Blog 8: 1920s Boom and the Great Depression
Despite the increase in many manufacturing sectors after World War I, one of Ontario’s most profitable sectors was in trouble. In the middle of the war, in 1916, the Ontario government had voted to ban the sale of alcohol in the province. Breweries such as London’s Labatt and Guelph’s Sleeman could no longer sell to Ontarians but could still export their products; however, the situation worsened for these firms in 1919, when their largest customer, the United States, passed similar prohibition laws that prevented the import and consumption of alcoholic beverages. Unsurprisingly, illegal sales remained common: Sleeman famously “bootlegged” its beer across the Detroit River for a number of years, selling the product tax-free. To the relief of many firms and consumers, Ontario’s prohibition laws were repealed in 1927, and the United States followed suit less than 10 years later.
The automotive industry continued to thrive in the years immediately after World War I. In the early 1920s, U.S. giant Chrysler joined Ford and General Motors in establishing a facility in Windsor to serve the Canadian market. By the end of the decade, Canada was the second-largest automotive producer in the world, selling mostly to the growing and increasingly wealthy nations in the British Empire. However, the Great Depression brought a sharp end to the explosive growth of the 1920s across many industries.
The Great Depression rapidly spread from its origins in the United States to Canada, devastating communities across Ontario—and the rest of the country—by creating a flood of unemployment. Production slowed or stopped across all sectors. By 1933, Canada’s unemployment rate had reached 33 per cent and its gross domestic product had fallen 42 per cent since the start of the Depression. Manufacturing production dried up as a result of the drop in Canadian consumer spending. Ontario was less affected than some provinces (e.g., Manitoba), mainly due to its more diversified economy, but manufacturing centres across the province were severely damaged economically. Throughout the 1930s, government programs—such as unemployment relief camps and the establishment of the Canadian Wheat Board to cap food prices—mitigated some of the overall damages of the economic collapse, but it was not until World War II began in 1939 that government spending helped to jumpstart the economy once again.
Read part 9 of The History Of Ontario’s Manufacturing Industry here.