry in Atlantic
Canada and the forestry, mining, and fishing industries in British Columbia, were hit the
hardest and suffered massive layoffs. Ontario and Quebec were less affected, which made the
other provinces resent them. The Trudeau government increased transfer payments to the

poorer provinces to be used for social services and spent millions of dollars on regional
projects to help economic development; however, regional disparity still aggravated a second
problem, Western alienation, which had also long existed. Many Westerners believed that
Ottawas policies favoured Central Canada at the expense of the West, and their suspicions
seemed to be proven in two situations in the 1970s. In the first instance, in response to the oil
crisis, the federal froze the price of domestic oil and gas and imposed a tax on petroleum
exported from Western Canada. The money raised by the tax would subsidize the cost of
imported oil in the East, which infuriated Albertans, who felt that Alberta had the right to
charge world prices for its oil, and Western Canada in general, who felt alienated by their
own country. In the second instance, the Liberals brought in the National Energy Program,
which aimed to reduce oil consumption, protect Canadians from rising oil prices, and make
Canada self-sufficient in oil. In effect, it encouraged Canadian petroleum companies to drill
for oil in promising sites in the Arctic and off the coast of Newfoundland, and encouraged
consumers to switch to electric sources of power. Alberta was once again angered. By 1984,
oil prices had fallen and the NEP had been dismantled, but Western bitterness and alienation
lingered.
9. During the 1970s and early 1980s, the Trudeau government was very interested in finding
new trading partners to limit the economic influence of the United States on Canada. Trudeau
tried to interest the European Economy Community, but they were more eager to strengthen
trade links among themselves; the Asian tigers, or the newly industrialized countries of
Southeast Asia, were not interested in a special agreement with Canada either. It was
necessary for Canada to keep depending economically on the United States; however,
Trudeau still tried to strengthen Canadas control over its economy and culture through three
programs: the NEP, the CRTC, and the FIRA. The National Energy Program aimed to reduce
Canadian consumption of oil, protect Canadians from rising oil prices, and most importantly
in this case, make Canada self-sufficient in oil. Development of Canadian oil sites
strengthened Canadian economic independence. The Canadian Radio-television and
Telecommunications Commissions, created in 1968, regulated the amount of foreign material
broadcast over the airwaves and imposed rules requiring Canadian content. This promoted
and maintained Canadian identity and culture. Lastly, the Foreign Investment Review
Agency, established in 1973, reviewed all major proposed foreign investments to determine
whether they serve Canadas national interest. In essence, this limited United States
investment in Canada, giving Canada greater control over its own economy.

10. In the 1980s, the detrimental effects of the oil crisis, inflation, and high interest rates were
causing huge problems for the Canadian economy. Years of high unemployment meant that
government revenues fell as fewer people paid income tax and more required government
assistance. Thus, the government had to borrow money to pay for social services, the national
debt grew tremendously, and both provincial and federal governments often ran deficits as
government expenditures outpaced revenues. The Trudeau government had reluctantly begun
to cut social programs and offer tax breaks to corporations to help stimulate the economy. By
the time Trudeau retired in 1984, the government faced huge economic problems, the
National Energy Program had failed, and years of high unemployment and interest rates
resulted in a faltering economy.
11.

Mulroney (Conservative)
Inspired by conservative

Chrtien (Liberal)
Inject $6 billion into the economy

governments in US (Reagan) and

through public works, e.g. road

Britain (Thatcher)
Reagan: trickle-down effect:

repairs and new bridges


Create jobs -> workers spend

earnings -> boost economy


1994: interest rates shot up ->

solution lay with corporations and


wealthy citizens -> large tax breaks
-> reinvest in economy and create

provincial and federal governments


used 43% of revenues to pay debt

jobs for all


Cut back governments role in the

economy
Save money and pay off debt by

interest
Paul Martin (Minister of Finance):

Canada cannot afford big

government and social services


Eliminated 40,000 jobs in federal

trimming social programs


United States:

Tighten economic links: replaced

civil service, drastically reduced

FIRA with Investment Canada to

money transfers to provinces for

encourage suitable foreign

post-secondary education,

investment
Free Trade Agreement and NAFTA:

healthcare, and welfare


Thus forced provinces to cut

programs
Put money into Canada Pension Plan

believed free trade and open


investment would help businesses

thrive, raise employment rate,

and Employment Insurance

increase government revenues

essential to social safety net

Results:

Results:

Ultimately did not work as planned;

recession in 1990
Businesses failed and workers lost

jobs
Debt increased, government forced

new drugs and technologies; hospital

to increase rather than cut taxes


1993: only 2 Conservatives won

shortened, staff cut, registered

University and college tuition rose


Healthcare: costs rose, but aging
population meant more demand for
wards closed, hospital stays
nurses replaced by less trained aides;

seats in Parliament

some patients even went to US for


treatment because they were

unavailable in Canada
More Canadian children living in

poverty
More Canadians homeless and
relying on food banks (40% of users
were children, though 26% of

population were children)


Social services much more hard
pressed to meet needs

12. Globalization, a process by which the regions and countries of the world are becoming
economically and culturally interconnected, swept the world by the end of the 20th century,
partly due to rapid changes in communications technology and the fall of communism. When
Chrtiens Liberal government came to power in 1993, he prioritized expanding Canadas
trading opportunities. He sent Team Canada trade missions to Asia and Latin America to
secure deals for Canadian investment and exports. Canada also signed free trade agreements
with Chile and Israel, and joined the Asia-Pacific Economic Cooperation to promote
cooperation, freer trade, and economic growth among Pacific Rim countries.
Supporters of globalization believe that it is a powerful trend that will raise living standards
for everyone, both rich and poor. They argue that when large corporations invest in lessindustrialized countries, jobs and economic opportunities are created for people, which raises
living standards, benefitting everyone. Opponents say, however, that globalization makes

businesses rich at the cost of workers everywhere. Multinational corporations moved


production away from North America, Europe, and Japan in the 1990s, to countries that had
lower labour costs and fewer environmental regulations. This was detrimental to the
Canadian economy as many Canadian factories closed, while China became the worlds
leading producer of manufactured goods. Globalization also raises ethical questions for
Canadas economy, such as whether Canada should build trade relations with countries that
consistently disregard human rights. Critics believe that Canadas attempts to introduce
human rights as a topic in trade talks do little to improve conditions in countries with poor
human rights records.