1. THE CAUSES OF THE GREAT DEPRESSION IN CANADA
The great depression of was the worst economic disaster that has befallen canada in the last century. It is not the only economic downturn but it is certainly the one that had the most impact on the most people. Notice people riding the rails as an example of unemployed me, denied relief/welfare who rode on top of trains and sometimes beneath them in a vain search for work.
What do these pictures tell you
about life during the 1930s?

2. Were demand or supply issues most important?
What caused the great depression? (consider underlying and immediate causes…)
Were demand or supply issues most important?

3. Business cycle
Note the four main headings and copy them down. Prosperity= defined as economic good times. The 1920s were considered prosperous- of course not for all- and the thirities were times of depression . What did it look like?

4. Unemployment in the Great Depression
How bad was it? 25% unemployed and made worse because men were breadwinners and many women did not work once married. Some got jobs again but at much less pay than men.

5. PER CAPITA INCOME BY PROVINCE
How bad was it? Note sask. Note avg income decline was 50% . Point out dust bowl as part of the problem.

6. Trade decline during the Canadian Depression
The amount of goods and services produced in a society
33% of gross national income came from trade. Canadian economy especially vulnerable because it was dependent on export of raw materials. , Canada was particularly affected by the collapse in world trade. The 4 western provinces, which depended almost exclusively on primary-product exports, were the most affected. In Saskatchewan, plagued by crop failures and the lowest price for wheat in recorded history, total provincial income plummeted by 90% within 2 years, forcing 66% of the rural population onto relief. The other western provinces were technically bankrupt from 1932 onwards. Although Ontario and Québec experienced heavy unemployment, they were less severely afflicted because of their more diversified industrial economies, which produced for the protected domestic market. The Maritimes had entered into severe economic decline in the 1920s and had less distance to fall.

7. DECLINE IN GROSS DOMESTIC PRODUCT IN CANADA FROM 1928-1938
By 1933 the annual GNP had dropped 40% from pre crash levels.

8. WHAT IS THE RIPPLE EFFECT?
Why does the economy move through these cycles. You need an understanding of the ripple effect. Because everything is connect when a sector of the economy goes down it is like a pebble in the water so that an individual's reduction in spending reduces the incomes of others and their ability to spend

9. Why does the ripple-effect impact the economy?
Because all parts of the economy are interconnected a citizen wears two hats.
One he/she is a consumer who purchases the goods and services
Two, the consumer is also a worker who helps to provide those services
If one sector of the economy is no longer able to fulfill its role as consumers other sectors are affected- the mine lays people off so the barber does not have as many hair cuts to provide

10. What is demand? What consumers need and want
If demand for a product goes down then the workers are laid off
Since the economy is integrated this can lead to a downturn in the economy

11. What is supply?
All the goods and services produced by workers/companies for consumers
When companies cannot sell their goods they lay off workers and they cannot fulfill their roles as consumers

12. DEMAND ISSUES: Natural Resources
Economy depended on sale of natural resources to other countries
i.e. wheat, fish, paper, coal, wood, etc
Post WWI recovery meant demand did not continue
Farmers represented 40% of all consumers in Canada
The net farm income fell from $417 million in 1929 to $109 million in 1933.

13. DEMAND ISSUES: Lack of Income
Not as many factory jobs in the Maritimes as Ontario
Wheat farmers did well until 1928, but other farmers did not
Buying on credit—Canadians went into debt
Buying on margin—buying stock on credit—yikes!
Use a sheet of paper with the number 10$ and ask them to buy putting down only 10% or 100$ . Pass paper three times generating profit and the drop the bomb that the paper is now worth just over a dollar. How much is he on the hook for given that he only put down 10%. It was said by the Federal Department of Labor that a family needed between $1200 and $1500 a year to maintain the "minimum standard of decency." At that time, 60% of men and 82% of women made less than $1000 a year.

14. DEMAND ISSUES: LOSS OF INTERNATIONAL MARKETS
Businesses over-produced—led to huge stockpiles
Tariffs=taxes on imports
Government raised tariffs to protect Canadian businesses—other countries did the same
40% of all produced was traded to the U.S.
40% of all trade went to usa. And it was bigger than second trading partner great britain… tariffs are tax on imports….. When canada raised rated Caused equal reaction from trading partners. Damaged trade.

15. SUPPLY ISSUES: OVER EXPANSION OF FARM LAND
FARMERS WERE OVERLY OPTIMISTIC ABOUT THE FUTURE
PURCHASED EXTRA LAND TO RAISE ADDITIONAL REVENUE
WHEN THE BOTTOM FELL OUT OF THE WHEAT MARKET THEY WERE UNABLE TO MEET PAYMENTS.
THEY COULD NOT ACT AS CONSUMERS

16. SUPPLY ISSUE: OVERPRODUCTION OF GOODS
COMPANIES PRODUCED TOO MUCH AND STOCKPILED THEIR GOODS
DEMAND WENT DOWN SO GOODS WERE NOT NEEDED
LED TO WORKERS(CONSUMERS) BEING FIRED
CANADA PRODUCED 200,000 CARS MORE THAN THEY NEEDED. STOCKPILING OCCURRED. THIS PIC IS HENRY FORDS PLANT IN WINDSOR….

17. SUPPLY ISSUE: OVER-DEPENDENCE ON NATURAL RESOURCES
For example: newspaper trade was over 146 million dollars in 1930 and by 1936 it was a little over 85 million
RAW MATERIALS SUCH AS FISH, WHEAT, LUMBER AND PULP AND PAPER MADE UP MOST OF CANADA’S EXPORTS-TOO MANY EGGS IN ONE BASKET!!!
WE WERE NOT A DIVERSE ECONOMY 33% OF THE GROSS NATIONAL INCOME WAS DEPENDENT UPON REVENUE FROM NATURAL RESOURCES
WITHOUT FOREIGNERS (PRIMARILY THE U.S.A.) CONSUMING OUR NATURAL PRODUCTS OUR ECONOMY SUFFERED.
40%

18. Underlying causes=supply & demand issues
What were the immediate causes?

19. Drought! 1929=droughts & plagues of locusts
Canadian West became a “dust bowl”
Drought lasted 10 years!
At the same time, Australia, Russia, and Argentina had huge wheat harvests—drove price of wheat down (more supply)
Wheat bushel = $1.29 in 1928
=.34 cents in 1932

20. Impact was so vast and what was the solution?

21. Stock Market Crash
Investors suddenly realized their shares were overpriced—lots of people tried to sell them all at once
shares traded at half their value
Remember that many people had bought “on margin”
Not everyone invested, but all heard horror stories—lead to a downward spiral
Future investment in the stock market hurt—companies could no longer expand

23. Remember People bought on credit and on margin…
Companies had over spent…
Farmers had over produced…
People and companies could not make their payments
Companies had to lay people off, which left less money circulating
People lost cars, houses, and, well, everything

24. Adam Smith vs. John Maynard Keynes
John maynard keynes as a solution?