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Alberta's separatist angst has bone-deep economic roots. Ottawa cannot ignore it
Alberta's separatist angst has bone-deep economic roots. Ottawa cannot ignore it

Globe and Mail

time12-05-2025

  • Business
  • Globe and Mail

Alberta's separatist angst has bone-deep economic roots. Ottawa cannot ignore it

John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian. A radio personality-turned-populist Alberta premier fanning the flames of a constitutional crisis. Many Albertans convinced that central Canadian business and political big shots neither understand Alberta's economy nor the aspirations of its people. This was Alberta in 1935, under the premiership of William 'Bible Bill' Aberhart. It resembles Alberta in 2025, led by populist Premier Danielle Smith, who believes Albertans' livelihoods have been under attack for the past decade. According to Ms. Smith, the federal 'onslaught of anti-energy, anti-agriculture and anti-resource policies have scared away global investment to the tune of over a half a trillion dollars.' After the recent election of another federal Liberal government, led this time by Prime Minister Mark Carney, Ms. Smith has opened the door to a separation referendum in 2026 if, over any 120-day period, 10 per cent of voters sign a petition for one. In 1935, Aberhart wanted a separate Alberta banking system. Some in Alberta now want a separate country. What one has to do with the other is how the Eastern 'big shots,' as Aberhart called them, responded to Alberta's economic angst in the 1930s and why a replay of history could be our national undoing. Aberhart and his Social Credit Party campaigned against the Canadian banking system because the financial pipelines connecting Alberta's farmers and businesses to internal and external markets were inadequate, constraining growth and exacerbating the hardships of the Great Depression. Canada's banking system was designed in the 1870s. Its goal at the time was to generate stability and protect depositors by facilitating mostly short-term credit (a year or less) for merchants and mixed farming in Eastern Canada. Alberta, founded in 1905, needed a different system, one suited to an economy based on large single crops of wheat, oats and barley, or cattle-raising where viable. This farming required longer-term, lower-cost loans to better manage the ebbs and flows of boom-and-bust commodity markets. By 1935, Albertans were demanding change. Moderates wanted a central bank to manage monetary policy and deliver liquidity to a banking system that could then deploy longer-term loans, keeping the banking system stable. Most bankers from Toronto and Montreal were ideologically opposed to a central bank, believing it would be politicized by Ottawa. Albertans were told by bankers their commodity-driven economy was the problem and that they should mimic Ontario's diversification and make do with the economic results. Moderates won the fight to create the Bank of Canada in 1934 and it opened its doors in March the next year. But the battle for changes to the kind of lending banks could do (longer-term credit facilities that better supported Alberta's economy and consumers) was lost. Banks, for instance, were not permitted to finance even insured mortgages until 1954. Using a mix of incoherent, redistributionist assumptions (social credit), underwritten by conspiracy theories about bankers, Aberhart and his Social Credit Party promised voters in 1935 to take control of the loan policies of Canadian banks and give Albertans the credit they needed to thrive. Two years on, Social Credit hardliners wanted action and forced Aberhart's hand. The Credit of Alberta Regulation Act was passed by the provincial assembly in August, 1937, giving the province regulatory authority over the lending policies of Canada's chartered banks operating in Alberta. Legislation was enacted outlawing use of the courts to invalidate provincial statues, a 1930s attempt at what we know today as a 'notwithstanding clause.' The late constitutional expert J.R. Mallory noted that by this legislation, Alberta 'stood committed to a rejection of the financial system of Canada and of the basic assumptions of national unity in matters of national scope.' Canada was faced with a full-on constitutional crisis. John Hugill, Aberhart's attorney-general and a moderate, resigned from cabinet. Banks prepared to close all bank branches in Alberta. Ottawa acted within 10 days and disallowed Alberta's legislation under the Constitution. Establishing the Bank of Canada was considered good enough to address Alberta's concerns about banking in the early 1930s. To do more, to change the kind of banking system the country needed to support Alberta prosperity, was deemed a step too far. What the experience of Alberta and Canada in the 1930s tells us today is this: When there is opportunity for wholesale change, what looks good enough from the perspective of Ottawa and Toronto is not enough. Failure to understand this in the 1930s planted the seeds of Western alienation deep in Alberta's political soil. Failure to understand this today may well uproot Confederation as we know it in the future.

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