Palmerston contended with high welfare costs in 1936

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.


Stephen Thorning