The City of Calgary's First Boom and Bust (1895-1919)
The CPR's decision in 1898 to make Calgary its divisional headquarters immediately spurred the local economy creating a fast-growing and prosperous community. Here, the CPR built the largest repair shops in western Canada, and new working class communities like Ogden grew around them. New industries were introduced to the city because of the railway-stockyards, agricultural-related industries, food and beverage factories like Calgary Brewery, and construction material manufacturers were soon established. As a result of CPR's presence, Calgary's population (4000 in 1901) grew to over 63,000 by 1912, the peak of the construction boom. Property values also went up substantially; one dramatic example is a corner lot at 7th Avenue and 2nd Street West, fetching for $2000 in 1905, sold for $300,000 in 1912.
Calgary did experience some setbacks during this period of unprecedented growth. Calgary failed in their bid to become the capital city of Alberta in 1905, losing out to Edmonton. Two years later, Strathcona, a community located across the river from Edmonton, was chosen over Calgary as the location for the University of Alberta.
Meanwhile, the harsh winter conditions of 1906-07 devastated the local cattle industry exacerbating the fragile future of southern Alberta's ranching industry. Ranchers saw their land diminish in size as a wave of homesteaders settled in the area. In spite of these setbacks, Calgary continued to develop and diversify its economy. Beginning in 1904, Calgary expanded its borders by annexing its hinterlands while speculators purchased lots, created subdivisions, and later sold them to developers. Some of the more famous subdivisions were the luxurious Tuxedo Park Estates and Mount Royal-the latter being CPR's own development. The construction industry could not keep up with the increased demand for housing; between 1905 and 1909, a severe housing shortage forced some newcomers to live in tents along the Bow and Elbow rivers. Downtown witnessed considerable growth, complete with a modern street car system. Dozens of new warehouses and business blocks emerged, including the opulent Grain Exchange Building and the neo-classical giant, the Dominion Bank. This was truly the age of celebrity developers. Men like James Lougheed and William Roper Hull made fortunes through real estate investments and developments.
From 1910-1912, Calgary's economy soared beyond imaginable heights. Building permits Calgary jumped from 5.5 million dollars to over 20 million dollars, the biggest increase of any city in Canada. In 1910 alone, 14 business blocks, 12 warehouses, 8 hotels, 5 schools, 2 hospitals, Mount Royal College and Carnegie Library, were all built. By 1911, Calgary was the tenth largest city in Canada and the financial capital of the West.
Calgary's economic prosperity continued into 1911. The city's population went from 43,000 to 45,000 in that year alone while the Palliser Hotel, Grain Exchange Building, six-storey Hudson's Bay Company department store, general hospital, and a new city hall were built. Among the most prosperous industries of the time was the real estate industry-real estate offices outnumbered grocery stores and almost 10% of the adult male population was involved in the industry. By 1912, there were 443 real estate firms in operation. Many of these men speculated on residential property, buying and reselling housing, all the while over-inflating the price of real estate until the boom finally reached its peak.
In 1913, numerous signs pointed to an imminent economic collapse. The excesses of the real estate industry caused building permits to drop to 8.5 million dollars in 1913, down from $20 million the previous year. During this time, the industry had been largely unregulated causing problems to arise from rampant speculation. Investors outside of Calgary were often duped into buying worthless property by unscrupulous speculators. Other speculators bought up land that they could not afford to pay the taxes on. When the real estate market collapsed in late 1913, the city was forced to repossess much of this land. The economic boom created waves of optimism among most Calgarians and they responded by investing in real estate instead of saving their money in banks. Calgary's real estate agents had earlier tried to protect buyers and sellers in the market by forming the short-lived Calgary Real Estate Association, in 1910. However, an overall lack of co-operation amongst its ranks caused the association's downfall.
1914 marked end of the boom and thus a slide into recession. Housing, over-inflated in value, became largely unaffordable for Calgarians. The real estate industry, along with the construction industry, collapsed as a result of inactivity. This in turn created high unemployment. Despite the recession, entrepreneurs in Calgary were still trying to find a way to increase their profits. When the Dingman well was discovered at Turner Valley in May 1914, real estate speculators became oil speculators. Oil speculators began selling shares in Calgary, often for companies that did not even exist. Several Calgarians prospered from Turner Valley's oil industry as Calgary immediately became its financial headquarters.References
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