The Depression seriously undermined municipal finances. Montréal paid for a large portion of unemployment relief. Property taxes, which exempted religious, educational and social institutions, were insufficient to meet the City’s needs. It was forced to borrow, thereby increasing its burden of debt.
Business circles called for a reduction in expenditures. Camillien Houde, a Populist politician, refused to cut back unemployment aid. In 1935, he introduced new taxes, including Québec’s first sales tax.
The municipality’s financial situation remained precarious. Montréal was placed under government trusteeship from 1940-1944. Among other measures, City Council was completely transformed: property and business owners, along with English-speaking members, gained influence, while the Populists fell from power.