The Dirty 30s

Market meltdown. Economic mayhem. Corporate scandals. And war

“October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February.”
—David (Pudd'nhead) Wilson

There's been a lot of that kind of attitude going around in recent months, even if the people backing out of the market have never heard of the Pudd'nhead Doctrine. The same sort of retreat took place throughout the 1930s in reaction to the market's implosion in October 1929 — just as it did when writer Mark Twain was implanting the doctrine in the mind of his Pudd'nhead character in a story published shortly after the crash of 1893. And, for that matter, the same thing happened way back in the wake of the collapse of 1857.

Pudd'nhead — actually a smart New Yorker pinned with the nickname by the crackers in his adopted Mississippi home who didn't get his sense of humor — would have known through Twain about the deflationary aftermaths of both 19th-century meltdowns. Of interest to the soothsayer school of analysts is the fact that October — the calamitous month of 1929 — gets first mention in the Twain-Pudd'nhead warning. (The market collapses that cued previous economic downers occurred in August of 1857 and June of 1893.)

If flagging October could truly be taken as an early warning of hazards ahead, it would fit with the notions of some watchers that markets, for example, get roiled every 36 years. So would the truer tradition that advance alerts get drowned out by dreamers.

Take the change-of-millennium years. As the New Economy wrestled with adversities in the late 1990s, some analysts saw history repeating itself. The déjà-vu crew — among them Americans George Soros, the billionaire investor, and political economist Robert Reich–traced scary parallels with the price and debt bubbles of the late 1920s, and the way hot shares traded exuberantly on margin at exaggerated prices.

There were warnings before Wall Street plunged on October 24, 1929, and all markets crashed in unison on October 29. As early as January 1928, analyst Roger Ward Babson, author of the reputed Babson Reports, urged investors to beware: “People are in debt today to an extent never before. Sooner or later the dam will break, to be followed by unemployment, failures and hard times.”

The similarities reverberate across seven decades. Take for instance investor attitudes — one week upbeat, the next a downer. Just like nowadays, upticks in the market in the 1930s nourished spasms of hope that “the slump” would be short-lived.

This magazine, an infant voice of the Canadian Chamber of Commerce only 20 months old when the markets crashed, opted for an upbeat approach amid the wreckage. At the turn of each year, it remained on the outlook for a resurrection of “Roaring Twenties” prosperity. In December 1930, for instance, an editorial seductively advised readers, “Informed circles feel, and reasonably so, that though there may not be meteoric gains from present levels, that a steady advance should be recorded and that the horizon will increasingly brighten as the weeks pass by and the months come and go.”

Nine months before the optimistic editorial appeared, a published study showed that the valuation of all listed and unlisted Canadian securities had plunged by more than $5 billion from their 1929 peak of $9.5 billion. And by the middle of 1930, the prices and the earnings of products from the farms, forests and mines — then the mainstays of the economy — were slithering into freefall. The price of wheat was on its way from a 1929 average of $1.34 a bushel to a record low of 50¢ in 1931. Copper also skidded to a low of 6¢ a pound.

In the four years from the peak of prosperity in 1929 to the Depression's deepest trough in 1933, the ravages of the afflicted economy took corporate Canada from total profits of almost $400 million down to a loss of nearly $100 million. The down-spin chopped the value of exports in half, eroded the gross national product by 43% and pushed up unemployment — the rate was never less than 12% throughout the decade — to a massive 27% of the workforce in 1933. Almost two million of the roughly 10.5 million Canadians then had no earned income at all. As the ruination gathered momentum, the magazine maintained a brave face. “The present is no time for gloomy forebodings,” an editorial stubbornly proclaimed in September 1931. “The dark days are over and we do well to look ahead.”

As if the losses of money and jobs alone weren't enough to turn off the people's trust in business, the early days of the Dirty Thirties exposed cases of bent corporate practices akin to the Enrons and WorldComs of our time. Courts sentenced a dozen top brokerage executives, convicted of defrauding clients and corporations, either to pay large fines and serve short jail terms, or vice versa. The magazine's editorial of January 1931, scolds: “Our high standards of business ethics have received rude shocks during the past twelve months and, to be perfectly frank, the dishonest practices of a few unscrupulous individuals…have made the legitimate seeking of capital somewhat difficult.”

At the same time, with capitalism itself in disrepute in many quarters, the publication devoted generous space to the system's challengers, including the Soviet Union. Other reform-minded movements received attention, among them the Co-operative Commonwealth Federation, born in Calgary in 1932 and forebear of the NDP. Consistently negative appraisal was lavished on Alberta's Social Credit, forerunner of the Reform and Canadian Alliance parties, and a winner provincially in 1935, its first election. The magazine's editors also maintained a circumspect watch on neighbor Franklin D. Roosevelt's New Deal program, launched in 1933.

The good news about the Great Depression is about the country's accomplishments in those otherwise dire days–notably in communication by radio and airplane and even in pioneering versions of television. Both the CBC and Air Canada, offspring of the 1930s, established key linkages in cross-country business operations and social unity.

Another unifying factor figures in the Great Depression's legacy. It is the lesson that co-operation in hard times — between public and private enterprise, among regions and language groups — evolved into a central element of Canadian life. That spirit produced national unemployment insurance and, in elaboration of that idea, such social assets as national health care and the many forms of mutual support between business and government.

Canadian Business makes the same point a number of times. One occasion was in December 1936, as Depression pressures eased somewhat, although about a million Canadians were still receiving relief assistance. An editorial applauded co-operation between the public and private sectors in fashioning social security programs for the post-Depression future. It concluded: “Canadians have their problems to work out in their own way. They can do it by co-operation under the present economic order without resort to the political 'isms' so prevalent in the world today but so unfitted to the Canadian mode of living.”

Excerpts from Canadian Business

Sir Henry Thornton, K.B.E., President of the C.N.R., states that Canada is better off than most countries and that the business structure is broad, based on essentially sound economic principles.

—December 1930

As the bad times worsened in 1931, Canadian Business enlisted the verbal shotgun of C.W. Davis, an associate of a Toronto ad agency, Norris-Patterson Ltd., to keep business people on their competitive toes with brief, boxed pep talks. Here are a couple of examples.

Watchful waiting

Business would be brisker today if so many self-styled “Executives” hadn't been so busy for months wearing out the seats of their pants instead of the soles of their shoes….The cautious “conservative” (how they love that word) watchful waiters of business — drags on the wheel of industry — will wake up astounded to find that certain red-blooded individuals are several jumps ahead of them in the prosperity parade.

Raw materials are cheap, stocks of finished goods are low, banks have millions to lend, dollars buy a lot more than they did a year ago, and enterprising men are using them freely — and profiting.

—January 1931

The unkindest cut

There is justice in cutting dividends and wages at the same time, if there's no other way out, but some corporations may be inclined to use hard times as an excuse for wage cuts that are not absolutely necessary. Such tactics smack of exploitation.

When wielding the pruning knife, why not first lop off obsolete machines and methods, cut down costs of distribution and chop off non-productive labour?

On the other hand, we don't hear of many voluntary reductions in the cost of work, and labour leaders might well study [a] scheme of periodic adjustment of wage scales.

Canadian Business made it a practice during the 1930s to devote pages to a variety of opinions and approaches on what to do about the sick economy. Many such offerings conflicted with the views of its founding publisher, the Canadian Chamber of Commerce. Some 16 months after the magazine ran the following article by eloquent disturber James Shaver Woodsworth, a former Winnipeg Methodist minister and an Independent Labour Party MP since 1921, a Calgary conference of socialists, farmers and workers on August 1, 1932, elected him the founding leader of a new political party, the Co-operative Commonwealth Federation, reorganized some three decades later as the New Democratic Party.

What the worker has to contend with

by J.S. Woodsworth, M.P.

Unemployment is the dread spectre that haunts every working-class district….the worker must bear the brunt of the depression. Financial arrangements usually take care of idle or depreciating or obsolescent machinery–not of the human machine….

Lack of understanding on the part of the employer, class inferiority, unemployment, insufficient wages, uninteresting work, lack of free speech and skilled leadership–is it any wonder that a growing number of workers have a rankling sense of social injustice?

Private control of the agencies of production and distribution by competing groups with the minimum of State regulation has been regarded as the accepted national ideal….

But now capitalism is on trial…. Unemployment on a national scale means that the captains of industry who have been granted such a free hand have failed — thus leaving both their workmen and the general public in a serious predicament.

So far our captains of industry have attempted to disclaim their responsibility. In the meantime, the workers, both industrial and agricultural, have exhausted their reserves and are suffering great hardships. Surely their welfare is a first claim on industry; the financial arrangements necessary to secure this a first charge on profits.

Is capitalism equal to such responsibilities? Well, it is up to the captains of industry to show the way.

—April 1931

Pioneer automaker Robert Samuel McLaughlin launched the McLaughlin Buick in 1905 from his family's wagon works in Oshawa, Ont. After the factory began building the Chevrolet, General Motors of Michigan purchased his company in 1918, renaming it General Motors of Canada, and retaining McLaughlin as boss.

We all profit from export progress

by R.S. McLaughlin, President, General Motors of Canada

Economists here and there have been dipping into Canada's trade future and the predictions range all the way from general improvement up to the vision of world dominance.

Business prophets, however, have been so discredited during the past three years that one hesitates to agree with even the most moderately optimistic of the soothsayers. It is bad policy — or at least bad tactics — to say that the future seems rosy, or that the corner has been turned, or that the worst is over, or that we are getting back on our feet. Such expressions of confidence, apparently, are to be avoided unless we care to have some sceptic sneer 'Oh Yeah?' and point a cruel finger at a jagged red line heading for the southeast corner of the map of business.

On the other hand, an occasional glimpse of plain facts never did anybody any harm, and perhaps we may be pardoned if we gather together a few of these facts to study them in relation to the inevitable future….

The more business abroad the Canadian automotive industry is able to secure, the better it will be for the consumers at home…. An increased export market is urgently needed to make practicable the manufacture of an increased percentage of the Canadian car….

Canada is second on the list of nations of the world in motorization and, until recent trade down-swings, in production. Per capita, Canada has led the world in exports….But the cold fact remains that exports of Canadian cars and trucks declined from 95,000 units in 1929 to 44,000 in 1930 and to less than 20,000 in 1931.

The decline was not because Canada did not continue to make good cars. The decrease took place because of what were called “circumstances beyond control.” That, to some extent, may be eliminated [in future]. Some of those circumstances, at least, can be controlled….

Watch our growing tax bill!

by Horace L. Brittain, Director, Citizens' Research Institute of Canada

Business is not endeavouring to force a curtailment of legitimate social services. It aims towards a scaling down of unnecessary, uneconomic government expenditures.

Until comparatively recently the contributions of commerce and industry and workers in commerce and industry to the cost of government caused at most passing irritation, but as the functions of government have grown this puzzled irritation has changed to alarm. It took, however, the existing depression to bring home to those engaged in commerce and industry and taxpayers in general, the true relation of public debt, public expenditure and public taxation to the production and the distribution of the products of industry….

Government is an absolute necessity…. But why have too much? Possibly we cannot reduce the number of provinces, but surely we can reduce the number of bodies concerned in local administration, numbering in Canada some 30,000 Councils and Boards….

The automobile, good roads and the telephone have revolutionized the organization of private business, but have hardly made an impression on the size of local units of government.

Business, as represented through The Canadian Chamber of Commerce, has expressed itself as in favour of the observance of Armistice Day [November 11] by a two-minute silence during working hours. The observance of Remembrance Day as a legal holiday provides, in many cases, for indulgence in sports and pleasures not in harmony with the significance of the event.

…It is further felt that the observance recommended has the additional advantage of tending less to dislocate industry and commerce.”

—October 1932, Editorial

In keeping with a stated editorial policy of striving to provide its readers with balanced information on alien economic system and proposed alternatives to capitalist free enterprise, Canadian Business published several reports in the 1930s on the progress and otherwise of the Soviet Union's communist society. Two prominent Canadian physicians, W.A. Lincoln and Frederick Banting, winner of the 1923 Nobel Prize in Medicine for his discovery of insulin, provided reports on personal visits and reached starkly opposing conclusions.

What I saw in Russia

by W.A. Lincoln, M.D., C.M., F.R.C.S. (Eng.)

Russia is at present conducting the greatest experiment in the world's history and is therefore very much in the public eye. One hears most contradictory reports of its value and success….

Far be it from me to attempt to express any opinions about what is occurring in Russia. All I shall do is try and tell of some of the things I saw, principally in Moscow. The first impression one gets is that everything is very much run down and out of order…the one-horse droshky is still the main means of transportation….

The younger people are not encouraged to establish homes…. It is not considered immoral or wrong to live together if unmarried. In the case of children the state brings them up in children's homes.

The state of course owns everything and everyone works for the state unless disenfranchised….

If ill or old, one is cared for by the state, and when dead incinerated and one's ashes scattered to the four corners of the earth.

Does anyone believe that such a situation can compete in the long run with what we by sacrifice, strife and and long years of effort have built up? If so, all our efforts for the last two thousand years and the sacrifices and blood shed by our heroes and martyrs have all been in vain.

–December 1931

Science and the Soviet Union

by Sir Frederick Banting, K.B.E.

The greatest experiment that the world has ever known has just been carried out within the Soviet Union. This experiment involved the lives of 170,000,000 people who use 189 languages or dialects and who occupy nearly one-sixth the land surface of the world. It was an experiment of government.

In the successful carrying out out of the experiment, science was a major factor….The Bolsheviks suffered privation, fought and if necessary died for those far-sighted leaders who promised the people education and science….

[B]efore the revolution only about ten people out of every hundred could read and write. The country was one of the least industrialized in the world…During the past ten years progress has been stupendous….

The Soviet government is building a gigantic structure on the solid rock of science and research. For this reason there now remains not a vestige of doubt as to the future success of the Soviet Union.

—February 1936

Aaren't you glad the depression is over?

by D.L. Morrell [Editor]

Read why Canadians look to happy and improved business conditions in '34. It will do your heart good.

Statistics released from Geneva have shown a continuous improvement in world trade since last spring. Other figures reveal that over ten million of the estimated unemployed thirty million last March are again on the pay rolls.

Iron and steel production in 49 countries increased by over 40% between April and August. [Railroad] Car loadings generally throughout the world as well as port clearings are in the upward direction. Nor can we make light of the reports indicating that World industrial production increased by 30% during 1933….

It is to be hoped that the well over 200,000 increase in Canadian employment will continue, and so put greater purchasing power into the hands of workers…. This New Year can advisably be one of building towards a prosperity unequalled in our history.

—January 1934

October 1934, Editorial: Provincial Disarmament

To those who are conversant with our political history immediately preceding Confederation, it will be apparent that the Venerable Fathers strove for a powerful central government to be assisted by “local” governments….

Instead of the achievement of these objectives, which were held as desirable for a united nation, we find that the local or provincial governments have increasingly asserted themselves and their rights, built up political armaments which mount to the highest possible bulwarks around their provincial borders….

At present more than a few provinces are leaning on the Dominion financially, business is suffering from unusually heavy provincial duplicatory taxation, social reforms are being cubby-holed, unemployment relief lacks business-like management. It is high time that our provincial governments were effecting a measure of disarmament, and were demobilizing their present governmental battle array.

A job for business

Many, whether for political, business or personal ends, [have been] quick to propose not one but a hundred methods for restoring prosperity. The regimentation of business, Social Credit, repudiation [of debt], and pseudo-communism have been most prominent….

The restoration of confidence has now become a strictly business proposition. As such, it is frankly up to business men to concoct the national restorative and to consign to the sink the quack tonics of feverish prosperity.

How? By meeting organized popular appeals with organization.The job is to convince citizens, in whatever station, of the proven methods of Canadian industry and commerce, which business itself knows to be the only sound basis of permanent recovery.

—July 1935

William (Bible Bill) Aberhart became premier of Alberta on August 22, 1935, after an overwhelming electoral victory — 56 of the 61 legislature seats — by his newly formed Social Credit League. Despite the actions of Ottawa and the courts in disallowing his laws to regulate the banks and the news media in Alberta and to grant to every adult Albertan “dividend certificates” of $25 a month as an anti-depression measure, Aberhart was to serve until his death in 1943 and his party for 35 unbroken years.

Canadian Business did not take kindly to Aberhart and his Social Credit, the contemporary model in Alberta's long record of producing political parties, from its earlier Alberta Progressive Party and onward after Social Credit to the Reform Party, the Canadian Alliance and its special Albertan brand of Toryism. For several years after an initial, sniffy editorial,the magazine ran monthly critical rants headed Aberhartiana by “our Edmonton correspondent,” the editor explaining in a note that “For obvious reasons we withhold his name.”

September 1935, Editorial: Aberhart

It is not that we call into question the sincerity of Mr. Aberhart's ideas on the modern state which, germinating in an evangelistic atmosphere, have swelled into a belief that he can enrich the masses by issuing his dividend certificates…. He, himself, may understand what puzzles us — just how Alberta can live unto itself alone, and how the Province under such a scheme is to maintain its credit standing.

January 1937 Aberhartiana

The premier has spent the last three weeks out of the province at the Interprovincial Conference…. Before he left Ottawa, he visited Hull where, press reports say: “An enthusiastic audience jammed the auditorium.”

At this meeting he followed his usual fantastic economics in decrying the recuperative value of work and wages and good crops. He still believes in issuing bits of paper instead of growing wheat and oats, making butter and cheese, and selling hogs and cattle.

September 1935 Editorial: No Work, No Relief

“The world owes me a living” is a refrain whose popularity increases in proportion to the volume of demagogic agitation and length of unemployment.

Unfortunately, both provocations have been increasing in the last few years.

…Everyone sympathizes with the unemployed, but there are those, and many of them, who prefer to go on marches, as long as the government sends them a relief cheque.

December 1935 Editorial: Trade Agreement

We are gratified by the ratification of a Trade Agreement between the United States and Canada….While it is too early yet to discuss the affect of the individual tariff changes, it is hoped the treaty will work toward a more equitable balance of trade….

This Agreement should serve as a first important and persuasive step away from the economic nationalism which has retarded world trade.

Prosperity's on its way… please!

January 1936 Editorial: Business Ahead

Stagnation will not characterize Canadian business in 1936. Change for the better can neither be stopped by cynic nor alarmist nor decryer of our present business system….As new frontiers are crossed, as development marches on, as new operations bring forth greater profits, may each of you share to the full in the 1936 prosperity.

January 1936 : Is Prosperity Really on the Way?


Often since 1932 we have appeared to be headed straight for prosperity. And now, if we are realistic, we shall not be fooled by the gaudy nine-month jump of the stock markets, the exhibitionism of which fascinates so many business oracles on this continent. The prospect is too uncertain for self-hypnotism. Restricted production and trade; stark unemployment; frozen assets; these are too alarming for the serious thinker to assume that all is well and a natural recovery is under way….

Is prosperity really on its way? Look around you. A million people dependent on relief, seven billion dollars of debt, frozen bonds, frozen mortgages, frozen tax arrears, fifty per cent markets. These are the obstacles between us and real prosperity. Only productive work, earned wages and widening markets can enable us to reach the goal.


We have relatively low commodity prices, and attractive borrowing rates which provide a sound basis for projects undertaken at this time. There is efficiency in business and earnings may, therefore, rise materially faster than production. There is stability and equilibrium in our currency. In addition, money is steadily flowing into our country as the gap between our total exports and our total imports continues to grow. Furthermore, we have needs which must be supplied. Worn-out and obsolete machinery needs to be replaced and renewed; our standard of living needs to be restored and improved. And most of all, there is the tremendous “pull” of our rising population. It is this combination of circumstances which makes for inevitable recovery….

In the years just prior to the 1929 crash, we lived beyond our means out of the phantom proceeds of speculative values. Not until hectic business activity again presents chances to the greedy will society experience another stage of mythical prosperity. In the meantime, there is a sound urge to rehabilitate our equipment for the growing family of Canadians.

Our needs are sufficient to keep us busy, and as we add to our earnings we can meet our debts. Is prosperity really on its way? The answer obviously is that nothing can hold it back.

December 1936 Editorial: Wanted: Co-operation Plus

What is needed in Canada today is not a sharing of the wealth but a sharing of enlightened understanding and responsibility.

Progress has too often come as the result of the struggle of one economic group upholding or defending its particular cause against the divergent claim of another.

Business, for instance, has opposed government, labour has opposed management, farmers have opposed industry and social thinkers have opposed administrators of an existing system. They have all been competitors for the confidence and favour of their patron public….

Before another year's end catches up with us, disagreements that exist between the “horizontal” classes of our people can and should be narrowed.

Now that recovery is on the way, 1937 could be advisably dedicated to a greater understanding and an effective appreciation of one another's economic problems.

January 1937 Alberta Gushers

Oil men believe that that the crude oil pool of Western Canada has at last been tapped.

In the Turner Valley of Alberta, three crude wells have been brought in during the past six months.

The riddle of the Valley may be on the verge of solution. In 1912 gas was located in this area and since then a substantial amount of Naphtha and commercial gas has been obtained. But drillers have been seeking heavy crude oil.

In June [1936] the first crude oil “gusher” was brought in by Turner Valley Royalties. In November a second “gusher” materialized, while last month Imperial Oil's Toyalite brought in the third. At last the Turner Valley is yielding crude petroleum at the rate of about 2,000 barrels a day….

Hopes are running high that Alberta will supply a fair proportion of the 50 million dollars worth of crude petroleum products imported every year.

The Nazi danger

One of the gravest dangers today is the neurotic nationalism which is gripping Continental [European] countries and especially Germany. The Nazis are becoming desperate. It has often been said that Hitler would not risk a war in which the odds were not greatly in his favour. But relief must come from somewhere.

At the moment there is no sign of other nations going to the aid of Germany.

The Reich is bankrupt and is finding itself in an economic cul-de-sac. It has no outlet for its goods.The closed markets of the British Empire, the United States and other protectionist powers are intensifying the impoverishment of the German nation.

[London School of Economics analyst Lionel] Robbins believes that relief will come only from a fundamental reversal of the restrictionist tendencies of recent years which are responsible for a situation which breeds war as a natural consequence.

With the public in its present mind any change in tariff barriers and other trade restrictions is not likely to get very far….[But] opinion hostile to obstacles which block trade becomes more articulate as prices advance. Economic nationalism begins to break down as countries realize more clearly the advantages of rejoining the world economy.

—February 1937


Last year the world spent fourteen billion dollars on armaments. This year the amount will be materially larger….The expenditure of such vast sums [by Britain, France and Germany] superimposed on an inflationary business recovery is causing sharp increases in the prices of many basic commodities….Canada is in a favoured position….Indicative of the urgent demand for copper, for example, are the figures for January exports from Canada which totalled 27 million pounds against 19 million in the corresponding month of last year. Nickel and zinc showed smaller gains….

World stocks of primary commodities have dwindled to late 1929 levels and prices have recently risen at a rate almost without precedent as urgent demands plus speculation have given sellers an undue advantage.


by W.W. Goforth

“Something-for-nothing” has been a basic evil of many periods and groups of persons during the course of human history. It was never more abusive in its results and consequences.