The Impact of World War I on Canadian Economic Development

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World War I has had traumatic effects on the countries that participated in it in terms of

many aspects such as the tremendous amount of debt and war costs that they had to

encounter at the end of the war. Such effects were usually long-term in nature and were

most strongly reflected in the form of changing political, economic and social structures,

and public opinion across those participant nations or even other parts of the world for

decades even after the official end of World War I.1

At the end of the War, changes in political structures were evident in many countries,

especially those in Western Europe, as they began to adopt more liberal forms of

government. In addition, the optimistic outlook and prosperity of those countries of the

few decades preceding World War I were replaced by a more pessimistic outlook on life

and the economy as a result of the harsh consequences of the war.2

As a young country, Canada made huge contribution to the British forces and its Allies

in many ways. In other words, the Dominion played a significant role in World War I in

terms of its size and its relatively newly developed industrial economy.3 The years

between Confederation and the turn of the twentieth century marked a crucial period for

completing the framework of the new Dominion. “It is true that external stimuli so

important in the decade preceding the First World War were largely lacking and that

technological advance was slow to the end of the nineteenth century, but in view of the

range of problems encountered the period from 1867 to 1900 must be regarded as one of

solid and substantial achievement in nation-building.”4

The country began to experience significant boom in the late 1890s which were likely to

be triggered by high rate of growth and expansions in many of its prime sectors of the

economy such as the railway and wheat industries. These industries have generated huge

amount of capital inflows from foreign investments, especially from Britain. During the

preceding years of the war, there was a strong presence of optimism and stability in the

young Dominion.

“Those years, from 1897 to 1912, possessed a degree of continuity in economic terms.

They were years of more or less ongoing prosperity, continuous rises in the general

Canadian standard of living, and steady increases in Western production and immigrant

arrivals. Canadians had come to regard as normal extensive growth, ever-increasing

wheat exports, and British investment. In other words, ever growth, if reasonably

uninterrupted, provides a sense of stability.”5

Similar to the other countries that participated in World War I, Canada was also

tremendously affected by the war in many ways in a strong economic sense. One of the

greatest impacts of World War I on Canadian economic development was that the

expansions in the agricultural and Prairie wheat industries caused Canadian per capita

income to increase sharply during the war but also caused it to decline dramatically in the

post-war years. The war resulted in rising agricultural prices such as that in wheat which

generated huge profits for farmers and resulted in a huge boost in Canada’s national

income. Another significant impact of the war on Canadian economy was a shift of

resources such as capital and labour into and within the manufacturing sector. During the

war, Canada was a major supplier of the bulk of ammunitions such as shells and

explosives for Britain and its Allies. Most of the capital invested in the production of war

orders became obsolete at the end of the war which made the shift from manufacturing

production into consumer durable goods a very costly process.6

Some of the most notable industries that were greatly affected by the war include the

agriculture and manufacturing sectors of the...
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