The Great Depression in Canada Mr. Ballantyne

The Business Cycle

1. Boom Spending increases This creates more jobs and higher wages More spending meant more production As the demand for more production goes up, prices also rise (inflation) Eventually, prices rise so high that people refuse to pay Factories end up with too much inventory and lay off workers

The Business Cycle Boom X

Recession As fewer jobs are available, wages also fall Spending falls off, inventories increase even more, and even more workers are laid off Factories begin to close down

The Business Cycle Boom X X Recession

Depression Sales are extremely low, wages are low, prices are low Business failures increase Unemployment is high

The Business Cycle Boom X X Recession X Depression

Recovery As employment begins to pick up again, sales begin to rise Production increases, more jobs, higher wages

The Business Cycle Boom X Recovery X X Recession X Depression

The Great Depression Post War Boom X WWI Recovery X X Recession X X WWII X Depression (1934)

Causes of the Great Depression

1. Over-Production and Over-Expansion Too much food, minerals, newsprint and manufactured goods being produced Large stockpiles build up in warehouses

Companies panic and cut back production Lay off workers Now workers have no money to spend on goods Sales slow down even more.

2. Canada Depended on Selling a Few Primary Products We exported staples such as fish, wheat, minerals, pulp and paper. If the world stopped needing these products we would be in trouble. Maritimes and the West were the worst hit in the Depression because they were areas where these primary products were grown and made. In the 1930s drought and competition from other countries slowed down wheat industry

3. Canada’s Dependence on the U.S. When the crash hit the U.S. they stopped buying our products 40% of our exports went to the U.S. Problems with U.S. branch plants in Canada. As companies lost money, closing these plants was the quickest way to cut costs.

4. High Taxes on Goods Being Imported (Tariffs) European countries still in debt from WWI were unable to buy our goods They put high taxes on goods coming into the country so that people would buy goods bought in Germany, France, etc. We also put taxes on imported goods so that people would buy Canadian goods, which would always be cheaper All these protective tariffs made world trade slow down.

5. Too Much Buying of Products on Credit Especially new furniture, cars, household appliances Many families ended up hopelessly in debt.

6. Too Much Credit Buying of Stocks You only needed $100 to buy $1000 worth of stock.