The Turbulent 40s

From the ashes of war, Canada emerges a stronger, richer nation

At the beginning of this year, when President George W. Bush interrupted many months of single-minded effort to get a real war going against Iraq and proposed tax cuts to pump up the flaccid American economy, critics pounced on his policies. A shooting war would surely undo the White House plan to generate a boom economy, some economists argued. The costs of combat abroad, they figured, would offset the cash stimulants on the home front.

In that debate, neither the president nor his critics paid much heed to history. The lesson of the 1940s, for example, taught that all-out war may be hell for people and places, but it sure can beef up a flailing economy.

True enough, North America slid deeper into recession after George Bush Sr.'s attack on Iraq in the 44-day Gulf War of early 1991. But the economic slowdown back then may more likely be attributed to the simultaneous closing of the Cold War. It was that long contest of ideas and mutual menace between the US-directed Atlantic Alliance and the Soviet Union's Communist bloc that kept global economies ticking along prosperously and progressively for most of its more than 40-year duration. The decades of economic well-being flowed from what amounted to massive public works programs — military businesses that maintained enormous standing armies and massive industries of weaponry and munitions.

The same thing during the Second World War, compressed into a six-year span, provided a prompt cure for the maladies inflicted on the world by the Great Depression of 1929 to 1939. With the West, the Soviet Union and China engaged in active combat against the “evil Axis” of the time — Germany, Italy and Japan *mdash; the record-breaking unemployment of the 1930s gave way to jobs for everybody, in the armed forces or in the factories, shipyards and airfields supporting the war.

Canada built warplanes, armored vehicles and one of the world's biggest navies. At the same time, the national war effort developed human skills in making things and running high-tech electronics gear spawned by the urgencies of the time.

Afterward, the country experienced anxieties that the postwar years might inflate the cost of living and deflate the economy. Fifty-five years ago, to pick a period with economic uncertainties comparable to the present, the atmosphere is reflected in the pages of Canadian Business and its reports and analyses:

  • January 1948: “This year may…witness a gradual change from a distinctly inflationary environment to one of restrained deflation….Consumer resistance — forced and voluntary — is becoming a factor.”
  • March 1948: “Last month's break in commodity prices was somewhat startling. Newspaper headlines heralded the end of inflation. The stock market stumbled lower….Communists everywhere beamed with hope that this was the initial crack which would bring about the collapse of the decadent western democracies….But no economic collapse faces us. This isn't a 1929 situation….Inflation still remains an insidious danger. None the less [sic], powerful psychological forces are combining to break the back of the price spiral….Let's not begin crying for too many cushions to soften the economic bumps…we must let normal economic corrections achieve their purpose.”

In fact, as it turned out, the shortages of civilian cars and other goods created by the war helped defeat deflation, while the removal of wartime price and trade regulation by Ottawa in a measured, cautious way beat back the worst of price inflation.

At the same time, a lively commercial and industrial climate absorbed hundreds of thousands of war veterans, many of them first taking advantage of the country's offer of subsidized expansion of their education.

As this magazine remarked in an assessment of business conditions in June 1948: “On top of the pent-up demand for consumer goods during the past several years, capital expenditures have reached unprecedented proportions. Additions to inventories have also been unduly large. Generous loans have supported export trade and imports have been maintained through the use of our accumulation of American dollars. The combination of these influences has resulted in boom conditions in this country.”

All in all, just as the country's performance during the decade of the First World War carried Canada into political maturity, so the 1940s marked its industrial coming of age.

As for employing war as a healer of economic ailments then or now, the costs in humanity, of course, outweigh the benefits to business. As historians Jack Granatstein and Desmond Morton conclude in their 1995 book, Victory 1945: “It was, on the whole, a good war for Canada. The country emerged richer, more powerful, more outward looking than anyone could have imagined in 1939.” But they also observe: “A wiser people would have found better ways to spend $13 billion than on tanks and bombers and artillery shells, and on putting a million people in uniform and sending them to die.”

Excerpts from Canadian Business

In a regular report in the 1940s — How's Business? — this magazine, then as now, kept readers abreast of trends, both good and bad, for the private sector. An example:

Ottawa is now buying over half the total production of this country and will spend about 4-½ billion dollars during the present fiscal year. The problems arising from these huge expenditures are staggering….

The question is how much longer inventory accumulations can supplement the production of new goods to meet the continued insistent demand of consumers.

—Vol. 16, No. 1, January 1943

At times during the darker days of the Second World War, or in periods of postwar doubt, Canadian Business lightened up with spots of whimsy, sometimes scalped from other journals. A sampling:

There is still some doubt whether it was the USA or the USSR that won World War II. The British Commonwealth of Nations, Punch wryly points out, merely prevented both from losing it.

—Vol. 20, No. 4, April 1947

A tribute to the letter E

The most useful of the twenty-six soldiers of the alphabet is E — useful because it does more work than any other. The letter E is an unfortunate letter, however, since it is always out of cash, forever in debt, never out of danger and in hell all the time.

But those who traduce the letter E should not forget that it is never in war, always in peace, is the beginning of existence, and the end of trouble.

Without it, there would be no meat, no life, no heaven, no wine or women.

It is the centre of honesty, makes love perfect, is the beginning of eternity, the end of time and space, the beginning of every end, and the end of every place. Without it, there could be no editors, writers, or even wives or children.

—Vol. 13, No. 2, February 1940

Will Rogers once sagely observed: “You can't rise with the lark if you've been out on one the night before.”

—Vol. 20, No. 4, April 1947

Most of us know that the big potatoes are on top of the heap only by the aid of the little fellows keeping them there.

—Vol. 20, No. 5, May 1947

In May 1945, the month the Second World War fighting stopped in Europe, Canadian Business Editor S.C. Scobell had another reason to rejoice. In a regular feature at the time, The Editor Reports, Scobell tells why:

We can't disguise our pride. We can't resist the temptation to pull out a little horn and announce that our paid circulation has increased 42 per cent in less than a year. In fact, this issue will go to about 20 per cent more subscribers than received our December 1944, issue. Because of paper restrictions it's smaller in size but it's more tightly written and we hope more interesting.

—Vol. 20, No. 5, May 1945

The United Nations was still a toddler in world affairs in January 1948, nine months away from its third birthday, when an anonymous analyst in this magazine proclaimed it a multilingual bore:

The glamor has gone out of the United Nations. No longer do politicians and civil servants fight for the job of representing Canada or serving as Canadian representatives at meetings of the UN Assembly and its subsidiary bodies. It is a task not without honor but also not without discomfort and boredom. It means long hours of work and long hours sitting and listening to over-long speeches repeated in different languages.

—Vol. 21, No. 1, January 1948

The transition in the business community's publicized opinion of the Union of Soviet Socialist Republics and its Communist regime under Joseph Stalin happened with the speed of a Nazi blitzkrieg after the close of the Second World War. From its status as one of the wartime Allied Big Four, the USSR, Stalin and Communists of any ilk became Enemy No. 1 almost as soon as the guns went silent. Among events stirring up the hostility: at the war's end, cipher clerk Igor Gouzenko bolted from the Soviet Embassy in Ottawa blurting about Commie spies; on March 5, 1946, at Westminster College in Fulton, Mo., Winston Churchill fired an opening round in the Cold War (“From Stettin in the Baltic to Trieste in the Adriatic an iron curtain has descended across the Continent” of Europe); by April 1949, NATO, with Canada one of its 12 charter members, had established a defence against Communism in Western Europe. In July 1948, Canadian Business, its publisher still the Canadian Chamber of Commerce, remained mindful that leftists had feasted for years on widespread evidence of the capitalist system's weaknesses during the Great Depression of the 1930s. The magazine nevertheless expressed shock at the fact that Canadians had recently cast sizeable volumes of votes in parliamentary and Ontario legislature elections for left-wingers:

Gains for the Anti-Capitalists

Let's face it squarely. The tide of anti-capitalism in Canada has not been checked. It does not threaten to engulf us but it is still rising and we cannot be too preoccupied to ignore it. Success in three federal by-elections, coupled with surprising strength in urban areas in the Ontario election, must be interpreted as a distinct, but not a major, shift to the left. It is apparent that the CCF [precursor of the NDP] has been able to capitalize on a certain growing discontent with the ragtail end of wartime restrictions….

What is there in the private enterprise system which disturbs them?…

We must never lose sight of the fact that we are living under a system which operates reasonably smoothly…. Apart from hampering taxation, there are still generous rewards for enterprising individuals…. We have a story to tell. But the anti-capitalists continue to snipe at our weaknesses and capitalize effectively on distortions of our faults.

The Canadian Chamber of Commerce and associated local Chambers and Boards of Trade are engaged in a Dominion-wide program of economic enlightenment and interpretation. This campaign is being intensified to meet the swelling tide of socialist propaganda. It is confronted with virulent competition.

Therefore it is up to every business man [sic] who would sustain freedom of enterprise to support this campaign and to discover for himself why his employees — or even his friends — may be starting to vote the socialist ticket.

Let's face it squarely. The tide of anti-capitalism in Canada has not been checked.

—Vol. 21, No. 7, July 1948

In the same postwar time frame, the magazine ran reports on the “Red menace” abroad in the world and the beginnings of US witchhunts:

Washington Commentary
Red Influence Gaining

Committees of both House and Senate are spending and have spent great sums and much time delving into the operations of the handful of Communist plotters they have flushed out. At the same time, isolationist influences and general indifference to the tragic play of events abroad pave the way for complete success of Communist aspirations in Europe and Asia.

—Vol. 20, No. 4, April 1947

Canadian Business also kept up with hot new tech trends, providing tips to its readers from time to time:

Photographic copies without camera equipment or darkroom technique are now possible with the Tru-Copy-Photo.

This gives full-sized, detailed copies by merely placing the material inside a cabinet and closing the door. First copy takes about five minutes but additional ones can be made at minute intervals.

The manufacturers, General Photo Products Co., tell us that copy surface is from 8 by 14 up to 18 by 29 inches, depending upon which size model is used.

—Vol. 20, No. 5, May 1947

A full-page advertisement in January, 1943, by Canadian Breweries Limited—then owned by powerful financier E.P. Taylor, a senior wartime official of Mackenzie King's federal government—is a 1,000-word text on the benefits of drinking beer in moderation. It is presented as a retort to an anti-booze radio speech to the nation by Prime Minister King on Dec. 16, 1942.

The brewer offers An Alternative Speech On Temperance “not from any profit motive, since its profits are already controlled by the [wartime] excess profits tax, but out of a desire to retain the public's respect.”