How The Great War Changed Canada – An Economic Perspective

Written By: Sumeet Singh Dhatt

June 28, 1914: Archduke Franz Ferdinand has been assassinated triggering the start of a four-year-long conflict unlike the world has ever seen before, the Great War (10). These next four years will see the death of millions, as well as the rise and fall of nations and empires.

The Dominion of Canada, under the rule of Great Britain, fought alongside the allied powers including France, Russia, and the United States (10). Over the next four years, the young nation will step into its own, showing to the rest of the world that it’s more than just a colony and that it deserves representation on the global stage.

Although the Dominion would not see complete independence from the Empire until decades later, its contribution to the war was pivotal for the Allied victory and helped build the sense of a distinct ‘Canadian’ identity. As a young nation, Canada was not prepared for the brutal reality of the Great War, however, it was able to remarkably overhaul its military, production, and economy to support the war efforts.

The Turn Of The Century

By the turn of the century, the Dominion of Canada was developing from a rural economy to one that was rapidly industrializing with growing urban centers in both Quebec and Ontario. Both of these regions saw the rise of new industries, such as manufacturing, and spawned large financial and communication centers (4).

When news of tensions in Europe began to spread, it was becoming evident that a conflict would arise. Due to Canada’s position as a dominion, the nation would be brought into the war alongside the British Empire. In general, reactions to this news were mixed. Although there was a lot of enthusiasm at the start of the war, there existed a sentiment that French Canadians were less enthusiastic in participating in a foreign conflict (5).

On August 4th, 1914, The Dominion of Canada officially joined the war against the Central Powers (Germany, Austria-Hungary, Bulgaria, and the Ottoman Empire). At the time, its military was small, consisting of a minuscule standing army and a two-ship navy. However, the nation quickly ramped up enlistment and by 1918 had sent over half a million troops to the European battlefront (8).

Behind The Curtain

Although the battles were being fought in Europe, Canada felt the effects of the war through its economy. The war generated immense demand for certain industries, such as military services, manufacturing, and agriculture. In fact, unemployment levels at this time almost disappeared due to the insurgence of demand overwhelming the economy (7).

A specific focus in production was artillery shells. The production of artillery shells was crucial to the Allied forces, who expended millions of shells on the Western Front. However, early in the war, it was evident that no Allied economy was organized to produce the number of artillery shells required. This prompted Prime Minister Borden to form the Imperial Munitions Board in late 1915 (replacing the former Shell Committee) to organize wartime production (7).

The Imperial Munitions Board (IMB) was led by an English-Canadian Businessman, Joseph Flavelle, and was under the direct authority of Great Britain. The IMB’s initial focus was on organizing the production of artillery shells. At the time of the IMB’s creation, only a few organizations could produce artillery shells. But by 1917, the IMB was able to help organize dozens of businesses to collectively produce two million dollars worth of artillery shells each and every day (7).

After the IMB’s success with the organization of artillery shell production, it expanded to produce other military equipment such as propellants, brass casings, ships, and airfields. By the end of the war, the IMB under Joseph Flavelle’s guidance had organized 600 factories to produce 103 naval vessels, 2600 training aircrafts, and 30 flying boats; with more than 289,000 Canadians employed under them (7).


Financing A War

Financing a war is a difficult endeavor, and although the Dominion of Canada was supported by the Empire, it was soon evident that this support would be limited. Throughout the war, Great Britain was facing its own financial hardships which led to the Empire not being able to provide loans nor pay the Dominion (7;8).

As such, the Dominion was forced to look elsewhere for support, more specifically, they looked southwards. The United States of America began to fill Great Britain’s role in providing financial aid to the Dominion. This began a long-lasting trend, where Canada would stray away from the influence of the commonwealth and become more ‘US-centric.’ (7;8)

Although the United States provided loans to Canada, the dominion financed most of the war through the support of Canadian citizens in the form of bonds. The government offered bonds to citizens, corporations, and organizations, advertising the purchase of a bond as an avenue to directly support the troops. The ‘victory bonds’ were a loan provided to the government that could be redeemed with interest in 5, 10, or 20 years after purchase (1;8).
The ‘victory bond’ campaign was a great success; as it exceeded all expectations. Throughout the war, more than $2 billion worth of bonds were purchased, double the amount raised from foreign sources (8). Part of the success can be contributed to the high morale at the start of the war, leading to many Canadians wanting to support the troops.


The Silent Killer, Inflation

Despite this great success in financing the war, boosting economic activity, and reducing unemployment, the war still proved to be a heavy burden on the Canadian economy leading to rising inflation, shortages, and high costs of living.

Initially, the government attempted to manage this issue by appealing to Canadians, asking the public to reduce consumption of scarce goods and asking firms to increase the production of scarce resources. However, as inflation continued to increase, the cost of living became overwhelming, especially in urban centers (9).

Eventually, the government intervened attempting to manage the economy. They began to appoint boards to manage and oversee the production of scarce or essential resources, in a similar vein to the previously mentioned IMB. One such example was regarding food and fuel controls, in which the government-appointed controllers to oversee and manage their productions. By the end of the war, the government had appointed a board, the Canada Food Board, to take control and monitor foods sales in an effort to avoid shortages (9). Aside from monitoring production and sales, the board also attempted to use propaganda posters to dissuade the public from wasting essential or scarce resources and to promote good practices, such as conserving meat and fuel (9).

How Did It Change Canada?

The ‘Canada’ that emerged from the Great War, was not the same Canada that it was prior. Not only did the government have to overhaul the economy, through exercising more control than ever seen before, but the way the nation perceived itself had changed.

During the war, the government had to intervene in all aspects of the economy. Although many of the measures they implemented were temporary, we can still see the remnants of some programs to this day, such as the taxation program, social welfare programs, national transportation and healthcare systems (9;3).

The mass adoption of these programs after the war symbolically represents a change in the identity of Canada. The nation no longer saw itself as a subject of the British Empire, rather it was building its own national identity, separate from the Empire. This was not a sentiment that would die soon after the war, rather it continued to grow strength. In the decades between the first and second world wars, we saw a ‘new Canada’, one that asked for recognition on the global stage and made its own decisions; and finally in 1982 Canada achieved full independence through the passing of the Constitution Act (2;9;6).


Works Cited

1. Canadian posters from the First World War – Victory Bonds. Government of Ontarios. (n.d.). Retrieved October 23, 2021, from
2. Constitution Act, 1982. The Canadian Encyclopedia. (n.d.). Retrieved October 23, 2021, from
3. Cook, T. (2017, November 15). A changed Canada emerged from the First World War. The Globe and Mail. Retrieved October 23, 2021, from
4. Drummond, I., & McIntosh, G. (n.d.). Economic history of central canada. The Canadian Encyclopedia. Retrieved October 23, 2021, from
5. Durflinger, S. (n.d.). French Canada and Recruitment during the First World War. Canadian War Museum. Retrieved October 23, 2021, from
6. First World War (1914 – 1918) – veterans affairs canada. Government of Canada. (n.d.). Retrieved October 23, 2021, from
7. Finance and war production. Canadian War Museum. (n.d.). Retrieved October 23, 2021, from
8. Granantstein. (n.d.). How the first World War changed Canada. Retrieved October 23, 2021, from
9. The home front – food, fuel, and inflation. Canadian War Museum. (n.d.). Retrieved October 23, 2021, from
10. Introduction – how the war started. Canadian War Museum. (n.d.). Retrieved October 23, 2021, from
11. Biography – Flavelle, sir Joseph Wesley – volume XVI (1931-1940) – dictionary of Canadian biography. Home – Dictionary of Canadian Biography. (n.d.). Retrieved October 23, 2021, from
12. Brennan, P. (2018, July 1). Billy Bishop – canadian war hero. Canadian Roadstories. Retrieved October 23, 2021, from
13. Buy your victory bonds poster. Magnolia Box. (n.d.). Retrieved October 23, 2021, from
14. Canadian charter of rights and freedoms. The Canadian Encyclopedia. (n.d.). Retrieved October 23, 2021, from
15. File:sir Robert Borden, 11-12-21 loc npcc.05413.jpg … (n.d.). Retrieved October 23, 2021, from,_11-12-21_LOC_npcc.05413.jpg.
16. Library and Archives Canada Blog, & Library and Archives Canada Blog. (2018, November 20). Soldiers at the front, workers in factories. Library and Archives Canada Blog. Retrieved October 23, 2021, from
17. McLeod, S. (2019, November 20). Women flooded into war industry jobs. the whig. Retrieved October 23, 2021, from
18. SIR JOESPH W. FLAVELLE, BART. McCord Museum. (n.d.). Retrieved October 23, 2021, from
19. Nicolet, F. L. (n.d.). 1917 – doing their bit. Osgoode Digital Commons. Retrieved October 23, 2021, from

Leave a Reply

Your email address will not be published. Required fields are marked *