1. Causes of the Great Depression
CHC 2DR
Lesson 52

2. Causes of the Great Depression
Learning Goal:
Explain the causes of the Great Depression and the government’s response.
Note and discussion on causes of the Depression.
Finish up textbook work from yesterday.

3. The Causes of the Depression
The stock market crash of 1929 did not cause the depression
It was a sign that the economy of North America was very sick

4. 1. Over Production and Over Expansion
During the ‘20s, agriculture and industry prospered
Extra income was spent on expansion and growth
Items produced in Canada were stockpiled
Oshawa and Windsor produced over cars in 1930
This made little sense as only were bought in the best year
Workers were laid off so families had little money
Slowed down sales even more

5. Artificial scarcity

6. 2. Dependence on Primary Products
Included wheat, fish, minerals, pulp and paper (staples)
During the depression, areas that depended heavily on these staples suffered most (the west and the Maritimes)
Secondary industries process or manufacture primary products (remember from geography class)
They also suffered a slowdown

7. Western farmers were also faced with drought in 1929, 1931, 1933-37
They could not afford to purchase machinery from the East
There was no wheat to be shipped or ground railways and flour mills felt the punch
A chain reaction!

8. 3. Dependence on the USA
Economy of the ‘20s linked with the U.S.’s (65% imports, 40% exports)
Most important trade partner
When US economy was bad, so was ours
‘When the United States sneezed, the rest of the world got pneumonia’
when the depression hit US everything collapsed
didn’t need our lumber, paper, wheat or minerals

9. 4. High Tariffs
Countries raised tariffs to protect home industries from foreign competition
Country y puts on tariffs to keep out country x’s goods
Then Country x puts on tariffs to keep out country y’s goods
World trade slowed down  every country kept out each other’s goods
Surplus goods in one country were kept out of another country

10. 5. Too Much Credit Buying
All through the 20s, people were encouraged to “Buy now, pay later’
By 1929, credit buying was a well-established custom
You could have a piano or tractor now and pay for it later
Many families got hopelessly into debt with credit buying

11. If a wage-earner took sick or was laid off, it was impossible to keep up with the payments
As the depression worsened, many people lost everything
Appliances and even homes were repossessed by the creditors

12. 6. Too Much Credit Buying Stock
How it developed
For many people in the 20s, the stock market seemed like an easy way to get rich quickly
People in all walks of life gambled on the stock market
It was not necessary to have a lot of money to play the stock market

13. Margin Buying
You could buy stocks on credit just like a car or washing machine
The broker loaned you the rest of the money (at high interest rates)
The ideas was that as soon as your sock went up in value you would sell it and pay back the loan you took from your broker
You would pocket the profit
This risky business was called margin buying

14. What finally happened
Oct. 1929, the value of stock started to drop
People panicked  many started to sell
Prices fell even lower as more and more stocks were dumped on the market

15. The market was like a giant roller coaster racing down hill  nothing could stop it
In a few hours, the value of stocks nosedived by nearly 50%
Shareholders lost millions  big and small investors were wiped out
It dawned on people slowly hard times were here
 the Great Depression

16. Canada Responds to the Great Depression
Learning Goal: Explain how the citizens and the government dealt with the challenges of the depression.
Journal: How do we deal with hard times now? How do our government and employers support us? How do we expect to be treated? (9 sentences)
Review the causes of the depression. (Finish note)
CSI: Treatment of the Unemployed

17. CSI: Treatment of the Unemployed
Pages 50-55
Before Reading: chat with a friend
During Reading, page 50 (use handout)
During Reading, page 52 (use other side of handout!)
During Reading, page 54