Governments Respond: Bennett, King and the Beginnings of the Welfare State

Hook: "not a five-cent piece"

In April 1930, Prime Minister William Lyon Mackenzie King said in the House of Commons that he would not give "a five-cent piece" to provincial governments run by his political opponents to pay for unemployment relief. The opposition made sure voters heard it. In the July 1930 election, King lost to Richard Bedford Bennett and the Conservatives, who promised action.

Today's question: Did governments do enough during the Depression, and how did the Depression change what Canadians expected from government?

The problem: who is responsible?

Under the British North America Act (1867), social welfare, such as relief and charity, was a provincial responsibility, and provinces passed much of it to municipalities. But the biggest taxing powers belonged to the federal government. So the governments responsible for relief had the least money, and the government with the most money said relief was not its job.

Most leaders at first believed in laissez-faire: let the economy fix itself, keep budgets balanced, and give only emergency help.

R. B. Bennett, 1930 to 1935

Bennett was a wealthy Calgary lawyer and businessman. He promised to use tariffs to "blast a way" into world markets.

• Tariffs: He raised tariffs to protect Canadian factories. At the Imperial Economic Conference in Ottawa (1932) he negotiated preferences for trade within the British Empire.
• Relief: The Unemployment Relief Act (1930) gave $20 million to provinces and municipalities for relief and public works. Ottawa kept giving relief money through the decade.
• Relief camps (1932): Single unemployed men were sent to remote camps run by the Department of National Defence to build roads and airfields for 20 cents a day.
• New institutions: the Canadian Radio Broadcasting Commission (1932); the Bank of Canada (act passed in 1934, opened in 1935) to manage the money supply; the Canadian Wheat Board (1935) to market wheat and set a minimum price; and the Prairie Farm Rehabilitation Act (1935) to fight soil drift.
• Bennett's "New Deal" (1935): In a series of radio speeches in January 1935, Bennett surprised everyone by proposing unemployment insurance, a minimum wage, limits on working hours and other reforms. Many voters saw it as too little, too late. He lost the October 1935 election, and the courts later ruled that most of these laws were outside federal jurisdiction.

Mackenzie King returns, 1935 onward

King's slogan in 1935 was "King or Chaos." Back in power, he moved cautiously.

• He closed the relief camps in 1936.
• He turned the radio commission into the Canadian Broadcasting Corporation (CBC, 1936), a Crown corporation, and created the National Film Board (NFB, 1939). Both were partly meant to build Canadian culture against strong American influence from Hollywood films and U.S. radio.
• He set up the Royal Commission on Dominion-Provincial Relations (the Rowell–Sirois Commission, 1937 to 1940) to study how powers and money should be divided.
• After the provinces agreed to a constitutional amendment, Parliament passed the Unemployment Insurance Act (1940).
• In 1944, Parliament passed family allowances (the "baby bonus"), monthly payments to mothers for each child, which began in 1945.

Meanwhile the economist John Maynard Keynes argued (1936) that governments should spend more during a depression to create jobs. Wartime spending after 1939 seemed to prove him right: unemployment almost disappeared.