Causes of the Great Depression: (Notes 1 of 5)
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1 CHAPTER 4 The 1930s: A Decade of Despair Timeframe: Guiding Question: What were the causes, effects, and responses to the Great Depression? Causes of the Great Depression: (Notes 1 of 5) 1. : s caused many industries in Canada to expand because demand for goods was high. - But when economy slowed down, many companies faced overproduction; producing more goods than they sold. - Forced decrease in production; led to which further slowed down consumption. 2. Economic Dependence on : - Canada had heavy dependence on export of primary resources. Wheat and wood exports. - As other countries began to produce same goods, competition increased, supply increased, prices dropped. - Many farmers became unable to meet their mortgage and loan payments. 3. Tariffs and Protectionism: -Because U.S. so close, it became biggest trading partner and largest investor of Canada. - When U.S. economy crashed, Canada economy felt the effects. - U.S. policy of, imposing high led many other countries to do the same. - Tariffs caused a slowdown in trade; Canadian exports decreased substantially.
2 4. Debt from World War: - Britain and France owed money to U.S. - Planned to use German to pay their war debts; however, German economy in ruins, could not make payments. 5. Speculation and the Crash: - started selling stocks to cash in on high profits, others rushed to follow their lead. - This caused other stock prices to fall (supply and demand). - People panicked and began selling off huge volumes of stocks. - On, October 29, 1929, the New York Stock Exchange collapsed, followed by the Toronto and Montreal Stock Exchanges.
3 The Desperate Years: Making Ends Meet: (Notes 2 of 5) Drought on the Prairies: - Wheat very valuable in 1920s; high world demand. Canadian farms planted wheat to take advantage of market. - However, farming took its toil on land; used up all nutrients. - Prairies hit by eight year. Windstorms blew away topsoil. - Prairies also hit by plague of grasshoppers. - Combination of events devastated many farms and forced thousands of families to abandon their land. Unemployment: - Unemployment rates very high during this period; many evicted from homes because couldn t afford to pay rent. - Thousands existed on, similar to welfare today. - By 1933, more than % of Canada s workforce was unemployed. - Country filled with young, jobless, homeless men who were forced to drift from one place to another. - Many travelled by riding the rails, shantytowns sprung up in and around cities everywhere. The Disadvantaged: - viewed with hostility during Depression. - By 1935, more than 28,000 immigrants were from Canada. - also treated unfairly; aboriginal families on relief were given only $5 a month, compared to $19-$60 received by non-aboriginals. - Government continued to take lands from reserves, further limiting Aboriginal peoples resources. - Unemployed single did not qualify for government relief; relied on charities to get by.
4 Responding to the Depression: (Notes 3 of 5) - Initially, Depression viewed as a temporary problem; federal government reluctant to provide. Pointed to municipal and provincial governments. - Nevertheless, Richard Bennett s Conservative government introduced several measures. - Unemployment Relief Act provided funding for work-creation programs. - The Prairie Farm Act introduced in 1935 to help farmers build irrigation systems and reservoirs. - Relief payments, soup kitchens and a national network of work camps for single men also developed in attempt to provide relief. - paid workers $0.20 a day with room and board to work on projects such as building roads, clearing land, and digging drainage ditches. - On-to- -Trek - a 1935 rail trip from Vancouver to Ottawa (stopped at Regina) by unemployed men to protest conditions at employment relief camps , U.S. president Franklin Roosevelt introduced a New Deal that created public work programs for the unemployed. - Significant because provided several social assistance programs, such as old age pension, unemployment insurance, and financial assistance for mothers and children. - Roosevelt s inspired Bennett s New Deal. - Deal promised fairer taxation, unemployment and injury insurance, old-age, agricultural support programs, and legislation to better wages and working conditions. - Bennett s change in policy seen as a desperate attempt to win votes. For Bennett it was too little, too late.
5 Politics of Protest: (Notes 4 of 5) - As Ottawa struggled to find ways to cope with the Depression, some Canadians looked to new political parties for solutions. The Co-operative Commonwealth Federation ( ): - Canada s first socialist party; founded in the Prairies in Believed breeds inequality; advocated government control over the economy. Opposed free-market economics and supported public ownership. The Social Credit Party: - Political party from Western Canada based on the belief that capitalism was a wasteful economic system. - Believed government should release money into the economy so people could spend it. Promised each citizen $ a month to buy necessities. - Federal government challenged right of province to issue its own ; social credit was disallowed by the Supreme Court. Union nationale: - Nationalist French-Canadian political party led by Maurice Duplessis; supported Quebec. - Advocated for the protection and development of Quebecois culture and language. - Duplessis blamed social and economic problems on the English minority in Quebec, which controlled the province s economy. - As voters became more dissatisfied with government inaction, parties such as the CCF, Social Credit, and Union nationale gained momentum and power at the provincial level. - By 1935, five years after was elected prime minister, voters were frustrated by his inability to deal with the crisis of the Depression. - In the federal election, returned to power.
6 Federal-Provincial Tensions: (Notes 5 of 5) - Mackenzie King was re-elected prime minister of Canada in King did not support government in the economy; believed that in time, economy would improve on its own. - As a result, felt spending money on social programs during a depression did not make sense. - King s views clashed with findings of the National Employment Commission (commission King had set up in 1936 to examine state of unemployment in Canada). - Commission recommended government spending on job creation and training programs. - In 1937, King created the Commission on Dominion- Provincial Relations to examine issue of federal-provincial relations. - Depression had caused great deal of tension between federal and provincial governments. - Disagreements over which government had right to collect tax money and which should pay for and unemployment assistance. - Commission set out to look into the of the different levels of government. - Commission s findings recommended federal government give poorer provinces grants, or payments; upset wealthier provinces. - Also recommended federal government bear responsibility for unemployment insurance and other social benefits such as pensions. - The economic crisis of the 1930s resulted in social and political instability around the world. - Instability was perfect breeding ground for dictators who gained power by offering solutions and hope to desperate people. - Ambitious plans to expand and resources led to global military conflict.
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