The Dirty Thirties offer some important lessons for Harper
TheGlobeandMail.com – Opinion/commentary – The Dirty Thirties offer some important lessons for Harper
November 27, 2008. LAWRENCE MARTIN
In Peru on the weekend, the Prime Minister spoke of having studied the history of the Great Depression. If so, it was time very well spent. Stephen Harper knows the dangers, the havoc, for one thing, that the Dirty Thirties wreaked on his conservative flock. It almost killed them.
On this continent, they spent two decades in the wilderness. In Canada, the Liberals, under Mackenzie King and later Louis St. Laurent, governed from 1935 to 1957. In the United States, the Democrats held power from 1932 to 1952, when Dwight Eisenhower arrived in the Oval Office with his golf clubs.
With the Depression, the primordial economic pillars of conservatism crumbled, giving birth also to the CCF, later the New Democratic Party. Today there isn’t such a blanket invalidation of the precepts. But the shift to the Keynesian approach is proceeding with vigour. Its embracers include a reluctant Mr. Harper, who, in making an abrupt and somewhat embarrassing turnabout on the question of deficits, is at least demonstrating a flexibility that some of his political forebears did not.
Opponents accuse him of moving slowly to provide stimulus. But slow today is thankfully not what it used to be. In the 1930s, slow was several years. That’s what it took before governments budged. The Tories of R. B. Bennett, he with the soul of leather, have borne the brunt of the blame for the Depression. But in fact the initial idler and miscreant, the prime minister whose folly has been overlooked, was King.
The Liberal PM greeted the stock market crash of 1929 with foolhardy equanimity. He could barely concede there was an unemployment problem and ardently opposed central government intervention. Warring with Conservative-run provinces, he infamously proclaimed that he would not give them so much as a “five-cent piece” to refuel their economies. In his losing election bid of 1930, that miserly utterance undermined him.
Mr. Harper has surely taken note. But where King really hurt the country – and the PM should know this, too – was in relations with Washington.
The mysterious Liberal leader had a terrific opportunity to have Canada exempted from the crippling Smoot-Hawley tariff. Herbert Hoover had won the 1928 election on a platform of high tariff walls. Knowing a Smoot-Hawley monster was coming down the tracks, Mr. King was also aware that a top Hoover priority was a deal for the joint development of the St. Lawrence Seaway. “Hoover is wedded to the project more than all else,” the PM wrote in his diary. A trade-off was in the works – an exemption on the tariff for an agreement on the river. But due in no small part to King’s obstreperousness, the deal fell through.
While King preferred a discreet arrangement so as not to be seen as having been pushed around, Hoover wanted fanfare. There were then leaks to the media and King ran for cover, denying he had ever been intent on a deal. The Smoot-Hawley tariff was then passed – with calamitous effect. Bilateral trade plunged to one-third of what it had been.
With congressional Democrats today threatening protectionist measures – although not of an equivalent dimension – some smarter bilateral work than that shown by King is needed.
Having watched the Liberals botch the file, R. B. Bennett took over without seemingly having learned a thing. His stubbornness outdid even his predecessor’s. “Gentlemen,” he said in 1930, “the Depression is over.” He avoided the hapless Hoover even more so than Mr. Harper has avoided George W. Bush. But he refused to provide stimulus to the economy, holding to the hidebound view that “the sole function of government is to favour private enterprise.”
When Franklin Roosevelt came to power, Bennett was quick to Washington to break bread with the instantly popular Democrat. But instead of picking up on FDR’s New Deal, as Mackenzie King would wisely later do, he dawdled for two years. Then, shortly before the 1935 election, he made his astonishing deathbed conversion, completely reversing his long-held market creed and announcing he was heartily in favour of government control and regulation. “It means the end of laissez-faire,” he stated.
Indeed it was that, but it was also the end of him. He was crushed in the 1935 campaign and it wasn’t until John Diefenbaker became leader that the Conservatives ruled again. While the conditions in our domestic economy are considerably different today than in those times, many critical political lessons are there to be learned. Mr. Harper, who studied the Depression at the University of Alberta, has a head start.