The great depression of the 1930s was a difficult period for municipal councils in Ontario. Much of burden of welfare costs and unemployment relief fell on them, and to meet the challenge councils were faced with declining assessments as industries closed. To make matters worse, ratepayers wee in no mood for a tax increase: indeed, many councils tried to lower their tax rate.
The impact of the depression on municipalities was uneven. Fergus managed quite well, as the dominant employer, Beatty Brothers, maintained production through the entire period. Others suffered greatly. Among that group was Palmerston.
The Canadian National Railway’s payroll dominated the economy of Palmerston in those years.
The big rail system employed close to 300 residents in the town during the 1920s, as operating crews on trains running on the six lines radiating from the town, in the freight warehouse, and in the locomotive and car repair shops.
In 1932, Canadian National cut back its service dramatically, reducing the number of passenger trains through Palmerston by more than a third. The depression was not the only challenge facing the railway. Trucks and cars were cutting severely into all parts of the railway business.
CN laid off more than 100 of its Palmerston workforce. Some of them moved away, but most remained in Palmerston, hoping that the economic conditions would be brief and that they would soon be back on the job.
Without their railway income, some of those unemployed railwaymen and their families relied on public welfare for sustenance. As a group, railway workers were not popular amongst some of Palmerston’s residents.
They tended to identify with their crafts and with the railway, rather than the town, and many of them had spent much of their income out of town, relying on their railway passes to go to Stratford and Guelph to do their shopping.
More than any other town in Wellington County, Palmerston council had granted benefits such as fixed low assessments to both the railway and to manufacturers. Canadian National had secured tax concessions when it threatened to centralize some of the repair shop functions to Stratford and London.
As a consequence of those policies, Palmerston’s residential assessment stood at more than 94% of the total in 1936, with the balance divided between industrial and commercial. In good times those policies, passed to push growth and prosperity, seemed sound. Now the hens had come home to roost.
At its first meetings in January and February 1936, town council struggled to address the situation. Mayor C.A. Watt led the economy drive, with an announcement that the positions and salaries of all municipal employees would be reviewed, and that other steps would be taken to reduce costs and improve efficiency.
Several councillors immediately came down with cases of cold feet. Reeve Brown and councillors Auld and McDonald stayed away from a special meeting on fiscal matters called for Feb. 4. That meant there was not a quorum, but nevertheless the other councillors discussed matters surrounding the town’s finances.
A discussion of public welfare costs, as expected, occupied most of the evening. Councillors reviewed a list of accounts from merchants. Welfare recipients could purchase food and other items from stores, up to a limit, and the merchants then submitted their accounts to council.
Councillors disputed two items. One was a bill for $21 from merchant E.J. Locke for welfare purchases by two families who had since left town. The amount was from the previous summer, during the period when Palmerston suspended welfare payments on the notion that recipients could raise food in their own gardens.
The other item was a complaint about the Nye Dairy. Several welfare recipients refused to take milk from that source on the grounds of inferior quality. Councillors were determined that the town’s two dairies should share equally in the welfare purchases. Nye was present, whining bitterly that he received less than 20% of the money spent on milk by welfare recipients. The town clerk backed up Nye’s figures, stating that some families refused to take vouchers for milk at the Nye Dairy.
Several councillors believed that some undeserving households were receiving welfare, and that measures should be undertaken to weed them out immediately. The clerk presented figures to show that the number of people on relief was declining, but that did little to reassure councillors that the town was not in financial peril.
There were 14 heads of families on the roll, supporting 55 dependents, plus six single men. That totalled 75 people, down considerably from the end of 1934, when the total number neared the 200 mark.
In December 1935, the clerk’s figures showed $294 spent for food, $61 for fuel, and $19 for medical costs.
Council held a regular monthly meeting on Feb. 10. The much-discussed personnel review turned out to be nothing but hot air. Council reappointed all employees from 1935 at no change in salary. Councillor Matthews proposed a motion that all positions be advertised for tender, but his motion failed to attract a seconder.
The town’s liability insurance policy was on the agenda that night. There were three quotes, the lowest from out of town, and the other two from local agents. After a lengthy discussion, council supported awarding the policy to the highest bidder, on the grounds that they wished to deal locally, and that the highest bidder did not at the time have a share in the town’s business. The economy drive, it was evident, applied only to welfare costs.
At the next meeting two weeks later, council quickly approved a $50 grant to the Palmerston Brass Band for instrument repairs. Council had awarded the group a similar grant just before Christmas 1935. Council was not so generous when informed of a new welfare case, resulting from a family from Wallace Township moving to town. There was a discussion about measures that might be taken to remove them from Palmerston.
Municipal councils might be paternalistic and ungenerous, but welfare recipients had no friend in the provincial government either.
Agenda items that night included a circular from Queen’s Park alerting them to the epidemic of venereal disease among the welfare class. It could substantially raise medical costs to local governments. After discussion, council referred that matter to the health board.
Both the town council and the relief recipients, whether deserving or undeserving, received something of a boon during February. Several storms dumped a thick layer of snow on Palmerston and area, with depths totalling four feet in most places, and drifts up to 12 and 15 feet.
The town council hired a group of men to shovel snow from sidewalks and streets, and the railway called back most of its laid-off operating employees to run special trains pushing plows. One plow train carried a carload of shovellers to rescue a train stranded in a drift near Listowel.
The income earned by those men replaced public welfare, thus substantially reducing the drain on the municipal coffers that month, and during the following March. That money took a great deal of the pressure off Palmerston council that spring.
There are two obvious lessons to be learned from municipal finances of the 1930s. One is that favouring one class of ratepayers with fixed assessments or reduced rates not only increases the burden on everyone else, but also that such a policy can paint a municipality into a corner when the economy reverses.
The other lesson is that placing welfare costs on the local property tax base is a foolish policy. It can devastate a municipality that is particularly hard hit by increasing its expenditures at the worst possible time.
As well, everyone on council, and even some ratepayers, will see themselves as supervisors and administrators of welfare policy. In the end, such a situation is demeaning to councillors and ratepayers, as well as to the unfortunate who find themselves on the receiving end through no fault of their own.