Chapter 8. The Economy since 1920

8.1 Introduction

The political transformations that ushered in the Confederation era were both a product and a reflection of the economic changes that were underway. Chapter 3 considered the industrialization of the economy and how that led to the emergence of new social classes and political agendas. However, there were also important continuities in the Canadian economy.

This chapter explores the outlines of the Dominion economy from the 19th through the 20th century. It examines the most commonly used theoretical model of the Canadian economy (the staples model) because of its implications for the economy in the past and the present. Some of the principal features of capitalism are reviewed as well, including capital markets and business cycles. The enormous impact crater that was the 1930s Depression is also considered, as is the emergence of what historians describe as the “new economy” in the 20th century. Three persistent sectors shipping, fishing, and oil and gas offer insights into the rhythms of the national economy. The post-war economic order is reviewed, as is the regional economy of the Maritimes. The chapter concludes with an essay on economic nationalism, an idea that informed Macdonald and that continues to influence economic policy-making.

Learning Objectives

  • Explain the concept of and the survival of the staples model.
  • Identify the roles played by capital markets, foreign investment, and branch plants.
  • Describe the economic cycles since 1867.
  • Account for the rise of the “new economy.”
  • Assess the extent to which old staples sectors have been industrialized.
  • Outline the differences between the economy before 1939, after WWII, and after the post-war boom.