By 1933 more than 20% of the male working force we unemployed. Many lived in relief camps set-up by the Department of National Defense. Due to this emergency the Bennett government quickly moved to legislate an unemployment insurance scheme. They were so desperate to implement such a scheme that they ignored the obstacles of federal-provincial jurisdictions.

The 1935 Unemployment Insurance Act was struck down by the courts which argued that under the British North America Act only the provinces could enact such legislation. Therefore, at the end of the 1930s, the new Liberal government formed the Royal Commission of Dominion/Provincial Relations to establish the roles of the federal and provincial governments. The Commission concluded that the provincial government should retain responsibility for unemployed people who were unemployable, or the "deserving poor" -- seniors, single-parents, the disabled, and the federal government should have the responsibility for the employable or "non-deserving" poor. The Commission established the agenda for post-war discussions on social reform.

Special Committee of the House of Commons discussing the Unemployment Insurance Act, Aug. 1940, National Archives Neg. no. PA188953.