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The Economic Impact
The Great War had a tremendous economic impact on Canada and the world.
It is estimated that the war cost almost $340 billion dollars with more than
half of that going to the direct cost of waging it. For Canada, paying for the
war changed the economy and taxation structure of the country forever. Before
the First World War, Canada had no income tax and the then minister of finance
thought it would be necessary to institute a tax to pay for the soaring costs
of the war effort. Surprisingly, a 1915 appeal to the public raised more than
$100 million and the Victory Loan Campaign, launched in 1917, raised hundreds
of millions more.
Canada’s stagnant economy was pushed into high gear by the war. The demand
for shells, rifles, tanks, aircraft and all types of armaments sparked the rapid
creation of a new industrial manufacturing sector in Canada. The war transformed
Canada from a largely rural economy to an industrialized nation. At the |
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outset
of the war, Canada had no munitions industry to speak of, but through the Shell
Committee (and later, in 1917, the Imperial Munitions Board) the country’s
capacity expanded rapidly. By 1915, Canada had almost 250 factories, employing
60,000 to 70,000 people. By 1918, some 300,000 Canadians (30,000 of them women)
were at work in factories.
This rapid change brought hardship too. Inflation soared and higher prices bit
into the income of many families. Workers were disgruntled and labour unrest
was common. Finally, and perhaps most importantly, the government in 1917 relented
to the economic pressures of the war effort and instituted the “Income
War Tax Act,” bringing income tax to Canadian |
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