1939-1945
With the start of the war came a boom in the economy after the Great Depression of the 1930s. Since Canada, at the time, had a wartime economy, there were much fewer consumer goods available, as most of the production was going towards armaments. However, the economy was booming so the new generation of workers had money to spend. With so many dollars chasing such few goods, the prices would obviously rise quickly and lead to a crippling inflation.
To combat this problem, the Canadian government used large tax increases, forced savings, and the sale of Victory Bonds to keep prices down and take the money out of the consumers' hands. By 1943 they took in nearly $1 billion dollars. The total amount of War Bonds bought was nearly $10 billion.
The government also took the revolutionary step of freezing all prices and wages to prevent inflation by intervening in the economy heavily. Consumers who wanted to buy certain items would have to get permits, and rationing was introduced. However, even though there was food rationing, the rationing was not as strict as most countries, including Britain and the United States.
At the end of the war, this massive government intervention paid off - Canada dealt with inflation without slowing down the economy. Its record of keeping inflation in check was the best in the world. After the war, Canadians got back the money they invested in Victory Bonds (with the returns) to invest in the post-war economy, effectively avoiding another Depression.
Topic: Damn Inflation... (Read 3505 times)
