The 1937-8 Recession in Canada

Abstract

There have been numerous studies of Canadian cyclical experience during the Great Depression beginning in 1929. Similarly, the cyclical experiences of 1937–8 in both the United States and the United Kingdom have been fairly popular subjects for examination. However, it is interesting that no intensive analysis of Canadian experience during the 1937–8 recession has been made, but rather it has been treated as an afterthought to studies of the 1929 downturn instead of receiving the specialized attention which it merits. As a result there are doubts about its exact timing, about the magnitude of the fluctuations involved, about the influences exerted upon Canadian activity by the comparable American and British recessions, and certainly there has been a tendency in some recent works to provide a very facile interpretation.The 1937–8 recession is a subject of interest for several reasons. It is the last pre-war cyclical movement, and roughly coincides with similar economic changes in Canada's major trading partners. Cyclical movements in Canada do not always coincide with those in the United States, as was evident in 1948–9 and 1926–7, but when they do, a close examination of what has happened in Canada and of possible interrelationships between the Canadian and American experience may improve our understanding of Canadian cyclical patterns. This paper first represents a modest attempt to single out those sectors of the economy in which the cyclical downswing was concentrated, and second offers a tentative interpretation of the causal elements at work in this particular cycle.