Canada entered the war on August 10, 1914, sending 25 000 volunteers with a promise from Britain that they would return home by Christmas. However, when the war began to escalate Canada sent more troops to Europe. Meanwhile, the economy at home was forced to change in order to accommodate the war. On the "Home Front" as it was known, Canada was going though the greatest economic change that it had ever experienced. Because of the war, many new industries were formed in Canada's cities. In these factories guns, food, munitions and other war supplies were produced for the soldiers overseas. In addition, rural Canada went through great economic changes. To feed Allied troops, Canadian farmers expanded their farms in order to produce upwards of four times more food than they had to before. Allied forces desperately needed the food they produced for the soldiers. Women began to play important roles in Canada's economy. While Canada's men were fighting, women picked where they left off in the workforce. They were key in the war effort, as well as keeping Canada's economy running. Resource industries in Canada also expanded and Canada's marketplace began to grow.
During the war, demands for Canadian goods went up in Europe and in Canada. Increased demand caused inflation on products in Canada to skyrocket, as prices on most products nearly doubled. The workers wages went up as well, but they didn't keep up with the inflationary prices. Workers therefore had to do with less. During this time the government expenditures on the war were enormous. The war was costing Canadians a million dollars per day. For a country of only eight million this was an extremely large burden. In order to raise funds, the government introduced income tax, and sales tax and luxury tax. They also borrowed money from the people through Victory Bonds.
When the last shot was fired in World War 1 on November 11, 1918, Canada had gone though a great economic transformation; the economic changes the country endured would influence it forever.
After the war, Canadian soldiers came home expecting to be regarded as heroes. Instead they came home to unemployment, because the munitions factories and army supply factories were shut down. Canada had to adjust from war economy to a peacetime economy. Unemployment was very high, and they government couldn't do very much because they were still recovering from the economic losses due to the war. In the early 1820's Canadian workers began to form unions to help ensure equality and job security. Many strikes were staged all across the country in an effort to improve working conditions. These hard times were short lived, however, because in 1923 Canada's economy was once again on track. Farmers produced bumper crops, and their wheat was in high demand in war torn Europe. People began to settle in Western Canada, and factories were producing new products like cars, radios, and refrigerators. With the introduction of all these new products, unemployment dropped and people had money. One the big reasons for the pick up in Canada's economy was increase trade with the U.S. The US purchased most of Canada's raw materials, and they set up branch plant in Canada to produce American products. In addition Canada was continuing to expand its economy. Resource industries were broadening, immigration and railroads were continuing to expand the west, Canada was truly a country on the rise. Women also were working in the economy. During the war many of them got jobs and most of them retained them throughout the 20's.
Prohibition also played a large roll in Canada's economy, albeit an illegal one. Canada introduced prohibition in 1917, and in ended in 1919. More importantly, however, was that prohibition in the USA lasted from 1919 to 1933. Canadians liquor barons set up shop and sold contraband liquor to other Canadians between 1917 and 1919 and in 1919 they began selling to Americans. The illegal liquor business was a huge money making industry for Canadians. The liquor trade however led to organized crime, which is still a problem in society.
The 20's were a time of partying and having fun. Unemployment was low; Canada had just won the war. New and exciting products were being introduced to the marketplace.