Great Depression In Canada
Do we remember the period in Canada’s history in which Canada experienced an economic boom? Of course we’ll have trouble remembering because this period was followed shortly afterwards by one of the worst depressions in Canada’s history. This period is referred to by many as the “Roaring Twenties”. This “Golden Age” of Canada was followed by the Great Depression. How could a depression that lasted for ten years occur after a period of economic prosperity? A major reason is because the economic conditions and lifestyles of Canadians during the 1920s had a very large impact on the prosperity of the 1930s. If Canadians and business owners were less optimistic about the future during the 1920s they would have been affected less by the
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depression of the
1930s. If Canada were to have been less reliant on the sale of exports and natural resources in the 1920s they would have been devastated less by the depression. If
Canadians were to have changed their lifestyles by buying fewer items on credit they would have been devastated less by the Great Depression. If Canadians were to have bought less shares of a company by buying on margin in the 1920s they would have been devastated less by ‘Black Tuesday’. Although the 1920s of Canada were considered the
“Roaring Twenties”, the lifestyles of Canadians and the Canadian economic underpinnings of this period were the underlying causes of the Great Depression.
The optimism of Canadians and business owners were a long-term cause of the Great Depression. Most Canadians and business owners in the early 1920s were overly optimistic about the future. They believed that the good times would last forever and that their quality of life would continue to improve. This belief caused many farmers in the prairies to borrow money from financial institutes to purchase more land. They believed that as long as they had produced a successful harvest each year they could afford to make their monthly payments to their creditors. Since they believed that the economic prosperity of the 1920s would last forever they would always produce a bountiful harvest each year, allowing them to pay their monthly payments to creditors. This belief of the farmers caused the agricultural production in 1922 – 1928 to increase by 20% (The 1920s
Economy: A statistical portrait).Unfortunately they failed to even consider the possibility of an economic recession let alone a depression in the future that would make them unable to pay their monthly payments to their creditors. The optimism of the farmers was shared with many Canadian business owners too. Many businesses in Canada had expanded by going into debt with the assumption that their prosperity would continue.
They started to purchase more factories and machines for their businesses and even hired extra workers. They did this because they believed that the demand for their goods and services would steadily increase. This belief of theirs caused them to spend an extra $0.3 billion in 1929 than 1928 for advertising their goods and services (The 1920s Economy: A statistical portrait). They assumed that the period of economic prosperity that most
Canadians were sharing would last forever. They thought that as the standard of living in
Canada was increasing, more and more Canadians would have extra money in their pockets to spend on the goods and services provided by their businesses.
They too failed too recognize that the period of economic prosperity would not last forever and were unable to foresee the future of their business if Canada was struck with a period of economic recession or depression. Thus, the optimism shared by many Canadians and business owners about the future in the 1920s was one of the underlying causes of the Great Depression. Canada’s dependence on the sale of exports and natural resources in the 1920s was another underlying cause of the Great Depression. Due to their optimism of the future many businesses had overproduced their goods and began to stockpile them in warehouses. In the late 1920s they realized that there was not enough demand for their products. Suddenly, there was less demand for Canadian natural resources because factories in other countries using those resources had huge stockpiles of goods and started producing less. Since these foreign factories had huge stockpiles of goods they no longer needed to purchase natural resources from Canada until they had sold all of their stockpiled goods. The government soon raised tariffs on foreign imported goods to protect Canadian businesses and their workers. They did this so that imported products would cost more than domestic goods, causing Canadian consumers to buy domestic goods over the foreign goods due to the price difference, …show more content…
which will in-turn profit Canadian businesses. Unfortunately, other countries also raised their tariffs on imports which resulted in less trade and fewer sales between them and Canada. The demand for
Canadian products and resources began to plummet after 1928, causing many Canadian workers to be laid off. The government’s efforts to protect Canada’s economy by raising tariffs on imports had only further damaged Canada’s economy and trade with other countries. Thus Canada’s dependence on the sale of exports and natural resources in the
1920s was one of the underlying causes of the Great Depression Canadian’s lifestyles during the 1920s were another underlying cause of the Great Depression.
During the early and mid-1920s many Canadians had a job and spent their wages on bigger homes, faster cars, newer appliances and entertainment. Buying on credit became a popular trend for many Canadians who went into debt to buy when they did not have enough cash. Also many Canadians were optimistic about the future. They believed that as long as they had a job in the future they could afford to make their monthly payments to creditors. They did not even consider the possibility of an economic recession or depression in the future, or how it would affect their future job security.
Another trend that was developing throughout the 1920s was the buying of shares of a company on margin. A share is basically one unit of ownership in a company that can be purchased or sold in a stock market. In the 1920s margin requirements were loose. In other words brokers required their investors to put in very little of their own money.
During the 1920s, buying on margin required investors to put down only 10 percent of the cost of their shares (Bolton 31). The remainder was borrowed which required the payment of interest. This caused the leverage rates of up to 90 percent debt to be uncommon (Conrad 72). Investors also had to put up some collateral to back up the loan in case the price of their shares went down. Investors who were buying on margin
usually
put their homes, cars and appliances as collateral to get the loans to buy shares. This was very risky but since Canadians were optimistic about the future they believed that their shares would steadily increase in value and could be cashed in at much higher prices.
Buying on margin caused a superficial demand for shares in the 1920s and company shares rose in price. If Canadians had changed their lifestyles by buying fewer items on credit and bought less shares of a company by buying on margin in the 1920s they would have been devastated less by the Great Depression. The stock market crash of 1929 was another underlying cause of the Great Depression. On October 19, 1929, known as ‘Black Tuesday’ the stock markets of America had crashed. On this day investors began to see stock prices fall, something that they had never encountered before, and began immediately selling their shares. As the bigger investors started to suddenly pull out, stock prices fell dramatically. Soon smaller investors started selling as well and the snowball effect began. In Canada, investors started to see the markets in America dry up and responded similarly by selling their stocks as well. Everything had fallen; stocks that were worth hundreds were worth less than the paper they were printed on. After the crash occurred, many people were in serious debt to their creditors and had absolutely nothing to pay them off. The crash was so bad that by mid-1930s, the value of stocks for the 50 leading Canadian companies had fallen by over 50% from their peaks in 1929 (fundamental finance.com). The total drop for the 1929 to 1932 bear markets was 89.2% (Durangobill.com). The crash of the stock markets in Canada and the U.S. was the spark that triggered the Great Depression. The stock market crash of 1929 was another underlying cause of the Great Depression. Wijeweera 6
The way Canadians lived and spent their money in the 1920s had a very large impact on the 1930s. If Canadians and business owners were less optimistic about the future during the 1920s they would have been affected less by the depression of the
1930s. If Canada had been less reliant on the sale of exports and natural resources in the
1920s they would have been devastated less by the Great Depression. If Canadians had changed their lifestyles by buying fewer items on credit and bought less shares of a company by buying on margin in the 1920s they would have been devastated less by the Great Depression. Although the 1920s of Canada were considered the “Roaring
Twenties”, the lifestyles of Canadians and the Canadian economic underpinnings of this period were the underlying causes of the Great Depression. It may be too late to change the past but by using the 1920s as an example we can avoid a depression in the future.
Wijeweera 7
Works Cited
1. Bolton, Mark. Canada’s Great Depression. Ottawa Purish Publishing Ltd., 2007.
2. Durangobill.com. Durango Bill’s Graphs of the 1929 Stock Market Crash 15 October 2006
3. FundamentalFinance.com. The Stock Market Crash of 1929. 5 June 2007
4. Gold Trivia. Black Tuesday October 29th, 1929 Revisited? 3 July 2007
5. Stein, R. Conrad. The Roaring Twenties - Cornerstones of Freedom. Chicago Children 's Press, 1994.
6. The 1920s Economy: A Statistical Portrait. Industry, Agriculture, Advertising 21 January 2007
7. Travel And History. Roaring Twenties. 20 March 2009
depression of the
1930s. If Canada were to have been less reliant on the sale of exports and natural resources in the 1920s they would have been devastated less by the depression. If
Canadians were to have changed their lifestyles by buying fewer items on credit they would have been devastated less by the Great Depression. If Canadians were to have bought less shares of a company by buying on margin in the 1920s they would have been devastated less by ‘Black Tuesday’. Although the 1920s of Canada were considered the
“Roaring Twenties”, the lifestyles of Canadians and the Canadian economic underpinnings of this period were the underlying causes of the Great Depression.
The optimism of Canadians and business owners were a long-term cause of the Great Depression. Most Canadians and business owners in the early 1920s were overly optimistic about the future. They believed that the good times would last forever and that their quality of life would continue to improve. This belief caused many farmers in the prairies to borrow money from financial institutes to purchase more land. They believed that as long as they had produced a successful harvest each year they could afford to make their monthly payments to their creditors. Since they believed that the economic prosperity of the 1920s would last forever they would always produce a bountiful harvest each year, allowing them to pay their monthly payments to creditors. This belief of the farmers caused the agricultural production in 1922 – 1928 to increase by 20% (The 1920s
Economy: A statistical portrait).Unfortunately they failed to even consider the possibility of an economic recession let alone a depression in the future that would make them unable to pay their monthly payments to their creditors. The optimism of the farmers was shared with many Canadian business owners too. Many businesses in Canada had expanded by going into debt with the assumption that their prosperity would continue.
They started to purchase more factories and machines for their businesses and even hired extra workers. They did this because they believed that the demand for their goods and services would steadily increase. This belief of theirs caused them to spend an extra $0.3 billion in 1929 than 1928 for advertising their goods and services (The 1920s Economy: A statistical portrait). They assumed that the period of economic prosperity that most
Canadians were sharing would last forever. They thought that as the standard of living in
Canada was increasing, more and more Canadians would have extra money in their pockets to spend on the goods and services provided by their businesses.
They too failed too recognize that the period of economic prosperity would not last forever and were unable to foresee the future of their business if Canada was struck with a period of economic recession or depression. Thus, the optimism shared by many Canadians and business owners about the future in the 1920s was one of the underlying causes of the Great Depression. Canada’s dependence on the sale of exports and natural resources in the 1920s was another underlying cause of the Great Depression. Due to their optimism of the future many businesses had overproduced their goods and began to stockpile them in warehouses. In the late 1920s they realized that there was not enough demand for their products. Suddenly, there was less demand for Canadian natural resources because factories in other countries using those resources had huge stockpiles of goods and started producing less. Since these foreign factories had huge stockpiles of goods they no longer needed to purchase natural resources from Canada until they had sold all of their stockpiled goods. The government soon raised tariffs on foreign imported goods to protect Canadian businesses and their workers. They did this so that imported products would cost more than domestic goods, causing Canadian consumers to buy domestic goods over the foreign goods due to the price difference, …show more content…
which will in-turn profit Canadian businesses. Unfortunately, other countries also raised their tariffs on imports which resulted in less trade and fewer sales between them and Canada. The demand for
Canadian products and resources began to plummet after 1928, causing many Canadian workers to be laid off. The government’s efforts to protect Canada’s economy by raising tariffs on imports had only further damaged Canada’s economy and trade with other countries. Thus Canada’s dependence on the sale of exports and natural resources in the
1920s was one of the underlying causes of the Great Depression Canadian’s lifestyles during the 1920s were another underlying cause of the Great Depression.
During the early and mid-1920s many Canadians had a job and spent their wages on bigger homes, faster cars, newer appliances and entertainment. Buying on credit became a popular trend for many Canadians who went into debt to buy when they did not have enough cash. Also many Canadians were optimistic about the future. They believed that as long as they had a job in the future they could afford to make their monthly payments to creditors. They did not even consider the possibility of an economic recession or depression in the future, or how it would affect their future job security.
Another trend that was developing throughout the 1920s was the buying of shares of a company on margin. A share is basically one unit of ownership in a company that can be purchased or sold in a stock market. In the 1920s margin requirements were loose. In other words brokers required their investors to put in very little of their own money.
During the 1920s, buying on margin required investors to put down only 10 percent of the cost of their shares (Bolton 31). The remainder was borrowed which required the payment of interest. This caused the leverage rates of up to 90 percent debt to be uncommon (Conrad 72). Investors also had to put up some collateral to back up the loan in case the price of their shares went down. Investors who were buying on margin
usually
put their homes, cars and appliances as collateral to get the loans to buy shares. This was very risky but since Canadians were optimistic about the future they believed that their shares would steadily increase in value and could be cashed in at much higher prices.
Buying on margin caused a superficial demand for shares in the 1920s and company shares rose in price. If Canadians had changed their lifestyles by buying fewer items on credit and bought less shares of a company by buying on margin in the 1920s they would have been devastated less by the Great Depression. The stock market crash of 1929 was another underlying cause of the Great Depression. On October 19, 1929, known as ‘Black Tuesday’ the stock markets of America had crashed. On this day investors began to see stock prices fall, something that they had never encountered before, and began immediately selling their shares. As the bigger investors started to suddenly pull out, stock prices fell dramatically. Soon smaller investors started selling as well and the snowball effect began. In Canada, investors started to see the markets in America dry up and responded similarly by selling their stocks as well. Everything had fallen; stocks that were worth hundreds were worth less than the paper they were printed on. After the crash occurred, many people were in serious debt to their creditors and had absolutely nothing to pay them off. The crash was so bad that by mid-1930s, the value of stocks for the 50 leading Canadian companies had fallen by over 50% from their peaks in 1929 (fundamental finance.com). The total drop for the 1929 to 1932 bear markets was 89.2% (Durangobill.com). The crash of the stock markets in Canada and the U.S. was the spark that triggered the Great Depression. The stock market crash of 1929 was another underlying cause of the Great Depression. Wijeweera 6
The way Canadians lived and spent their money in the 1920s had a very large impact on the 1930s. If Canadians and business owners were less optimistic about the future during the 1920s they would have been affected less by the depression of the
1930s. If Canada had been less reliant on the sale of exports and natural resources in the
1920s they would have been devastated less by the Great Depression. If Canadians had changed their lifestyles by buying fewer items on credit and bought less shares of a company by buying on margin in the 1920s they would have been devastated less by the Great Depression. Although the 1920s of Canada were considered the “Roaring
Twenties”, the lifestyles of Canadians and the Canadian economic underpinnings of this period were the underlying causes of the Great Depression. It may be too late to change the past but by using the 1920s as an example we can avoid a depression in the future.
Wijeweera 7
Works Cited
1. Bolton, Mark. Canada’s Great Depression. Ottawa Purish Publishing Ltd., 2007.
2. Durangobill.com. Durango Bill’s Graphs of the 1929 Stock Market Crash 15 October 2006
3. FundamentalFinance.com. The Stock Market Crash of 1929. 5 June 2007
4. Gold Trivia. Black Tuesday October 29th, 1929 Revisited? 3 July 2007
5. Stein, R. Conrad. The Roaring Twenties - Cornerstones of Freedom. Chicago Children 's Press, 1994.
6. The 1920s Economy: A Statistical Portrait. Industry, Agriculture, Advertising 21 January 2007
7. Travel And History. Roaring Twenties. 20 March 2009