“Roaring Twenties” become “Dirty Thirties”: Canada and the Causes of the Great Depression also see: http://www.youtube.com/watch?v=bzGmkbAJcpc

The Trigger: The Stock Market Crash

The Trigger: The Stock Market Crash September 1929 – Prices begin to fall Investors begin to lose confidence in the stock market and the companies they’d invested in Tuesday, October 29, 1929  the stock market crashed as investors quickly sold their shares before they lost all their value

The Globe, October 30, 1929

How did Canada go from the optimism and prosperity of the 1920s to the “Dirty Thirties”?

What were the 5 main long term causes of the Great Depression in Canada?

1. Overproduction -- Businesses were producing more goods than they could actually sell. The industrial capacity of both the U.S.A. and Canada had expanded beyond the ability of the consumer to consume

During the 1920s, many industries were expanding, and profits were spent on adding to factories or building new ones Huge supplies of manufactured goods were stockpiled because they could not be sold Question for the class: why would this be harmful to the economy (having too many goods and no one to sell them to?) Guiding questions – if there is a lot of something, would you pay a lot for it? If it’s unique, would you pay a lot for it? Demand drives pricing AND if no one is buying the product, they are spending more money producing it than they are taking in – have to pay for workers, raw materials, etc.

2. Canada was dependent on exports of natural resources/staples. 1920s: about 25% of the Canadian Gross National Product was derived from exports of staple products What happens if other countries stop buying?

Wheat, fish, paper, minerals, coal, wood – shipped to Europe as it recovered from the war, and to the US Overproduction! As the economies of other countries started to decline, there was less demand for Canada’s raw materials

3. Canada’s economy was very dependent on that of the United States. 1920s: 40% of Canadian exports were sold to the USA A lot of US investment in Canada So…what happened when the US economy failed? Decreased demand for Canadian exports Closing of US branch plants in Canada Canada was the second hardest hit country by the Depression, after the US

4. Protectionism Increasing trend in the 1920s Tariffs: money (“duties”) collected on goods coming in to a country Meant to discourage imports and protect industries from foreign competition US protectionism threatened Canada’s export market

5. Canadians were going into debt. Buying stocks “on the margin” Buying consumer goods on credit Farmers and businesses borrowing from banks to pay for equipment and labour

So when the economy began to fail… Banks wanted repayment Companies went bankrupt and laid off workers Canadians couldn’t pay back their debts

What were the long term effects?

Widespread Unemployment

More recent unemployment stats

Canada and causes of great depression crash course on the roaring 20s