# data[].attributes.body
The outbreak of WWI initially worsened Canada's recession, but had the opposite affect once demand for war production peaked as it created new jobs for all that were unemployed. The IMB became a huge war contributor, because it produce one third of Britain's military supplies. To fund the war, Canada transited from foreign borrowing, to the Victory Bonds that eventually produced more money from home than from Britain or the U.S.

The historical significance of this event is that it shifted Canada’s economy. While the war initially worsened Canada’s economy, the increased demand for military production created jobs and boosted the economy. Canada shifted from foreign borrowing to funding through the Victory Bonds, which made the country more financially independent and strengthened its economy.

# data[].attributes.attachment_link.description
The First World War of 1914–1918 was the bloodiest conflict in Canadian history, taking the lives of nearly 61,000 Canadians. It erased romantic notions of wa…

# data[].attributes.body
The income tax was introduced in Canada in 1917, after the U.S. introduced its income tax in 1913. It was temporary because the government needed funding for the war. However, as the cost of war increased, the government raised the tax rate, lowered exemptions, and added many expansions, such as Surtaxes and the National defense Tax.

The income tax was introduced to help Canada during its economic recession. Initially a temporary measure, it has now become the main source of federal revenue. This act is important because it provided the government with the funds, and Canada would not have achieved victory without enough financial resources.

# data[].attributes.attachment_link.description
Originally presented as a temporary wartime measure, the Income War Tax Act of 1917 was viewed as a controversial measure at the time. This digest, offered by R. Easton Burns, a certified accountant, goes through the act clause-by-clause to discuss its full impact on Canadians.

# data[].attributes.body
The Halifax Explosion, caused by two ships crash into each other (one of them carried huge amount of explosives), was the largest explosion before the atomic bombs in 1945. Halifax was a crucial wartime harbor, handling much military supply. The blast triggered a tsunami, fire, and earthquake, destroying about 325 acres.

The Halifax Explosion, the largest non-nuclear blast in history, was equivalent to 3.2 kilotons of TNT. This disaster highlighted the importance of the Halifax harbor, which played a key role in wartime. The explosion killed thousands and destroyed many structures, halting all exports and imports, severely impacting the local economy. The event underscored the harbor’s significance during wartime and its value.

# data[].attributes.attachment_link.title
Halifax Explosion | The Canadian Encyclopedia

# data[].attributes.attachment_link.description
History, politics, arts, science & more: the Canadian Encyclopedia is your reference on Canada. Articles, timelines & resources for teachers, students & public.

# data[].attributes.body
After World War I, Canada's economy began to recover and transitioned from agriculture to industry. While agriculture remained part of the economy, its contribution declined compared to pre-wartime. Canada's economy became more dependent on its natural resources and exports. The war marked the beginning of Canada's modern economy, as industrial growth reshaped its economic structure.

This event transitioned Canada’s economy from being heavily reliant on agriculture before WWI to a more industrialized economy after the war. This transformation provided opportunities for economic expansion and contributed to Canada's urbanization, as industry became a central part of the economy.

# data[].attributes.attachment_link.readable_text
Like most other combatants in 1914, Canadians expected the war to be short, victorious, and relatively inexpensive. They were wrong.

Traditional Finance, Untraditional War

Far from ending the pre-war economic recession, the war's outbreak at first worsened it, with layoffs, contract cancellations, and severe cutbacks in the already-troubled railway industry.

Ottawa sought money to pay the war's modest early expenses by borrowing in traditional capital markets - first Britain and then, as British loans dried up in response to domestic needs, the United States. Few observers believed that Canadian financial sources would need to be tapped before the war ended; fewer still supported using taxes to raise money to finance war expenditures, instead of borrowing it by raising war loans.

But the war did not end quickly. The effort required to sustain massive armies in the field rescued the Canadian economy from recession. It also required huge amounts of capital. A pre-war federal budget of $185 million had quadrupled by its wartime peak to more than $740 million. Debt quadrupled to $1.2 billion as well. Prior to the war, customs duties, postal rates, and tariffs on imported goods had accounted for more than 85 percent of government revenue. Higher duties and new tariffs alone could not hope to cover vastly higher wartime expenditures. Ottawa borrowed to finance the shortfall from an unexpected source: ordinary Canadians.

Borrowing from Canadians

Canadians' willingness to loan money to their own government by buying war bonds exceeded all expectations. No bond issue in Canadian history had raised more than $5 million, but Ottawa's first "victory bond" drive brought in $100 million, twice the initial estimate. Subsequent drives proved just as successful. Publicity campaigns, including tens of thousands of posters, linked buying bonds to the direct support and welfare of soldiers overseas and used a variety of messages to encourage contributions, from well-known poems to emotional imagery. Long-term interest rates of up to 5.5 percent for terms of up to 20 years were also a powerful inducement.

Total domestic bond purchases during the war exceeded $2 billion, ten times the amount of money raised abroad. Canada had financed the war by incurring more than $2 billion in debt, thereby passing the war's costs to future generations, but it owed most of this money to Canadian citizens, not foreign lenders. The success of the "victory bond" campaign would be repeated during the Second World War. Today's Canada Savings Bonds are the direct descendents of these wartime efforts.

Taxing Income and Profits

Wartime costs were not the only factors influencing the government's financial policies. As the war continued, political pressure grew on Ottawa to ensure that businesses and the wealthy paid their fair share of the financial burden. Labour organizations, farmers, churches, and other groups called for the "conscription of wealth." Periodic charges of war profiteering by corrupt officials or unscrupulous entrepreneurs made for sensational headlines and undermined the government's propaganda message that all Canadians should "do their bit."

New federal taxes on business profits in 1916 and personal incomes in 1917 - the latter a 'temporary' wartime measure - set important precedents, but the war ended before either had produced substantial results. In 1919, personal and corporate taxes combined accounted for only 3.4 percent of total federal revenues. Most Canadians paid no tax at all, and those who did pay, paid very little.

Evolution of a War Economy

The outbreak of war threatened Canada with economic crisis. Existing manufacturing orders were cancelled, some factories shut down, and construction halted on many pre-war civilian projects. Some feared that war would cause the collapse of Canada's already fragile economy. But the demand for war supplies, equipment, and shells soon provided economic stimulus and employment. Output grew and fears of collapse were replaced by the challenges of rapid expansion. Due to the combined demands of military service, industry, and agriculture, unemployment had virtually ceased in Canada by 1916.

Organizing Wartime Production

One of the greatest economic surprises of the war was the military's near-insatiable demand for vast quantities of artillery shells. Armies expended them by the millions in the great barrages and siege-like battles on the Western Front, and no Allied economy was organized to produce shells in anything near the quantities required.

Canada's Minister of Militia and Defence, Sam Hughes, initially established a Shell Committee to coordinate production, but its failure to deliver on contracts led to angry recriminations between Canada and Britain and widespread rumours of corruption.

Imperial Munitions Board

In late 1915, Prime Minister Borden replaced the Shell Committee with the Imperial Munitions Board (IMB), which answered solely to Britain but was run by a Canadian. Under well-known Toronto businessman Joseph Flavelle, the Board was organized according to sound business practices and hired professional managers to oversee its operations. It eased the problem of scarce labour by hiring 30,000 women to work in its factories and offices.

Impressive Expansion of Scope and Production

Under Flavelle's supervision, the Board oversaw an impressive expansion in wartime production, from only a few companies having the capacity to produce shells to, in 1917, dozens of companies, including crown corporations, that collectively produced some $2 million worth of goods per day.

The IMB's mandate later expanded to include propellants, brass casings, and complicated fuses. By 1917, almost one-third of all British shells were being manufactured in Canada. The IMB constructed ships and aircraft and developed airfields for a large pilot training program. By war's end, its 600 factories had completed some 103 naval vessels, 2,600 training aircraft, and 30 flying boats. When the IMB ceased operations in 1919, it was Canada's largest civilian employer, with over 289,000 employees.

Keep exploring with these topics:

# data[].attributes.attachment_link.title
The War Economy - Finance and War Production | Canada and the First World War

# data[].attributes.attachment_link.description
Like most other combatants in 1914, Canadians expected the war to be short, victorious, and relatively inexpensive. They were wrong. Far from ending the pre-war economic recession, the war's outbreak at first worsened it, with layoffs, contract cancellations, and severe cutbacks in the already-troubled railway industry.

# data[].attributes.body
After WWI, Canada transitioned from a wartime economy to a peacetime economy, causing a short recession. However, recovery was swift as industry and manufacturing grew. Laborers, and farmer expecting better conditions, formed strikes. The government’s role in managing the economy during this period was minimal, led to wealth inequality.

The economy of the 1920s in Canada recovered and even surpassed pre-wartime due to the shift from a wartime to a peacetime economy. However, this growth led to wealth inequality, resulting in strikes from farmers and laborers. These changes significantly influenced future events and policies in Canada.

# data[].attributes.attachment_link.readable_text
This entry is the first in a series exploring the economic history of Canada. Although the following entries describe Canadian economic history by region, the country is historically a single economic unit. ( See also ​Economic History of Atlantic Canada, ​Economic History of Central Canada and ​Economic History of Western Canada.)

Canadian Overview

​

The fur trade first created a single transcontinental trading economy; since Confederation in 1867, labour and finance have moved freely among the regions. Improvements in transportation - the railways between 1867 and 1915 ( see Railway History), and the highway and pipeline systems after 1945 - have helped. The provinces have become important markets and suppliers for one another, so that an investment boom in one region such as the Prairie West could create a nationwide boom, while a slump in Ontario manufacturing becomes a nationwide slump.

By the 1980s, most Canadians had become city dwellers, and the majority of workers were in white-collar jobs, generally in the service-producing industries ( see Urbanization). Disparities in earnings, living standards and ways of life had been much reduced, especially after 1945 ( see Income Distribution). Nevertheless, the various regional economies were still very different. Manufacturing remained largely a matter for Ontario and Quebec, while the four western provinces still generated immense surpluses of natural products. In the Atlantic provinces, living standards after 1945 remained comparatively low and prospects less bright. Partly for this reason, interregional subsidies have become deeply entrenched in Canada's way of life ( see Equalization Payments).

Study of Economic History

Economic history includes the study of the evolution of the economy and economic institutions. Dating to the 19th century, the subject uses ideas from economics, history, geography and political science. It must not be confused with the history of economic ideas or with the interpretation of general history using economic forces.

Distinctive contributions to Canada's economic history came in the 1920s and 1930s both from economists such as Harold Innis, and from historians such as Donald Creighton, who stressed the importance of what they called "staple products" whose markets were abroad ( see Staple Thesis). Emphasizing the importance of Canada's distinctive geography - the Canadian Shield and the Great Lakes- St. Lawrence system - they traced interactions between geography, resources, foreign markets and the inflow of people and funds from abroad. They treated regional growth in relation to the staple products.

More recent approaches have supplemented the old with modern economics and statistics. Work has been done in areas including working class history, urban growth, business history, the industrial development of central Canada, that fitted rather poorly into the Staple Thesis. Meanwhile, historical geographers produce invaluable material on settlement patterns and on the growth of towns, while regional studies, which staple theorists treated as components of nation-building, have become routes to regional self-confidence, especially in Quebec and Atlantic Canada. Marxist scholars share business and labour history and other fields with scholars whose ideologies are very different.

( See also Business History.)

# data[].attributes.attachment_link.description
This entry is the first in a series exploring the economic history of Canada. Although the following entries describe Canadian economic history by region, the country is historically a single economic unit. ( See also ​Economic History of Atlantic Canada, ​Economic History of Central Canada and ​Economic History of Western Canada.)

# data[].attributes.body
The stock market crash began in late October 1929 and severely affected the global economy. People lost their savings, investments, and jobs. Though it happened in the U.S., Canada was also impacted, with national exports dropping by a third. Farms in the West faced a crisis, as nearly a third of the workforce was unemployed. This economic downturn had lasting effects on Canada’s economy.

This event not only impacted the economy but also taught valuable lessons on preventing similar crises. It demonstrated how quickly the stock market can collapse, leading to reforms that reshaped the stock market system and the bank system, making them more reliable and stable for the future.

# data[].attributes.attachment_link.readable_text
stock market crash of 1929, a sharp decline in U.S. stock market values in 1929 that contributed to the Great Depression of the 1930s. The Great Depression lasted approximately 10 years and affected both industrialized and nonindustrialized countries in many parts of the world.

During the mid- to late 1920s, the stock market in the United States underwent rapid expansion. It continued for the first six months following President Herbert Hoover's inauguration in January 1929. The prices of stocks soared to fantastic heights in the great "Hoover bull market," and the public, from banking and industrial magnates to chauffeurs and cooks, rushed to brokers to invest their liquid assets or their savings in securities, which they could sell at a profit. Billions of dollars were drawn from the banks into Wall Street for brokers' loans to carry margin accounts. The spectacles of the South Sea Bubble and the Mississippi Bubble had returned. People sold their Liberty Bonds and mortgaged their homes to pour their cash into the stock market. In the midsummer of 1929 some 300 million shares of stock were being carried on margin, pushing the Dow Jones Industrial Average to a peak of 381 points in September. Any warnings of the precarious foundations of this financial house of cards went unheeded.

Prices began to decline in September and early October, but speculation continued, fueled in many cases by individuals who had borrowed money to buy shares-a practice that could be sustained only as long as stock prices continued rising. On October 18 the market went into a free fall, and the wild rush to buy stocks gave way to an equally wild rush to sell. The first day of real panic, October 24, is known as Black Thursday; on that day a record 12.9 million shares were traded as investors rushed to salvage their losses. Still, the Dow closed down only six points after a number of major banks and investment companies bought up great blocks of stock in a successful effort to stem the panic that day. Their attempts, however, ultimately failed to shore up the market.

The panic began again on Black Monday (October 28), with the market closing down 12.8 percent. On Black Tuesday (October 29) more than 16 million shares were traded. The Dow lost another 12 percent and closed at 198-a drop of 183 points in less than two months. Prime securities tumbled like the issues of bogus gold mines. General Electric fell from 396 on September 3 to 210 on October 29. American Telephone and Telegraph dropped 100 points. DuPont fell from a summer high of 217 to 80, United States Steel from 261 to 166, Delaware and Hudson from 224 to 141, and Radio Corporation of America (RCA) common stock from 505 to 26. Political and financial leaders at first affected to treat the matter as a mere spasm in the market, vying with one another in reassuring statements. President Hoover and Treasury Secretary Andrew W. Mellon led the way with optimistic predictions that business was "fundamentally sound" and that a great revival of prosperity was "just around the corner." Although the Dow nearly reached the 300 mark again in 1930, it sank rapidly in May 1930. Another 20 years would pass before the Dow regained enough momentum to surpass the 200-point level.

Many factors likely contributed to the collapse of the stock market. Among the more prominent causes were the period of rampant speculation (those who had bought stocks on margin not only lost the value of their investment, they also owed money to the entities that had granted the loans for the stock purchases), tightening of credit by the Federal Reserve (in August 1929 the discount rate was raised from 5 percent to 6 percent), the proliferation of holding companies and investment trusts (which tended to create debt), a multitude of large bank loans that could not be liquidated, and an economic recession that had begun earlier in the summer.

# data[].attributes.attachment_link.title
Stock market crash of 1929 | Summary, Causes, & Facts

# data[].attributes.attachment_link.description
Stock market crash of 1929, a sharp decline in U.S. stock market values in 1929 that contributed to the Great Depression of the 1930s, which lasted approximately 10 years and affected both industrialized and nonindustrialized countries in many parts of the world. Learn more about the crash in this article.

# data[].attributes.body
The global economic recession caused by WWI, people buying stocks on margin, economic imbalances, and a weak banking system, led to the stock market crash. The consequence was the Great Depression, lasting nearly 10 years, Canada's unemployment reached a third of the population, and Canada's exports dropped by a third. Initially, investors sold large amounts of stocks due to economic pressure and a lack of confidence. Some large corporations and banks attempted to minimize market losses, but their efforts had only little impact on the stock market.

# data[].attributes.body
Canada continued to rely on its rich natural resources and exports, but the shift from agriculture to technology after WWI marked a significant change in its development. Cities like Toronto and Vancouver became important economic hubs. This event highlighted the challenges faced during the economy recovery, and makes the labor went on strikes for better working conditions.