3 The Market Economy Canada operates on a market economy Controlled by Supply and DemandSupply – availability of a productDemand – how badly people want productBig supply Low PricesLow supply High Prices
4 Business CycleMarket economies go through a cycle of prosperity and recession every 5 or 6 yearsCan also go through a boom (extreme prosperity – 1920s) and bust (deep depression – 1930s)
5 THE 1920’S WAS A PROSPEROUS TIME BUT THE PROSPERITY WAS NOT SHARED EQUALLY MANY PEOPLE, LARGELY DUE TO NEWLY INTRODUCED INSTALLMENT BUYING, COULD AFFORD TO BUY CARS, RADIOS AND OTHER NEW PRODUCTS OF THE 1920’S. FARMERS, HOWEVER, WERE IN A DEPRESSION THROUGHOUT THE WHOLE DECADE.
6 The Great DepressionIn 1929, the Great Depression had begun that affected Canada, the USA, and the world in generalThe causes of the Great Depression are…
7 1. OVERPRODUCTION IN INDUSTRY PRODUCED MORE GOODS THAN WERE SOLDAt first manufacturers lowered prices, then cut back and produced fewer goods = layoffs in factories = people not able to afford goods = sales slow moreTHE SURPLUS PRODUCTS COULD NOT BE SOLD OVERSEAS DUE TO HIGH TARIFFS AND LACK OF MONEY IN EUROPE..
8 Effects of Overproduction Too many goods were produced and unsold goods piled upManufacturers produce less goodsEFFECTS:-charities can’t keep up with demands (NO unemployment insurance)-shantytowns emergedWorkers are laid off jobsCan’t afford to buy productsMore workers are laid off, etc…
9 2. Protectionism 1920s, many countries put tariffs on imported goods USA became very protectionist (protecting domestic producers) because they did not need raw materials from other countriesCaused slowdown in world tradeCanadian exports (wheat) decreased as U.S and other countries stop buying
10 3. WAR DEBTSU.S. lent several countries money during and after the First World WarAT THE END OF WORLD WAR ONE, EUROPEAN NATIONS OWED OVER $10 BILLION ($115 BILLION IN 2002 DOLLARS) TO THE UNITED STATES. THEIR ECONOMIES HAD BEEN DEVASTATED BY WAR AND THEY HAD NO WAY OF PAYING THE MONEY BACK.NATIONS DEPENDED ON SELLING PRODUCTS TO USA TO REPAY LOANS, BUT COULD NOT – PROTECTIONISMFrance and Britain relied on Germany’s reparation payments, but their economy was in ruins, so they could not pay their debts either
11 4. Canada’s Reliance on Exporting Staples Economy depended on exporting staples (basic products – crops, timber, minerals)Two in particular:1.) Wheat from prairies2.) Newsprint from B.C., Ontario and Quebec80% of Canada’s production on farms, and in forests and mines was exportedBumper crops of wheat around the world led to a huge wheat supply that farmers could NOT sell because other countries were producing their ownProblems made worse because of drought – dustbowl on prairies
12 5. Dependence on United States 40% of exports sold to USAProtectionism made it difficultWhen US economy failed, our economy failed
13 6. Stock Market Crash Black Tuesday – October 29, 1929 New York Stock Exchange Collapsed, followed by Toronto and Montreal Stock ExchangesCauses of the Crash:Buying on margin: buying stocks on borrowed money with the hope that the stock will rise significantly in a short time,Speculation: The belief that a stock will rise; stockholder can re-pay the loan after selling his/her shares.
15 The Stock Market Crash Tuesday October 29, 1929
16 STOCK MARKET CRASH AND FINANCIAL PANIC The trading floor of the New York Stock Exchange just after the crash of On Black Tuesday, October twenty-ninth, the market collapsed. In a single day, sixteen million shares were traded--a record--and thirty billion dollars vanished into thin air. Westinghouse lost two thirds of its September value. DuPont dropped seventy points. The "Era of Get Rich Quick" was over. Jack Dempsey, America's first millionaire athlete, lost $3 million. Cynical New York hotel clerks asked incoming guests, "You want a room for sleeping or jumping?"WALL STREET ON THE DAY OF THE CRASH, OCTOBER 29, 1929“BLACK TUESDAY”
17 Unemployment Poverty Despair Loss of jobs and incomes Evicted from homesDespairLoss of hope, dignity, respect
20 MIGRANT CAMPS IN CALIFORNIA WHERE REFUGEES CAME TO MAKE A NEW START
21 4.2 Consequences and Response to the Great Depression *Only write notes in BLACK*
22 Consequences of the Depression UnemploymentAt the height of the depression ( ), 26% of Canadians were unemployedTurned to government for helpRacismPeople thought immigrants were taking their jobs1931 – gov’t stopped immigration for year
23 UnemploymentIt was said by the Federal Department of Labor that a family needed between $1200 and $1500 a year to maintain the "minimum standard of decency."At that time, 60% of men and 82% of women made less than $1000 a year.As the depression carried on 1 in 5 Canadians became dependent on government relief.30% of the Labour Force was unemployed
27 Unemployment Poverty Despair Loss of jobs and incomes Evicted from homesDespairLoss of hope, dignity, respect
28 Effects of Great Depression Prime Minister Mackenzie King (Liberal) said provincial and municipal governments responsible BUT they’re brokeR. B. Bennett (Conservatives) became Prime Minister in 1930 election when King said he wouldn’t give a “five-cent piece” to a Tory provincial governmentConservatives – 137 seatsLiberals – 88 seats
29 King vs. Bennett 1930 Election R.B BennettConservative, Prime MinisterWilliam Lyon Mackenzie KingLiberal, Prime Minister
30 Bennett’s ResponseGave provinces $20 million for public works programsIncreased tariffs to protect Canadian industriesFailure – other country’s raised tariffs and Canada can’t export goods1931 – banned Communist Party (worried about revolution)Created work camps for unemployed menBuild roads, clearing landTerrible conditions
31 Protests On-to-Ottawa Trek 1935 – 1, 000 men left work camp and rode on freight trains to take complaints to OttawaMen detained in Regina – only leaders allowed to continue1 man killed and 30 arrested in Regina in stadium
34 ProtestsWorkers organized sit-ins to protest lack of government supportCooperative Commonwealth Federation (CCF) formed (J. S. Woodsworth)Appealed to farmers, labourers, socalists, intellectualsRegina Manifesto – stated support for public ownership of industries and social programs
36 Change in GovernmentIn 1935, Mackenzie King (Liberals) returned to powerStill did not spend enough money to create public works programsRowell-Sirois Commission suggested equalization payments to provinces, and establishment of unemployment insurance, and other social benefits
37 Overall Government Reactions to Depression Government would have to take a more active role in helping the poorUnemployment insurance, sick benefits, child benefits, and welfare were proposed during the Depression and implemented later.Laissez faire economic policy deadGovernments began to manage the economy through tax policy and monetary policy
39 Causes of the CrashBuying on margin: buying stocks on borrowed money with the hope that the stock will rise significantly in a short time,Speculation: The belief that a stock will rise; stockholder can re-pay the loan after selling his/her shares.
40 Causes of the Depression ProtectionismProtective Tariffs: Tariffs are duties collected on goods coming into a country.A country can protect home industries from the competition of foreign goods by discouraging imports through protective tariffs.When the United States began protectionist policies this caused other countries to lose their export markets (e.g. wheat from Canada)..
41 Slowdown in World Trade Decrease in production led to layoffs in factoriesLess spending on consumer goodsFurther decrease in productionled to additional layoffs in factories
42 Consequences of the Depression Unemployment1 in 5 Canadians became dependent on government relief.30% of the Labour Force was unemployed,The effects of unemployment were very severe because employment insurance and welfare payments were not yet in place.
43 Ways in which some Canadians tried to address their economic problems. Some Canadians tried to sell:products door to door,they panhandled,hey approached churches and charities for help,they “rode the rails”,and they collected public relief.
44 King v. BennettRichard Bennett was brought into power when his opposition, Mackenzie King, reported that he would not give "a five-cent piece" to "any Tory Government".In the election, of 1930, the conservatives got 137 seats in parliament and the Liberal representation was 88 seats.R.B BennettConservative, Prime MinisterWilliam Lyon Mackenzie KingLiberal, Prime Minister
45 Government responses to the Depression Government would have to take a more active role in caring for the poor.Unemployment insurance, sick benefits, child benefits, and welfare were proposed during the Depression and implemented some time later.Laissez faire* was dead. (*Leave it alone)Governments began to manage the economy through tax policy, and monetary policy
46 Bennett’s Response to the Depression Relief CampsThe Conservative government of Bennett set up work camps to prevent the growing unrest among this wandering mass of young unemployed workers.The camps were located in remote areas such as northern Ontario and B.C.'s interior. Inmates called these camps "slave camps".They lived on war surplus clothing, bunked in tar-paper shacks, ate army rations and were forced to work six and a half days a week for twenty cents a day
47 Letters to BennettDear Sir: I wish to give my opinion of relief. First it is a shame for a strong man to ask for relief in this country... The best thing that can happen to a young man is to toss him overboard and compel him to sink or swim, in all my acquaintance I have never known one to drown who was worth saving...It takes hardship to make real men and women so cut out of relief...There are some people in this country who are in hard circumstances, but I can safely say there is no one having hardship that we pioneers had 28 or 30 years ago.Blaine Lake, Saskatchewan
48 Bennett’s “New Deal” by ranking each point in order of what you think best protects individuals in times of economic crisis.Progressive taxation;maximum number of hours in a work week,minimum wage;stronger regulation of working conditions;unemployment insurance;health and accident insurance;revised old age pension plan;agricultural support;a board to regulatewheat prices.
49 LETTERS TO BENNETTDear Sir: I am writing you as a last resource to see if I cannot, through your aid, obtain a position and at last, after a period of more than two years, support myself. The fact is this day I am faced with starvation and I see no possibility for counteracting it or even averting it temporarily.I have applied for every position that I heard about but there were always so many girls who applied that it was impossible to get work... First I ate three very light meals a day; then two and then one. During the past two weeks I have eaten only toast and a drunk a cup of tea every other day.Day after day I pass a delicatessen and the food in the window look oh, so good! So tempting and I'm so hungry!...The stamp which carries this letter to you will represent the last three cents I have in the world, yet before I will stoop to dishonour my family, my character or my God, I will drown myself in.Hamilton, Ontario
50 Dear Mr.Bennett: I suppose I am silly to write this letter but I haven't anyone else to write to...we are just one of many on relief and trying to keep our place without being starved out...trying to get a start without and money and 5 children, all small... I am sure we can make a go of this place...if we could just manage until next fall. Just had 70 Acres in last year and the dry spell just caught it right along with the grasshoppers.Please help me by standing me some money and will send you my engagement ring and wedding ring as security...My two rings cost over $100 over 15 years ago but what good are they when the flour is nearly all done and there isn't much to eat in the house...Burton, Alberta