October 1929 Stock Market Crash in Canada
In the late 1920s, Canada’s economy and stock exchanges were booming.
But prosperity days came to an end on Black Tuesday, October 29, 1929, when the stock markets crashed in New York, Toronto, Montreal, and other financial centers. Shareholders panicked and sold their stocks for whatever they could get. The Crisis hit Montreal especially hard. Overnight, individual wealth and corporate finances were ruined.
Canadian stocks lost a total value of $5 billion on paper in 1929. By mid-1930, the value of stocks for the 50 leading Canadian companies fell by more that 50% from the 1929 level. The stock market collapse started a chain of events that threw Canada and the rest of the Western world into the decade-long Great Depression that ended only with the outbreak of the Second World War.
Despite 1929 being a good year for banks, mines, and manufacturing and construction industry in Canada reporting record profits at year-end, Canada ranked the second among the countries most affected by the Depression. Canadian economy was tightly dependent on its exports: wheat and paper, the two major Canadian products, constituted respectively 40% and 65% of the quantities exported on the global scale.
The unprecedented economic crisis produced a catastrophic effect on global demand for these items. Unemployment soared, industrial production collapsed, and prices, especially for farm commodities, fell rapidly as demand for all consumer goods virtually disappeared. In the period between 1929 and 1933, Canada's Gross National Product declined by 42%.
In August 1937, the federal government created the Royal Commission on Dominion-Provincial Relations (better known as the Rowell-Sirois Commission). Its chair was Ontario Chief Justice N.W. Rowell (1867-1941), who was replaced late in 1938 by Professor Joseph Sirois (1881-1941).
The commissioners were charged with finding out what would constitute "a balanced relationship between the financial powers and the obligations and functions of each governing body, and conduce to a more efficient, independent and economical discharge of governmental responsibilities in Canada." (Royal Commission on Dominion-Provincial Relations).
A key recommendation of the Commission was that every province had to ensure the resources to provide services at the average national level without levying taxes beyond the average national level.