1. The Causes of the Great Depression in Canada: 1925-1929

2. Much of what led to the Great Depression of the 1930's was a result of the unstable prosperity of the 1920's.
Through industrialization and trade the world had changed in so many ways.
And no one was willing to regulate the economy.

3. Uncertainty and false confidence led to these underlying causes of the Great Depression:

4. Causes of the Great Depression: Structure
Overproduction:
Too many factories producing too many goods.
More than Canadians were able to buy
Too much production meant that prices dropped
Workers lost their jobs
Less money in the economy

5. Structural Causes of the Great Depression II
Too many tariffs slowed down international trade.
Tariffs made things worse once the Depression began. Why?

6. Causes of the Great Depression: Structure
Canada’s Economy needed two things:
Selling raw materials
-Wood and paper
-Wheat and fish
Trade with the USA
-Whatever happened to them, happened to us.

7. Overdependence on the United States as a market and a source of investment funds

8. During the 1920’s people were encouraged to “buy now, pay later.”
People got themselves into huge debts with credit buying. If you fell behind in your monthly payments on the item the person who sold you the item had the right to get it back.
When the Depression came people couldn’t afford to make their payments and lost everything.
Credit Buying

9. Stock Market Speculation
How does the Stock Market work?
Companies want to expand—they need money
To raise money, they go public and issue shares (stocks) on the stock exchange (Dow Jones, NASDAQ, TSX)
These shares can be bought and sold by anybody

10. If people think a company is doing well, the price of its shares will go up.
If people think the company is doing poorly, the value of the share goes down.
Make money by buying shares cheap, and selling them for more money later.

11. “Buying on Margin” This is when you take a bank loan to buy stocks.
The idea is that the stocks will go up in value so much that when you sell them, you will pay back the bank loan and make money.
Bank loans for buying on margin were easy to get!

12. WHAT COULD POSSIBLY GO WRONG?

14. “Black Tuesday”
October 29, 1929

15. Why Did the Stock Market Crash?
Stock prices were very high
Investors started selling their shares to make a profit
Everyone started selling. Why?

17. International Causes: The Dawes Plan
Germany was forced to pay reparations to Britain and France for WW1.
Britain and France owed money to the USA
Germany could not afford to pay reparations.
The USA loaned money to Germany via the Dawes Plan

19. The End of the Dawes Plan
When the Crash of 1929 happened, the USA could no longer afford to loan money to Germany. Why?
Bank failures
Government belt tightening

20. Summary: Causes of Great Depression in Canada
No regulation of the economy
Overproduction, unemployment, less money in the economy
Canada relied too much on raw materials exports
Trade tariffs
The US economy collapsed:
Credit buying
Stock Market Speculation, banks collapse
International collapse of the Dawes Plan