UNIT 3 – From Boom To Bust: Canada in the 1920s and 1930s

 Early 1920s – Canadian economy continued to be depressed from the results of WWI  European countries had incurred huge war debts  demand for Canadian exports dropped drastically causing unemployment and bankruptcies  drought-like conditions occurred in the Prairies  High tariffs existed on imports to Canada from the United States  Canadians migrated to the United States in search of jobs

 Strong US economy helped provide American loans to Britain and European countries to help rebuild their economies, increasing the demand for Canadian products  Increased demand for Canadian pulp and paper/newsprint products, development of the mining industry and American demand for Canadian hydro electricity helped grow the economy  INCO – International Nickel Company, Sudbury  Noranda – copper in northern Quebec  Alcan – The Aluminum Company of Canada/Alcoa – The Aluminum Company of America

 By 1926 the automobile industry boosted the production of “spin off” industries: leather, rubber, glass, steel, tin lead, aluminum, nickel and increased research into the petroleum/gas industry  Led to the construction of roads, tire and auto parts plants, service stations, auto-supply dealers  1922 – Billes Brothers (John William – JW and Alfred Jackson – AJ – formed Canadian Tire – in 1934 they franchised their company and by associated Canadian Tire stores existed  Canadian auto manufacturers began making American cars by the end of the 1920s  Distinctively Canadian – Armand Bombardier invents snowmobile in 1926 (Valcourt, Quebec, - south eastern townships)

 Prosperity concentrated in Central Canada – Ontario and Quebec – rising prices still contributed to a poor/rich society and a lower standard of living to some members of society  Many jobs still paid poorly  Women and immigrants suffered the most from low wage and deplorable working conditions  Average annual income was $2500 – most Canadians could only read the advertisements for new electrical appliances and could not afford a car  1931 – 10 percent of all farms had electricity and 2 percent had running water

 Economy based on natural resources: coal, steel production/mining, fishing, agriculture  Demand for Nova Scotia coal decreased as the use of oil and hydro electricity increased in Central Canada  Many miners and workers were forced to take pay cuts rather than loosing their jobs  “handpick mining” work done by hand and workers paid for what they produced – very dangerous work explosions due to methane gas and loose blasting powder  In Newfoundland, the value of cod exports dropped by almost 50 percent – continued to be part of Britain until 1949 – in order to help pay off economic debts

 Late 1920s – the stock market became a “new frontier of making money”  The value of the stocks was not based on the real assets of a company, but on the market value of the stocks  Almost anyone could borrow to invest in stocks  The more people invested, the greater the market value of the stocks  Highly inflated stocks – not backed up by real worth of companies

 Stock holders finally decided that stocks were overvalued – “the pin had been stuck into the overinflated ballon”  Value of the stock disappeared  People rushed to convert their stocks into money  Panic selling took over  Prices continued to plunge  Thousands of investors lost everything  They could not sell their shares for even a fraction of what they had paid for them

 Banks demanded loan repayments and borrowers could not repay their loans  Companies were forced to shut down, people lost jobs  Banks foreclosed on houses/properties as people who could not pay mortgages  No money left to feed families or purchase anything  Bankruptcies were declared  Economic downward spiral continues “DIRTY THIRTIES – economic collapse beyond control and felt internationally