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Lecture 14

HIST113 Lecture 14: Lecture 14. War. Nov 11 2014.docx

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Catherine Briggs

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HIST 113
Lecture 14
November 11 2014
The Business of War
Themes and Questions
Why does war lead to greater government intervention in the economy?
Explain the nature of government intervention in business during WWI and
WWII. Similarities and Differences.
Partnership of business with the Government during war-time.
Does this lead to permanent changes in ideas about the role of government in
economic management?
War and Government Intervention
War increases level of government intervention in the economy and business
(private business sector)
oCost of financing total war
Canada mobilized not just its military forces but also its economy
to the conduct of the war
An enormous amount of money
Uniforms, instruments, military salaries, producing more food
oNew financial sources needed
Ways of generating revenue
Government introduced new means which led to greater
government interventionist role
oShortages of resources and demands of production for war
Critical resources are needed for production
Metals and minerals for shells and guns
Demand for wheat, not only to produce wheat but to drastically
increase the amount of wheat
Therefore need new infrastructure for farmers
oCentralized control of the economy
Ensure that there is enough and that its directed where its most
Ensure that Canadians are not facing food shortages
Require that government ensure that we dont have critical
oIncreases the partnership between business and the state
The extent to which the private business sector will work with the
World War 1
When Canada entered WW1 in 1914 it wasnt prepared for war

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In 1914 Canada was completely self governing
Military issues hadn’t been the substance of the first Canadian governments
Canada didn’t have a standing military (just a small one)
Had men with some military training (militia)
No industries producing for the war in 1914
Britain asked Canada to produce shells for the British army
Canada at that time was determined to mobilize completely with a military
mobilization and increasing its capacity to produce shells etc.
Canadian government makes the shell production committee
oDoesn’t involve civil servants or government employees
oIt was volunteers
oRole was to allocate production of wartime goods
oDoesn’t last that long
oCharged with profiteering: allocating the contracts to companies that are
friends with members of the committee
Making significant profits off of fulfilling these government
oMismanagement: not picking companies that are up to the task and doing
it well (don’t have the skills)
Becomes a problem when they are not able to fulfill the contract on
time (not keeping up with the demand for shells)
oNeed to train workers, because making shells requires precision because
you don’t want to make an error so they don’t backfire on the soldier
oGovernment gets rid of the committee and creates a new board
Private sector is working with the government
Imperial Munitions Board
oIt takes in contract from Britain
oVolunteer businessmen
oJoseph Flavelle was much more efficient and effective in achieving the
production demands and quality goods (better at picking companies)
oGave his own company one of the contracts so he made a profit
oMuch more successful than the Shell production committee
Business state relationship
oTraditional methods: Prefer to work with the existing business community
and encourage them to achieve what is needed for the war
oMutual benefit out of working together
oPrivate sector are given incentives (patriotism and profit)
New methods
oState owned business (crown corp.) in areas where the private sector is
oCost of conversion is too high, don’t have the skilled workers to produce
materials (too high tech for Canadian industry)
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