The Great Depression (64 page)

The same day, three policemen went to the home of the editor, Jean Perron, seized his books, files, and correspondence, and padlocked the house for one year. The next day a bookstore and two printshops were padlocked and the houses of several known communists were raided. The police also entered the Jewish cultural centre, a meeting place for young immigrants, seized its
library, and destroyed all the books believed to be communist. One victim had great trouble preventing the police from seizing a copy of a book called
The Land of the Free
on the grounds that any book with such a title could refer only to Soviet Russia.

Perron immediately took his paper underground, a move that led to more high-handed measures. Some travellers arriving in Quebec City from Montreal were treated like smugglers from a foreign land as police rummaged through their baggage searching for copies of
La Clarté
. An atmosphere of repression now reigned in the province. The censors wouldn’t allow the Oscar-winning film,
The Life of Emile Zola
, to be shown. And when a Baptist missionary group tried to distribute the Old Testament in Quebec City, they were prevented by the police from doing so – no reason given.

By the end of the year, Ottawa was flooded with demands from Quebec and across Canada that the Padlock Law be disallowed, as Aberhart’s legislation had been. Frank Scott, Eugene Forsey, and others had formed the Canadian Civil Liberties Union the previous spring in Montreal. Under its aegis, no fewer than forty-five Quebec organizations, ranging from the Musicians’ Union to the Montreal Ministerial Association, signed a petition demanding that the Act be struck from the books.

When a civil liberties delegation applied for a meeting with Mackenzie King to protest the federal government’s lack of action, the Prime Minister refused to see them. It had taken just eleven days for his government to get rid of two pieces of unconstitutional legislation in the West, but Quebec was sacrosanct. Although Duplessis’s law had by then been on the books for almost ten months, Ottawa showed not the slightest inclination to do anything about it. And the worst excesses under the Padlock Law were still to come.

In the tenth year of the Great Depression, Canada reached a turning point. This was the year in which the government of Mackenzie King moved hesitantly and reluctantly toward the Liberal welfare state. It was also the year in which – again hesitantly and reluctantly – it began to come to terms with John Maynard Keynes’s radical concept of cyclical budgeting: spending more money in bad times and (one hoped) paying off the deficit in better times. The balanced budget, in short, was about to become a thing of the past. And 1938 was, happily, the year in which the rains came at last – not the frustrating dribble that had characterized the drought years but real, drenching downpours in May and June that soaked the fields and produced the biggest prairie wheat crop in a decade.

The rains came a year too late. The previous year’s crop failure, which reduced Canada’s chief export to a trickle, had a devastating effect on the economy. In 1936 and in the early months of 1937, the country had seemed to be recovering from eight dark years of slump. But by the fall of 1937 the slump returned – a recession in the midst of a depression – caused not only by the drought but also by a general failure of nerve in the business community, which found its earlier expectations crushed.

Suddenly, after a few brief months of optimism, the light at the end of the economic tunnel winked out. Because there seemed to be no future for the country, not many were prepared to undertake long-term investments. The drought apparently had no end, and unemployment had not been solved – it increased by 30 per cent over the winter of 1937–38. In October 1937, when company earnings failed to justify the rising stock prices, the New York market crashed once again.

It was a time of uncertainty and doubt, fear and foreboding. Labour disputes were on the rise; there had been more strikes and lockouts in 1937 than in any year since the early twenties. War and rumours of war had also conspired against any long-term investment. Fears of political upheaval and financial instability pervaded the business community.

Manufacturers who had built up large inventories because of the optimism of 1936 had been unloading them in 1937. Construction had been on the rise; now it dropped as provincial governments reduced their expenditures. The lower birthrate and the lack of immigration meant that fewer families were building houses. Canadians (and Americans too) were like bathers who hesitate to swim too far into an untested lake. Years of economic depression had made them cautious.

The Liberal government was totally unprepared for this alarming change. King, banking on recovery, had rushed to reduce federal grants-in-aid to the provinces under the Unemployment Assistance Act by a hefty 34 per cent. He was, in fact, pinching pennies with as much zeal as his predecessor. Like Bennett, he was absolutely convinced that the provinces were wasting relief money and, again like Bennett, he still held to the belief that a balanced budget was the key to economic stability. He didn’t want to spend a nickel more on public works than he had to, and he wanted, if possible, to get Ottawa right out of the relief business. With times improving, he thought that burden ought to go back to the provinces and the municipalities.

Now, in January 1938, he was still reeling from a shock he had received a month earlier. His own political creation had stabbed him in the back! After the election he had invented the National Employment Commission to recommend ways of saving money on relief. Instead, he learned that the NEC was about to recommend that
more
money be spent and, even worse, that the federal government take over the entire responsibility for relief. That was something King and Bennett before him had passionately resisted.

The NEC’s approach stemmed partly from the growing demand for a national scheme of unemployment insurance. Bennett had promised it; King had paid lip service to it. When recovery seemed certain he had gone so far as to poll the provinces on the subject. Six, including Ontario (but not Quebec), agreed to accept a national unemployment insurance plan.

Thus in recommending unemployment insurance, the commission was only reflecting the tenor of the briefs placed before it and the apparent acquiescence of the government itself. But it did not stop there. Since such a plan would help only those who had jobs that they might lose, it could not cushion the effects of the Depression on the vast army of unemployed who weren’t covered.
It made sense, then, that if Ottawa were to be responsible for relief through unemployment insurance, it should take over
all
relief. It was that proposed recommendation, leaked to him by the one dissenting member of the commission, Mary Sutherland, a Westerner, that drove King into a fury. His whole idea had been to get out, cleanly, and let the provinces do the job.

In addition to Mrs. Sutherland, the seven-person commission was made up of three businessmen, one labour representative, and a widely respected economist, W.A. Mackintosh of Queen’s University. Its chairman was the president of Canadian Industries Limited, Arthur Blaikie Purvis. Now this essentially small-c conservative group was proposing a radical departure from conventional policies – nothing short of the centralization of all relief.

King moved to head off this alarming turn of events. He called in labour minister Norman Rogers, who had set up the commission and appointed most of its members – but not the recalcitrant Mrs. Sutherland (who had been King’s personal choice). He was infuriated to find that Rogers was enthusiastically behind the NEC’s proposals. Mrs. Sutherland’s tip-off had been the first knowledge King had that this apparently captive commission was departing from what he considered its mandate – to advise the government on how to stop provincial and municipal waste and thus save Ottawa millions.

King was convinced that he was being bamboozled by professors like Mackintosh and Rogers, another former Queen’s man. “I am beginning to see the wisdom of not taking into the government, men who have not had some political training,” he wrote, “however able they may be. The academic mind is not the best one to handle problems of Government.” He sensed a conspiracy. The two most powerful civil servants, W.C. Clark, Dunning’s deputy minister in the finance department, and O.D. Skelton, Under-Secretary of State for External Affairs, both backed the NEC proposals. They, too, were Queen’s University economists. “These University men,” King told the Cabinet, “… thought they had more in the way of wisdom than the rest of us put together.…” Their appointment, as James Struthers, the historian of the welfare state, has pointed out, was “a turning-point in cabinet/civil servant relations.” These members of “an emerging mandarinate … had no fear” – as King had – “of an activist social service state.”

To King, the commission’s betrayal was political dynamite. Yet he was caught up by his own rhetoric. Ever since his defeat by Bennett in 1930, he himself had been calling for a commission on national unemployment; all during his five years in Opposition it had been the cornerstone of his unemployment policy. Now, if the NEC stuck to its guns, its report, in King’s view, would be a millstone around the Liberal party’s neck. It would “defeat the Liberal Party entirely by attempting something its members will not adhere to for one moment.”

Federal commissions are supposed to operate independently, without political interference. King considered this commission was
too
independent, and he intended to interfere. He bluntly told Rogers and Dunning that the report must be rewritten and toned down before its release. Purvis, however, had resisted this unconscionable meddling. He was already peeved because the government had ignored the commission during its hearings. Worse, it had declined to take any action on the recommendations made public in an interim report released the previous August. Now Purvis was refusing to budge. King tried to split the commission, bringing pressure to bear on some of the weaker members. That tactic didn’t work. The best he could hope for was the minority report promised by the obliging Mrs. Sutherland, who drafted it with his advice and help. Her point – and King’s – was that the only way to keep relief costs from spiralling was to maintain responsibility at the grass-roots level. If faced with bankruptcy, the municipalities would think twice about being overgenerous with relief.

The Prime Minister sought refuge in delay, using another tried-and-true Canadian tactic. The report would have to be translated; that would hold it up until after the opening of Parliament, when the spotlight was off the Hill. He had one other stratagem. The Royal Commission on Dominion-Provincial Relations had been established the previous fall under Newton Wesley Rowell, the Chief Justice of Ontario, and was already holding hearings. King, through Rogers, managed to persuade the stubborn Purvis to see Rowell and discuss whether his report might conflict with the findings of the royal commission. Purvis did as he was asked and King got what he wanted – more delay.

But he was still angry with Purvis, whose action in signing the report against his advice he compared “to the action of Hitler in
invading and possessing Austria.” It revealed, King wrote, a lack of political sense. In a telling insight into his own political philosophy King noted that “in politics, one cannot reach one’s goal by a straight line. Account has to be taken of the rivers and mountains and other obstacles that have to be crossed on the journey.”

With the report finally translated, Rogers rose in the House to bury it, explaining that because the whole matter of unemployment was bound up with some larger questions, the implementation of the report would be postponed until the Rowell Commission brought down its own recommendations. King had two years of breathing space.

Meanwhile, conditions in the country had grown worse. Unemployment was increasing and the hoped-for upswing in the economy, which had caused an optimistic prime minister to consider implementing unemployment insurance, hadn’t occurred. Now King wished he hadn’t got into the subject. He managed to scrap his plans, using the convenient excuse that three provincial premiers – Duplessis, Aberhart, and A.A. Dysart of New Brunswick – had yet to agree to unemployment insurance. He could, of course, have bulled it through, whipping up public pressure to change the minds of the minority, but he had no intention of doing that. Although unemployment insurance had become an acceptable idea, it would not go into effect until 1940.

King still clung to conventional economic theories. He had cut funds for relief, expecting better times, but he had no plans to restore the cuts now that the times were growing worse. Rogers tried to justify this in a remarkably convoluted explanation that larger grants were not necessarily the solution; they might, he said, “tend to aggravate the situation.”

The government’s new policy reflected the old belief that the unemployed really didn’t want to work and wouldn’t work if relief payments were raised enough to equal the minimum wage. Ottawa made it clear that any aid advanced to the head of a family or to an individual must always be less than the normal earnings of an unskilled labourer in the same district. With a callousness that evoked the Bennett years, the King government had placed a ceiling on the dole designed to reduce further the living standard of the jobless. Small wonder that it could not escape the rumblings at the constituency level, especially from British Columbia, where hundreds of men, released earlier than usual from the
provincial government’s forestry camps and again unemployed, were already tin-canning in the streets of Vancouver. This was a direct result of the cut in federal funding, and it called up bitter memories of 1935.

In the United States, Franklin Roosevelt had launched a billion-dollar war on the recession through a program of emergency public works. King thought Roosevelt had gone too far, but his Cabinet, with the exception of Dunning, was clamouring for similar action in Canada. In April, King was forced to put Rogers in charge of a Cabinet subcommittee to recommend federal relief projects.