After the First World War, Canada faced economic hardship. During the great boom of the war years, demand for goods was high and prices rose accordingly. When the soldiers returned, they found that things cost nearly twice as much as they had before the war. To make matters worse, many industries fell into a slump. Factories that thrived during the war had to cut production significantly or closed down altogether. For the war veterans, this meant that jobs were hard to find. Many turned to the labour movement, which gained the national spotlight as unions demanded the right to strike. The Winnipeg General Strike of 1919 came to symbolize workers' discontent.

One the economy improved during the early part of the 1920s, Canada experienced one of the greatest economic booms in its history. American companies invested in Canada's natural resources and manufacturing industries. A seemingly endless supply of new products, such as vacuum cleaners, stove and refrigerators became available. Automobiles and radios had the greatest impact on the social and economic life of Canadians. The stock market boomed with new investors.

The 1929 stock market crash wiped out the huge stock market gains and signaled the beginning of the Great Depression. The successive governments of Mackenzie King and R.B. Bennett struggled to solve the social and economic problems of the Depression. Many Canadians began to look at alternative political parties such as the Cooperative Commonwealth Federation (CCF), the Social Credit Party and the Unione Nationale.

The outbreak of the Second World War in 1939 brought back the war economy and the Depression came to an end.