Laurier Boom

Few Definitions  Supply and Demand – as supply goes up and the demand goes down = low prices and vice versa.  Economic Inflation - The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.  Economic Expansion – is the opposite of economic recession. It is when money is flowing, people are being well paid, and the economy is healthy.  Economic Recession - a significant decline in economic activity spread across the economy, lasting more than a few months,

Boom and Bust Cycle  A process of economic expansion and contraction that occurs repeatedly.  The boom and bust cycle is a key characteristic of capitalist economies.  During the boom the economy grows, jobs are plentiful and the market brings high returns to investors.  In the subsequent bust the economy shrinks, people lose their jobs and investors lose money.  Boom-bust cycles last for varying lengths of time; they also vary in severity.

Boom and Bust Cycle

What is the Laurier Boom?  The Laurier boom is a reference we use as historians to identify an increase in two major areas  1) Economic Increase  2) Demographic Increase  In 1870, the world started to have an economic recession – the bust in the boom/bust economic cycle.  By the early 1890s the recession started to end – the boom part of the boom/bust economic cycle - and Laurier became the beneficiary of this economic success.

World Wide Expansion  World wide economic expansion saw economic benefits and prosperity in Canada.  Gold mines around the world – ex Yukon and South Africa – were opening up. With the increase of gold on the market this caused prices of goods to increase.  Canada, being a nation of staple goods, was now able to sell staple products at a higher value and make more money.  New technologies were being built around the world – Cars, airplanes, new machines for farmers, miners and industrial businesses.  Metal was a key resource that was used to build these new technologies – Canada had an abundant amount of Nickel and Silver.

World Wide Expansion  Because of the increase of money in the market – due to the gold rush – more people had money to buy products that comes from timber:  governments were building massive ships,  newspapers (and other paper products) were being sold exponentially more than ever before, and  wood products (such as tables, chairs and etc…) saw a massive increase in sales.  All of these products are derived from timber, and Canada has a lot of timber to sell internationally.

World Wide Expansion  Farmers also reaped the benefit of world wide expansion as their grains become more valuable than ever before.  With more people having more money, more people are buying more food, beer and drinks.  Farmers are able to produce resources for all three of those needs to be meet  1) Wheat for flour to make bread  2) Barley and Wheat to make alcohol  3) Corn, Potatoes, Carrots, Lettuce, Radishes, Onions and etc… for food  4) Meat from Cows, Chickens, Pigs and etc…  5) Milk from Cows  And the list goes on.

World Wide Expansion  World wide we see the following:  1) People have more money to spend,  2) People are buying way more products and goods than ever before, and  3) These products require natural resources to be made; Canada has an abundant of natural resources.  The market was being stimulated by this influx of money (from gold) and as such we saw economic growth and expansion world wide and in Canada.

Foreign Investment in Canada  Merchants and businessmen from around the world saw Canada as a great place to invest money in and work with.  If a country can bring outside money into their economy, this will produce economic stimulation.  While that may be a good thing, the flip side of it is economic inflation occurs.  During the Laurier years Foreign investment was a high demand.

Foreign Investment in Canada  There are three reasons why foreign investors came to Canada.  1) They want to exploit cheap Canadian labour and energy. We do not have any minimum wage laws, and businesses can pay as little as they like. Also, our hydro dams produce high levels of cheap electricity.  2) Foreign companies would come to Canada and buy our timber from us. We would sell it at a relatively high cost, but cheaper than other countries who pay their employees more money.

Foreign Investment in Canada  3) Because of the Tariff’s that Macdonald created via his National Policy – businesses would set up shop in Canada and produce products that are protected by Tariffs  i.e. An American can set up a table making shop in Canada and then sell his product to Americans and Canadians. If he was only set up in America and wanted to sell his products to Canada, there would be a tariff applied to it.

Foreign Investment in Canada  Note the last point benefits Canada not because of Laurier, but because of Macdonald’s National Policy. However, since Laurier is in power, it appears that he is the reason for this economic success – but in reality he is not.

Demographic Shift  “More money” and “more people” became the hallmark of the Laurier Era.  The flourishing economy attracted immigrants, who in turn helped stimulate the economy, which in turn attracted more immigrants.  Recall Clifford Sifton, a Liberal MP from Manitoba, was Laurier’s Minister of the Interior. It was up to him to populate the West.  Sifton started an international campaign claiming that Canada was home to the, “Last Best West.” This slogan was very effective.

Demographic Shift  Sifton suggested that the country should have an “open – door” policy on immigration. I.E. we will let almost ANYONE into Canada.  There were two things that he kept in mind in creating this policy  1) Push Pull Factor – He knew that Canada was a place that a lot of people wanted to move to because of its economic success (pull factor). He also knew that a lot of countries – particularly Eastern Europe Countries – were in economic turmoil and people wanted to leave (push factor).  2) He knew that the land in the West was predominately farm land, and he needed to entice families that had a history of farming.

Demographic Shift  Sifton once said, “a stalwart peasant in a sheep-skin coat, born of the soil, whose forefathers have been farmers for ten generations, with a stout (strong) wife and a half-dozen children is good quality.”  So who fit the profile?  Ukrainians, Russians, Czechs, Hungarians, Poles, Rumanians, Austrians and many other Eastern European people.  Others that came to Canada were Chinese (but not many as there was a head tax), Americans (mostly businessmen) and British citizens (those wanting to explore the world and live in a “civilized place.”)

Demographic Shift

Creation of New Provinces  With all these new immigrants moving into the West, Laurier and Sifton decided to create two new provinces.  In 1905 they created Saskatchewan and Alberta.  The two provinces had all the same rights and legislation capabilities of the other provinces except in one main area – the government had the rights to all natural resources excluding farming.  Shocking as it is – both provinces elected Liberal provincial governments after their birth.

Cities Explode  With the influx of immigrants, most found their way to where the work was.  If it wasn’t on the farms in the Manitoba, Saskatchewan or Alberta, it was in the factories in the major cities.  Cities, ultimately, had more jobs than on the farm.  By 1914, 50% of the population was living in major cities across Canada – Vancouver, Winnipeg, Toronto, Montreal (these four cities had over 100,000 people).

Cities Explode  Inside the cities, wealth was kept in the hands of the businessmen.  The workers were paid very little  $10 - $15 a week, working six days a week, with no job security. Most could hardly afford to pay for rent.  The result was the creation of ghettos – a slum area of a city usually inhabited by a group of minorities.  Inside these ghettos, up to three families would live together in one house, or two families in one apartment.

Cities Explode  These places offered very little light, fresh air, and heat. They were often unsanitary and frequently led to diseases.  Education was not on the forefront for most of these families. Work and making an income was more important. So children, at the age of ten would be working in factories.

New Comers Not Welcome  Canadians were very uncomfortable with all these new comers coming to Canada.  These people brought with them their language, culture and religion. All of which was vastly different to those that were all ready living here.  If you were Chinese you were treated even worse than White people. There was a $500 head tax on every Chinese immigrant into Canada.  That would be $10, 278 in todays money per person.

Conclusion  The Laurier boom saw massive expansion in economics and immigration.  We saw many Eastern Europeans move to the interior and the creation of Alberta and Saskatchewan in  Farmers, Businessmen and Industry grew and the stimulated economy grew with it.  New Comers were living in ghettos, they were not well received and they were paid very very very poor wages.