Causes of the Great Depression Interwar Years Causes of the Great Depression

Recession/Depression What is it? What are some examples that we have seen? What is going on in Canada today? What about China?

The Business Cycle

The Business Cycle The economy tends to experience different trends. These can be categorized as the trade cycle and may feature boom, slump, recession and recovery BOOM: A period of fast economic growth. Output is high due to increased demand, unemployment is low. Business confidence may be high leading to increased investment. Consumer confidence may lead to extra spending. SLUMP: A period when output slows down due to a reduction in demand. Confidence may begin to suffer. RECESSION: A period where economic growth slows down and the level of output may actually decrease. Unemployment is likely to increase. Firms may lose confidence and reduce investment. Individuals may save rather than spend. RECOVERY: A period when the economy moves between recession and a boom.

What happens in a Boom? - Businesses produce more goods - Businesses invest in more machinery - Consumers spend more money. There is a FEELGOOD FACTOR - Less money is spent by the Government on unemployment benefits - More money is collected by the Government in income tax and VAT - Prices tend to increase due to extra demand

What happens in a Recession? - Businesses cut back on production - Some businesses may go bankrupt - Consumers spend less money. Fall in FEELGOOD FACTOR - Individuals may lose their jobs - More money is spent by the Govt on unemployment benefits - Less money is collected by the Govt in income tax - Prices start to fall

REASONS FOR DEPRESSION STOCK MARKET CRASH buying on margin (buying shares with 10% down and using stock profits to repay loans Loans very easy to obtain Stock prices over inflated October 29, 1929 New York Stock Exchange collapsed and others followed Investors bankrupt in a day

REASONS FOR DEPRESSION PRICE OF WHEAT FALLS 1927 price of wheat plummets globally Farmers unable to pay mortgages and loans Leads to decrease in production, economy slows, layoffs occur US tariffs (taxes on imported goods) and protectionism slows trade Canada dependent on export of primary resources (wheat prairies, newsprint BC, Ontario, Quebec)

REASONS FOR DEPRESSION REPARATION PAYMENTS Germany burdened with reparation payments France and Britain have major loans to United States (money to rebuild after WWI)

REASONS FOR DEPRESSION DROUGHT 1928 – 1936 Wind blew topsoil away – constant dust storms Grasshopper infestation No irrigation systems and reservoirs

Causation: Immediate Vs Underlying Of the causes that we looked at, what were “immediate” and what were “underlying” causes? The criteria for Immediate Causes: Immediate Causes are often the most obvious and easily identifiable. Immediate Causes directly cause the event in question. Often, the removal of the immediate cause will do little to prevent a similar event from occurring again. For this reason, immediate causes are often seen as being less important than underlying. The criteria for Underlying Causes: The underlying cause is usually less obvious and more difficult for the historian to identify The underlying cause is often an underlying belief, ideal, or practice amongst a group of people, and not isolated to a single historical event. Often, the removal of the underlying cause will prevent a similar event from occurring again. For this reason, underlying causes are often seen as being more important than immediate.

For example… Instructions: Read the following case study and decide which of the mentioned causes are underlying, and which causes are immediate. Prepare to defend your position. Case Study: March 8, 2004 During a hockey game between the Vancouver Canucks and the Colorado Avalanche, Canucks player Todd Bertuzzi skated behind Avalanche player Steve Moore, grabbed his jersey, and punched him in the head. After crumbling to the ice, doctors found that Moore’s neck had been broken in the scuffle. Almost immediately after the incident people began to ask the question “what caused this event?”

Causation: Immediate Vs Underlying Which one is which? Todd Bertuzzi was a vicious and violent player. _______________________________ The punch was retaliation for a hit Moore had laid on one of Bertuzzi’s teammates the prior game. ________________________________ Coach Marc Crawford had encouraged his players to hurt Moore __________________________ The incident was a result of the violent culture in the NHL. _______________________________ The incident was caused by the removal of the instigator rule. ____________________________

Now it’s your turn… Fill out the worksheet with underlying or immediate causes. Support your answers using evidence from the text.

EFFECTS OF DEPRESSION MIDDLE CLASS WIPED OUT Canadians lost their jobs, homes, farms, businesses, high suicide rate Pogey, relief, dole, welfare, vouchers, soup kitchens Reliance on charities and gov’t aid not enough

EFFECTS OF DEPRESSION ANGER AND DESPAIR 1933 – ¼ of Canadians unemployed Young, homeless, jobless men drifting, hopping trains (riding the rods), looking for work Arrested for vagrancy for not having addresses Shanty towns (jungles)

EFFECTS OF DEPRESSION DISADVANTAGED HURT EVEN MORE Fewer jobs for women (domestic service) Aboriginal families expected to ‘live off land’ so received less relief Chinese population: starvation not uncommon Immigrants viewed with hostility as seen as threats to jobs Jewish anti-Semitism (no Jews allowed signs)