We will describe some key social, economic, and
political trends, events, and developments in Canada
between 1945 and 1982, and explain how they
affected the lives of people in Canada.
You will describe some key trends and developments
in the Canadian economy during this period, and
assess how they affected the lives of people in Canada
How did Canada’s economy develop
between 1945 and 1982?
The Maturation of the Canadian Economy
After WWII Canadian consumption grew dramatically.
Maybe it was because of the unadulterated happiness
that followed the conclusion of the world’s greatest
conflict. Whatever the reason, Canada (and North
America in general), began consuming at a pace that
had not been seen since the early 1920’s. Canadians
were buying televisions, radios, kitchen appliances,
automobiles, entertainment and other new products
that hit the market. Fears of a post-war depression
were quickly erased.
Seeing the booming Canadian economy, many
American businesses wanted to get their piece of this
pie. Businesses from the U.S.A. began to build factories
inside of Canada to sell their product to the hungry
Canadian markets. These American owned businesses
were dubbed Branch Plants. Although all the money
went to the ‘parent company’ in the U.S.A., they were
manufacturing and selling their products inside Canada.
American companies did this in order to by-pass
Canadian taxes and tariffs to save money. If they
imported their products from the U.S. to Canada, they
would have to pay major tariff fees and taxes to sell
their foreign products on the Canadian market. This
was a major problem because although it did create
jobs for factory workers, almost all the upper level
positions were filled by Americans. Along with this,
most of the taxable profits were sent back to the
‘parent company’ in America, and taxed by the
American government.
The Canadian government did not like this for obvious
reasons. Millions of taxable dollars were being sent to
the U.S., and these companies were also using this
loop-hole to avoid being taxed by Canadian tariffs.
Some Canadians thought this injection of American
business was good for the Canadian economy; however
many feared an American economic takeover. It was
not until 1994 when the North American Free Trade
Agreement (NAFTA) closed these loop-holes.
NAFTA Logo
In 1965 Prime Minister Lester B. Pearson and President
Lyndon B. Johnson signed the Auto Pact or APTA. This
agreement removed tariffs on cars, trucks, buses, tires,
and automotive parts between the two countries. This
greatly benefited large American car manufactures. In
return, they promised the same automotive output and
prices for the Canadian consumer.
This pact also put a new tariff on automobiles
imported from Japan, Germany and Britain. Due to this
pact, more automobile Branch Plants began to spring
up across southern Ontario. Automobile and parts
production quickly surpassed pulp and paper to
become Canada's most important industry. This pact
demonstrated how the American and Canadian
economies were interconnected.
After WWII and into the 1960s the world petroleum
market enjoyed a major boom. The consumption of oil
was mainly driven by the explosion of the automobile
market, and factories which needed oil to produce their
goods. Although the global petroleum market was
booming ,western countries were becoming more and
more dependent on foreign oil sources…mostly in the
Middle East.
In 1960 OPEC (Organization of the Petroleum Exporting
Countries) was created as a petrol cartel to moderate
and coordinate global oil prices between oil producing
countries. The founding member countries were Iraq,
Kuwait, Iran, Saudi Arabia and Venezuela. With the
Western World’s support of Israel during the Yom
Kippur War (mostly from America and the Netherlands)
in 1973, OPEC retaliated by flexing its economic might.
As Israel was being resupplied by America and other
western countries, OPEC decided to put an oil embargo
on countries who supported Israel. By 1974 the prices
of OPEC oil rose from $3 per barrel to $12. North
American gas stations were running dry due to the
rising price of foreign gas. North Americans were even
buying Japanese cars in record numbers (because of
their fuel efficiently) to survive this energy crisis.
1976 Honda Civic
Once again in 1979, the Western world endured
another energy crisis due to events that occurred in the
Middle East. On November 4th 1979, a massive
demonstration in Tehran, Iran, toppled the Americanbacked Iranian Shah (king). During the oust of the
Shah, the American embassy was taken over and 52
American diplomats were held hostage for 444 days.
During this Iranian Revolution gas productivity
drastically slowed down, and prices once again shot sky
high.
The energy crisis got even worse in 1980 at the
outbreak of the Iran-Iraq War. This war grinded oil
production in Iran and Iraq to a halt. Once again, North
Americans were forced to conserve all their energy, and
waited in line to buy gas at record-high prices. The
American hostages were finally released on January
20th 1981.
Forum Question:
Out of the different economic crises that we have
examined (Branch Plants, The Auto Pact, the
1973 energy crisis or the 1979 energy crisis),
which one do you believe has had the most
impact on the world today? Why?
Please post your response on the Discussion
forum and respond to at least ONE other
classmate’s opinion.