The Great Depression Part 1: Causes
Stock Market Crash Not a cause, more an effect that triggered the rest Kind of like the assassination of Franz Ferdinand Stock market dramatically overvalued The bubble burst when confidence began to be lost in the value of Tuesday, October 29th 1929, New York, Toronto & Montreal stock exchanges crashed
Business Cycle P. 143 in textbook
Underlying Causes Overproduction Purchasing stock/buying on margin. Purchasing on credit/high consumer debt Overdependence on primary industries High tariffs/limited trading partners Dependence on the U.S.A. for trade
Overproduction
Purchasing Stock/Buying On Margin Borrowing money to buy stocks At the time, needed only a 10% minimum downpayment
High Consumer Debt Buying on credit Many people were in debt
Overdependence on Primary Industries Canada’s economy was based heavily on primary industries These primary resources were then exported
High Tariffs/Limited Trading Partners Canada used tariffs to protect its own industry But this also meant narrowing its trade options with other countries
Dependence on the U.S.A. for trade At the time ~40% of Canada’s exports were to the USA (Now, 73%!) An economic crash in the U.S. inevitably affects Canada.
Business Cycle 1918-1938
Underlying Causes Overproduction Purchasing stock/buying on margin. Purchasing on credit/high consumer debt Overdependence on primary industries High tariffs/limited trading partners Dependence on the U.S.A. for trade