Causes of the Great Depression

1. Over-Production and Over-Expansion During the 1920’s, industries expanded and reached high levels of production. Many products were stockpiled. Factory owners slowed down production and laid off workers. As more workers were laid off, sales dropped even further.

2. Canada’s Dependency on a few Primary Products Canada’s economy depended on a few basic products or staples: wheat, fish, minerals, pulp and paper. When demand around the world dropped for these products, Canada’s economy suffered. A chain reaction occurred as industries which relied on these staples were also hurt.

Canada’s Dependence on the U.S. Canada relied heavily on American trade and investment. When the depression hit the U.S., they no longer needed our products causing more problems for our economy.

4. High Tariffs Hurt International Trade In order to protect their industries, the U.S. and European countries placed high tariffs on imports. International trade, which was so important to Canada, decreased due to these high tariffs.

5. Too Much Buying On Credit People bought too many items (cars, stoves, etc.) on credit (make a down-payment and pay the rest off in installments) and became hopelessly in debt. When people lost their jobs, their goods and homes were repossessed which left families with nothing. People also bought stocks on credit, they borrowed the money. On October 29, 1929, the value of most stocks in Montreal, Toronto, and New York dropped more than 50%. Shareholders lost millions when banks demanded they repay their loans. Crowd gathering on Wall Street (New York) after the 1929 crash.