CENTENARY REFLECTIONS

ON THE ECONOMIC IMPACT OF THE GREAT WAR ON CANADA

Stuart J. Wilson

Department of Economics

University of Regina

October 22, 2014

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CENTENARY REFLECTIONSON THE ECONOMIC IMPACT OF THE GREAT WAR ON CANADA

1. Introduction

2. The Great War and the Canadian Economy2.1 From Confederation through to the Pre-War

Boom2.2 The Wartime Economy2.3 Post-War Decline2.4 The Great War as a Turning Point in

Canadian Economic History

3. A Closer Look

4. Conclusion1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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2. THE GREAT WAR AND THE CANADIAN ECONOMY

“The war brought important changes in the Canadian economy, changes that would last long beyond the war itself.”

(Norrie, Owram, & Emery, 2008)

Wartime demands caused an “unparalleled rate of increase in the area devoted to the production of wheat and other field crops”, and led to “the adoption of the most advanced techniques of modern industrialism.”

(Easterbrook & Aitken, 1956)

Changes in the world economy, as well as the Canadian economy, had long been in transition, and that the changes normally associated with the war would have occurred anyway.

(Wrigley, 2000; McCalla, 2005).

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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2.1. FROM CONFEDERATION THROUGH TO THE PRE-WAR BOOM

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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Figure 1: Migration and Investment Rates, Canada, 1870-1926

Immigrant Arrivals/Population (Left Scale)Net Immigration/Population (Left Scale)Investment/GNP (Right Scale)

Source: Urquhart (1993), Firestone (1958)

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2.2. THE WARTIME ECONOMY1870

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Figure 2: Exports and Government Spending as shares of GNP, Canada, 1870-1926

Exports/GNP Government Spending/GNP

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

Source: Urquhart (1993)

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2.2. THE WARTIME ECONOMY

Source: Carnegie (1925)The History of Munitions Supply in Canada, 1914-1918

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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2.3. POST-WAR DECLINE1870

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Figure 3: GNP, Real GNP, and Real GNP per Person, Canada, 1870-1926

GNP (Millions, Left Scale)Real GNP (1900 Prices, Millions, Left Scale)Real GNP per capita (1900 Dollars, Right Scale)

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

Source: Urquhart (1993)

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2.4 THE GREAT WAR AS A TURNING POINT IN CANADIAN MACROECONOMIC HISTORY

The Great War:

Ended the Immigration and Investment Boom Ushered in an Export Boom

Was followed by a 4-year real economic decline and a 4-year slow recovery

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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3. A CLOSER LOOK1900

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Figure 4: Sectoral Shares, Canada, 1900-1926

Agriculture Share of GNPManufacturing Share of GNPGovernment Spending Share of GNP

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

Source: Urquhart (1993)

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CENTENARY REFLECTIONSON THE ECONOMIC IMPACT OF THE GREAT WAR ON CANADA

1. Introduction

2. The Great War and the Canadian Economy

3. A Closer Look3.1 Agriculture and the Wheat Economy3.2 Manufacturing3.3 Foreign Trade and Investment Dynamics3.4 Government Funding and Policy

3.4.1 Taxation3.4.2 Government Debt and Capital Markets3.4.3 Railways3.4.4 Veterans’ Benefits

4. Conclusion

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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3.1. AGRICULTURE AND THE WHEAT ECONOMY

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

Source: Department of the Interior (1903) Canada, the granary of the world

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3.1. AGRICULTURE AND THE WHEAT ECONOMY

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

Source: Wallace (2001) – Immigrant land seekers at Rivers, Manitoba, early 1900sThe Role of Transportation in Canadian Immigration, 1900-2000

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3.1. AGRICULTURE AND THE WHEAT ECONOMY

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Figure 5: Wheat Production and Acreage, Canada, 1870-1929

Wheat Production (Thousands of Bushels, Left Scale)Wheat Exports (Thousands of Bushels, Left Scale)Seeded Acres (Thousands, Right Scale)

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

Source: Statistics Canada (1983)Historical Statistics of Canada, 2nd Edition

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3.1. AGRICULTURE AND THE WHEAT ECONOMY

Was the Great War the turning point in the Canadian wheat economy?

“Canada became the largest wheat exporter simply due to the ongoing process of settlement... The process would likely have looked nearly identical without the war.”

(Lew & McInnis, 2007, pp. 14-15). Other factors:

Supply disruptions in Eastern Europe The Great War Russian Revolution

Growing world demand

The Great War was one of a series of shocks that caused the Wheat Boom Era in Canadian Economic History.

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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4. CONCLUSION

The Great War as a turning point in history

Economic assessment End of the immigration and investment boom

Transitory period Wartime production specialization Export boom

Wheat economy already on strong development path before war

Industrial economy already developed before war

Munitions not required after war Post-war decline and long recovery

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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4. CONCLUSION

The Great War as a turning point in history

Other issues (in essay) Manufacturing sector

Temporary surge in munitions and chemicals Rise in manufacturing share of paper products

Due to US newsprint demand (not related to war)

Investment and trade patterns Less dependence on the UK Opening of export markets other than the UK and

the US

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion

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4. CONCLUSION

The Great War as a turning point in history

Other issues (in essay)

Government sector Introduction of income taxes and railway

nationalization Other primary causes

Discovered a domestic capital market - Victory Bonds

First major federal social security measure – Veterans Benefits

1. Introduction 2. The Great War and the Canadian Economy 3. A Closer Look 4. Conclusion