The Causes of the Great Depression: A Canadian Focus The information contained in the next 6 slides is adapted from Ross Jopling, Glen Forest Secondary.

The Causes of the Great The Causes of the Great Depression:Depression:

A Canadian FocusA Canadian Focus

The information contained in the next 6 slides is adapted from Ross Jopling, Glen Forest Secondary School, Mississauga, Ontario.

The Stock Market Crash of The Stock Market Crash of 19291929

The Stock Market had been doing very The Stock Market had been doing very well. (In January you could buy a hundred well. (In January you could buy a hundred shares of Home Oil for $350 with a down shares of Home Oil for $350 with a down payment of less than $50 and sell them in payment of less than $50 and sell them in March for $1575)March for $1575)

Then in October 4, the Toronto Stock Then in October 4, the Toronto Stock Exchange lost $200 million in valueExchange lost $200 million in value

This led to people selling their shares This led to people selling their shares because they were worried they would because they were worried they would lose valuelose value

The Stock Market CrashThe Stock Market Crash

Most stocks sold at a loss as sellers Most stocks sold at a loss as sellers began to panicbegan to panic

On October 29 (known as “Black On October 29 (known as “Black Tuesday”), the price of stocks in New Tuesday”), the price of stocks in New York, Montreal, and Toronto York, Montreal, and Toronto plummeted as sellers tried to cut plummeted as sellers tried to cut their lossestheir losses

Some people lost everythingSome people lost everything

Too Much Buying on CreditToo Much Buying on Credit

People bought things they could not People bought things they could not pay for, and went deep into debt. pay for, and went deep into debt.

With interest, the products ended up With interest, the products ended up costing far more. When people got costing far more. When people got sick or were laid off, they could not sick or were laid off, they could not keep their goods. keep their goods.

Many people lost everything.Many people lost everything.

Over Production and Over Over Production and Over ExpansionExpansion

Demand was very high for most Demand was very high for most products, so businesses expanded products, so businesses expanded and over-producedand over-produced

When the stock market crashed When the stock market crashed manufacturers slowed down manufacturers slowed down production and laid off workersproduction and laid off workers

No one had money to spend and No one had money to spend and couldn’t buy productscouldn’t buy products

Canada's Dependence on Primary Canada's Dependence on Primary ProductsProducts

Canada depended on the sale of Canada depended on the sale of wheat, fish, minerals and pulp and wheat, fish, minerals and pulp and paper productspaper products

After stock market crashed demand After stock market crashed demand for these products decreasedfor these products decreased

Drought in Western CanadaDrought in Western Canada

Wheat Crop CrashWheat Crop Crash Price of wheat wad dropping due to Price of wheat wad dropping due to

competition from other countriescompetition from other countries By 1931 large areas of farmland in the By 1931 large areas of farmland in the

West had been hit by drought, dust West had been hit by drought, dust storms, and high temperatures due to storms, and high temperatures due to poor rainfallpoor rainfall

In 1936 the conditions were particularly In 1936 the conditions were particularly terrible, and 14,000 farmers who had terrible, and 14,000 farmers who had no crops to harvest and no money to no crops to harvest and no money to make their mortgage payments make their mortgage payments abandoned their farmsabandoned their farms

Canada's Dependence on the USACanada's Dependence on the USA

65% of all imports were bought from 65% of all imports were bought from USA, 40% of exports went to the USA, 40% of exports went to the USA. USA.

When the depression hit the USA, When the depression hit the USA, industries collapsed, and they industries collapsed, and they stopped buying our primary stopped buying our primary products.products.

High TariffsHigh Tariffs

Europe needed to recover from WWI, Europe needed to recover from WWI, so they added taxes, or tariffs, on so they added taxes, or tariffs, on many products sent from Canada, many products sent from Canada, driving up the prices. driving up the prices.

They also could not afford to buy They also could not afford to buy many products. many products.

Too Much Credit Buying on StocksToo Much Credit Buying on Stocks

People wanted to get rich quickly, so People wanted to get rich quickly, so they gambled in the stock market. they gambled in the stock market.

People even borrowed money to People even borrowed money to gamble, sometimes even buying on gamble, sometimes even buying on margin. This means they bought a margin. This means they bought a stock by paying only 10% of the stock by paying only 10% of the value of the stock. value of the stock.

The Great Depression HitsThe Great Depression Hits

Many people lost their jobs and could Many people lost their jobs and could not pay their debtsnot pay their debts 10,000 jobless in Toronto, 8500 in nine 10,000 jobless in Toronto, 8500 in nine

prairie citiesprairie cities Companies that had lent the money Companies that had lent the money

sufferedsuffered Manufacturers were left with large Manufacturers were left with large

inventories of products few people inventories of products few people could buycould buy

The Great Depression HitsThe Great Depression Hits

Farmers and companies that sold to Farmers and companies that sold to the US were hard hitthe US were hard hit

In Regina the weekly relief bill had In Regina the weekly relief bill had soared from $10,000 in December soared from $10,000 in December 1929 to $40,000 in January 19301929 to $40,000 in January 1930

Loaf of bread 6 centsLoaf of bread 6 cents ticket to movies, 50 centsticket to movies, 50 cents rent 3 bedroom apt $40, rent 3 bedroom apt $40, 3 bedroom house $4,700,3 bedroom house $4,700, cup of coffee 5 cents, cup of coffee 5 cents, hamburger 10 cents,hamburger 10 cents, coca cola 5 cents, coca cola 5 cents, white shirt $1.95, white shirt $1.95, men’s haircut 50 cents, men’s haircut 50 cents, Ford 4 door car $685Ford 4 door car $685

Cost of Living 1930s

Headlines:Headlines:Then and NowThen and Now

NowNow

Close, but no recession for Close, but no recession for Canada, forecasters agreeCanada, forecasters agree

- The Financial Post, October 8, 2008 The Financial Post, October 8, 2008

It's official: Canada's in a recessionIt's official: Canada's in a recession

- - Toronto Star, June 2, 2009Toronto Star, June 2, 2009

NowNow

NowNow

Then – the beginningThen – the beginning

Stocks Soar As Bank Aid Ends Fear of Stocks Soar As Bank Aid Ends Fear of Money PanicMoney Panic

– – New York Herald Tribune, March 28, 1929New York Herald Tribune, March 28, 1929 Banker Says Boom Will Run Into 1930 Banker Says Boom Will Run Into 1930

- The World, March 30, 1929- The World, March 30, 1929 September 1929September 1929

“There is no cause to worry. The high tide “There is no cause to worry. The high tide of prosperity will continue”of prosperity will continue”- Andrew W. Mellon, Secretary of the - Andrew W. Mellon, Secretary of the TreasuryTreasury

Then – the beginningThen – the beginning

Brokerage Houses Are Optimistic on Brokerage Houses Are Optimistic on the Recovery of Stocks - Brokers in the Recovery of Stocks - Brokers in Meeting Predict Recovery Meeting Predict Recovery

– – The New York Times, October 25, The New York Times, October 25, 1929 1929

Brokers Believe Worst Is Over and Brokers Believe Worst Is Over and Recommend Buying of Real Bargains Recommend Buying of Real Bargains

– – New York Herald Tribune, October 27, New York Herald Tribune, October 27, 19291929

Reality HitsReality Hits

Gigantic Bank Pool Pledged To Avert Gigantic Bank Pool Pledged To Avert Disaster as Second Big Crash Stuns Disaster as Second Big Crash Stuns Wall Street (sound familiar?) Wall Street (sound familiar?)

– – The World, October 29, 1929The World, October 29, 1929

More Self-DelusionMore Self-Delusion September 12, 1930September 12, 1930

“We have hit bottom and are on the upswing.”“We have hit bottom and are on the upswing.”– James J. Davis, Secretary of Labor.– James J. Davis, Secretary of Labor.

October 16, 1930October 16, 1930“Looking to the future I see in the further “Looking to the future I see in the further acceleration of science continuous jobs for our acceleration of science continuous jobs for our workers. Science will cure unemployment.”workers. Science will cure unemployment.”– Charles M. Schwab.– Charles M. Schwab.

June 9, 1931June 9, 1931“The depression has ended.”“The depression has ended.”– Dr. Julius Klein, Assistant Secretary of – Dr. Julius Klein, Assistant Secretary of Commerce.Commerce.

Sound Familiar?Sound Familiar?

August 12, 1931August 12, 1931“Henry Ford has shut down his “Henry Ford has shut down his Detroit automobile factories almost Detroit automobile factories almost completely. At least 75,000 men completely. At least 75,000 men have been thrown out of work.”have been thrown out of work.”– The Nation.– The Nation.