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 School, Mississauga, Ontario.

The Stock Market Crash of 1929 The Stock Market had been doing very well. (In January you could buy a hundred shares of Home Oil for $350 with a down payment of less than $50 and sell them in March for $1575) The Stock Market had been doing very well. (In January you could buy a hundred shares of Home Oil for $350 with a down payment of less than $50 and sell them in March for $1575) Then in October 4, the Toronto Stock Exchange lost $200 million in value Then in October 4, the Toronto Stock Exchange lost $200 million in value This led to people selling their shares because they were worried they would lose value This led to people selling their shares because they were worried they would lose value

The Stock Market Crash Most stocks sold at a loss as sellers began to panic Most stocks sold at a loss as sellers began to panic On October 29 (known as “Black Tuesday”), the price of stocks in New York, Montreal, and Toronto plummeted as sellers tried to cut their losses On October 29 (known as “Black Tuesday”), the price of stocks in New York, Montreal, and Toronto plummeted as sellers tried to cut their losses Some people lost everything Some people lost everything

Too Much Buying on Credit People bought things they could not pay for, and went deep into debt. People bought things they could not pay for, and went deep into debt. With interest, the products ended up costing far more. When people got sick or were laid off, they could not keep their goods. With interest, the products ended up costing far more. When people got sick or were laid off, they could not keep their goods. Many people lost everything. Many people lost everything.

Over Production and Over Expansion Demand was very high for most products, so businesses expanded and over- produced Demand was very high for most products, so businesses expanded and over- produced When the stock market crashed manufacturers slowed down production and laid off workers When the stock market crashed manufacturers slowed down production and laid off workers No one had money to spend and couldn’t buy products No one had money to spend and couldn’t buy products

Canada's Dependence on Primary Products Canada depended on the sale of wheat, fish, minerals and pulp and paper products Canada depended on the sale of wheat, fish, minerals and pulp and paper products After stock market crashed demand for these products decreased After stock market crashed demand for these products decreased Drought in Western Canada Drought in Western Canada

Wheat Crop Crash Price of wheat wad dropping due to competition from other countries Price of wheat wad dropping due to competition from other countries By 1931 large areas of farmland in the West had been hit by drought, dust storms, and high temperatures due to poor rainfall By 1931 large areas of farmland in the West had been hit by drought, dust storms, and high temperatures due to poor rainfall In 1936 the conditions were particularly terrible, and 14,000 farmers who had no crops to harvest and no money to make their mortgage payments abandoned their farms In 1936 the conditions were particularly terrible, and 14,000 farmers who had no crops to harvest and no money to make their mortgage payments abandoned their farms

Canada's Dependence on the USA 65% of all imports were bought from USA, 40% of exports went to the USA. 65% of all imports were bought from USA, 40% of exports went to the USA. When the depression hit the USA, industries collapsed, and they stopped buying our primary products. When the depression hit the USA, industries collapsed, and they stopped buying our primary products.

High Tariffs Europe needed to recover from WWI, so they added taxes, or tariffs, on many products sent from Canada, driving up the prices. Europe needed to recover from WWI, so they added taxes, or tariffs, on many products sent from Canada, driving up the prices. They also could not afford to buy many products. They also could not afford to buy many products.

Too Much Credit Buying on Stocks People wanted to get rich quickly, so they gambled in the stock market. People wanted to get rich quickly, so they gambled in the stock market. People even borrowed money to gamble, sometimes even buying on margin. This means they bought a stock by paying only 10% of the value of the stock. People even borrowed money to gamble, sometimes even buying on margin. This means they bought a stock by paying only 10% of the value of the stock.

The Great Depression Hits Many people lost their jobs and could not pay their debts Many people lost their jobs and could not pay their debts 10,000 jobless in Toronto, 8500 in nine prairie cities 10,000 jobless in Toronto, 8500 in nine prairie cities Companies that had lent the money suffered Companies that had lent the money suffered Manufacturers were left with large inventories of products few people could buy Manufacturers were left with large inventories of products few people could buy

The Great Depression Hits Farmers and companies that sold to the US were hard hit Farmers and companies that sold to the US were hard hit In Regina the weekly relief bill had soared from $10,000 in December 1929 to $40,000 in January 1930 In Regina the weekly relief bill had soared from $10,000 in December 1929 to $40,000 in January 1930

Loaf of bread 6 cents Loaf of bread 6 cents ticket to movies, 50 cents ticket 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 $685 Ford 4 door car $685 Cost of Living 1930s

Headlines: Then and Now

Now Close, but no recession for Canada, forecasters agree Close, but no recession for Canada, forecasters agree - The Financial Post, October 8, 2008 It's official: Canada's in a recession - Toronto Star, June 2, 2009

Now

Now

Then – the beginning Stocks Soar As Bank Aid Ends Fear of Money Panic Stocks Soar As Bank Aid Ends Fear of Money Panic – New York Herald Tribune, March 28, 1929 Banker Says Boom Will Run Into 1930 Banker Says Boom Will Run Into The World, March 30, 1929 September 1929 “There is no cause to worry. The high tide of prosperity will continue” - Andrew W. Mellon, Secretary of the Treasury September 1929 “There is no cause to worry. The high tide of prosperity will continue” - Andrew W. Mellon, Secretary of the Treasury

Then – the beginning Brokerage Houses Are Optimistic on the Recovery of Stocks - Brokers in Meeting Predict Recovery Brokerage Houses Are Optimistic on the Recovery of Stocks - Brokers in Meeting Predict Recovery – The New York Times, October 25, 1929 Brokers Believe Worst Is Over and Recommend Buying of Real Bargains Brokers Believe Worst Is Over and Recommend Buying of Real Bargains – New York Herald Tribune, October 27, 1929

Reality Hits Gigantic Bank Pool Pledged To Avert Disaster as Second Big Crash Stuns Wall Street (sound familiar?) Gigantic Bank Pool Pledged To Avert Disaster as Second Big Crash Stuns Wall Street (sound familiar?) – The World, October 29, 1929

More Self-Delusion September 12, 1930 “We have hit bottom and are on the upswing.” – James J. Davis, Secretary of Labor. September 12, 1930 “We have hit bottom and are on the upswing.” – James J. Davis, Secretary of Labor. October 16, 1930 “Looking to the future I see in the further acceleration of science continuous jobs for our workers. Science will cure unemployment.” – Charles M. Schwab. October 16, 1930 “Looking to the future I see in the further acceleration of science continuous jobs for our workers. Science will cure unemployment.” – Charles M. Schwab. June 9, 1931 “The depression has ended.” – Dr. Julius Klein, Assistant Secretary of Commerce. June 9, 1931 “The depression has ended.” – Dr. Julius Klein, Assistant Secretary of Commerce.

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