CAUSES OF THE GREAT DEPRESSION Canada in the 1930s

1. What effect did the Business Cycle have on the Great Depression? 2. Assess how the Stock Market Crash in 1929 was a symptom of the Great Depression 3. Diagnose the SIX main causes of the Great Depression Learning Goals:

Business Cycle Economic conditions are constantly changing Economy is on the upswing = Good times Business declines = Bad times  1920s – prosperity  Little unemployment, production was high, prices were high = 1930s – recession: Slowdown in economic activity  Too many goods + people not buying = fewer goods to be made  Fewer goods to be made =

Too many goods (Too many radios) Too many goods (Too many radios) People not buying goods ( Most people already have all the radios they need) People not buying goods ( Most people already have all the radios they need) Fewer goods for businesses to produce ( businesses make fewer radios to sell) Fewer goods for businesses to produce ( businesses make fewer radios to sell) Unemployment Rises (Fewer people working at the radio factory) Unemployment Rises (Fewer people working at the radio factory) Business go bankrupt (People don’t have jobs and money to afford new radios, cars, clothes and food so business close) Business go bankrupt (People don’t have jobs and money to afford new radios, cars, clothes and food so business close)

Stock Market  buying and selling shares of companies  In the 1920s many people bought shares  When stocks were high, people sold them and made money Black Tuesday  the day the stock market crashed in October 1929  Value of stocks quickly declined – people lost a lot of money  People tried to quickly sell their stocks.  The more stocks they sold, the lower prices fell  In just a few hours the value of the worlds major stocks dropped by 50% Copy BLACK font

Causes of the Great Depression 1. Over-Production and Over-Expansion  In 1920s agriculture and industry reached high levels of production.  Too many goods were produced and were stockpiled  Factory owners panicked and laid off workers and slowed down production  This led to people having less money to buy goods, which led to fewer goods being sold *Too many goods were produced and people didn’t have the money to purchase them anymore! Copy BLACK font

2. Canada’s Dependence on a Few Primary Resources  Canada’s economy ran on a few basic products called staples Examples: wheat, fish, minerals, pulp and paper.  Staples were produced in Canada and sold outside of the country (exported).  During the Depression, outside countries could not afford our staples, the demand of our products fell and Canada was not making money  Fishing industries in Easters and Western Canada declined  Wheat farmers in the Prairies were also hit hard. A drought from about created terrible conditions for farming - without rainfall crops did not grow and famers made no money. Copy BLACK font

3. Canada’s Dependence on the United States  65% of our imports were from the US  40% of our exports went to the US  When the depression hit the US, Americans could not afford and did not need Canadian lumber, flour, fish and products.  “When the United States sneezed, the rest of the world got sick!” Copy BLACK font

4. Protective Tariffs  Tariff: a tax on imported products  Many countries placed tariffs on imported goods to protect their own industries from foreign competition.  Canada now had fewer countries to sell their products to  Example: Canada wants to sell lumber to France.  France already has industries that sell lumber.  So, if Canada wants to sell their lumber to France, Canada has to pay a large tax.  This helps ensure that French people are buying French lumber (keeping French money in France) rather then buy Canadian lumber. Copy BLACK font

5. Too Much Credit Buying  Credit: Ability to “buy now and pay later”  Interest: A fee on borrowed money  Many people purchased their goods on credit.  With no money, people could not afford to pay off their credit fees  People lost money and their goods (stoves, furniture, homes). Copy BLACK font

6. Too Much Credit Buying of STOCKS  Many people in the 1920s purchased stock market shares using CREDIT – not their own money  When the stocks went up in value, you could sell, make back your money to pay the credit and put some in your own pocket  Stock Market Crash – value of stocks dropped and people lost all of their money and still owed the money they borrowed from credit! Copy BLACK font

Cause and Effect Map Cue Card Activity