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From Boom to Bust. THE ECONOMY ON THE UPSWING. By the middle of the 1920s, the economy turned around in Canada; Industries were growing, and foreign investment caused business to pick up;

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From Boom to Bust


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the economy on the upswing
THE ECONOMY ON THE UPSWING
  • By the middle of the 1920s, the economy turned around in Canada;
  • Industries were growing, and foreign investment caused business to pick up;
  • Not all provinces shared in the economic growth. For example, while oil and hydroelectric industry grew in Ontario, Quebec, and Alberta, the coal production in the Maritimes fell.
economic upturn
Economic Upturn
  • Wheat on the Prairies
      • enjoy huge wheat crops between 1925-1928
      • Introduction of cooperatives
  • Pulp and Paper
      • Canada’s largest industry during the 1920s
      • Majority exported to USA
      • Results in destruction of Canadian forests
  • Hydroelectric Power
      • Ontario and Quebec see dramatic increase in production of hydroelectric power
      • Begin to develop rivers as well as expand Niagara Falls site
slide4
Oil and Gas
      • Used to power automobiles and heat homes
      • Discover oil field in Alberta and begin to develop
  • Mining
      • Discovery of nickel, copper, lead and zinc
      • Begin to mine deposits and distribute worldwide
foreign investment the branch plant economy
FOREIGN INVESTMENT – THE BRANCH PLANT ECONOMY
  • After WW1, Canada’s biggest foreign investor was the United States
  • Americans introduced the “BRANCH PLANT” system to Canada’s economy.
  • In the branch plant system, the branch industries were copies of the American parent company;
  • They produced the same products as the parent company in the U.S., but because they were made in Canada, the parent company didn’t have to pay high tariffs on imports at the border
the branch plant system
The Branch Plant System

Parent Company (outside Canada)

PROFITS

Top management jobs

Important decisions

Foreign investment money

Research and development

Canadian Branch Plant (provides for Canada)

Jobs for Canadians

Products made in Canada

Taxes for Canada

views on american investment
Views on American Investment

Good

Bad

Increasing Americanization of the Canadian economy

Many important decisions about Canadian branches were made in the U.S.

Top management jobs were frequently held by Americans

Profits made by the branch plants were sent back to the U.S.

Fear of a complete economic takeover by the U.S.

Too much American control in Canadian economy

  • Foreign capital necessary to develop industries and provide jobs in Canada
  • American capital could develop Canada into an economic power.
slide8

The economic upswing in the mid-1920s gave many Canadians a new sense of confidence

  • Stock markets played a big part in the economic boom of the 1920s
the stock market
The Stock Market

What is a STOCK MARKET?

Why do people by SHARES (also called STOCKS) in a company?

They hope that the success of the business will cause the value of each share to rise. Then they can sell the stocks for a profit.

If the company is doing well, shareholders may receive a portion of the company’s profits. This payment is called a DIVIDEND.

Of course there are risks involved – if the company does poorly, there are no dividends, and the value of the shares will probably fall as well.

  • A place where investors (people who want to invest their money) can buy and sell shares in companies that make products or provide services
causes of the great depression the great crash cause 1
Causes of the Great Depression: The Great Crash – Cause #1
  • Black Tuesday
      • October 29, 1929; the day the stock market prices drastically dropped driving people into a panic
      • People rushed to the stock market to try and cash in their stocks hoping to avoid financial ruin
the great crash
The Great Crash
  • It wasn’t just investors that lost money. As shares lost value, companies had less money available.
  • Most companies cut back on production or closed altogether.
  • Even banks didn’t have money, because so many people had borrowed money to buy their investments, and when the market crashed, the people who “bought on margin” could not repay their loans.
  • People lost their homes, jobs…everything.
causes of the great depression
Causes of the Great Depression
  • Over-production and Over-expansion
        • Produce more items then factory owners can sell
  • Canada’s Dependence on a Few Primary Products
        • Dependence on staples: fish, wheat, minerals and pulp and paper
        • Canada’s economy booms when staples are needed on world market
        • During depression, world markets crashed and so did the need for Canadian goods
  • Drought
        • 1929, 1931, 1933-37 wheat farmers faced heavy drought which destroyed crops (known as the “dust bowl” years)
slide13
Canada’s Dependence on the USA
        • Buy 65% of goods from USA; sell 40% of goods to USA
        • Canada’s largest trading partner; when US economy takes a dive, Canada’s inevitably follows
        • “When the United States sneezed, the rest of the world got pneumonia”
  • High Tariffs Choked off International Trade
        • In Europe, because of WWI debt, protective tariffs used on foreign imports to protect home industries from foreign competition
        • Countries retaliate with own protective tariffs slowing world trade
slide14

Too Much Buying on Credit

        • “buy now, pay later” mentality
        • Families become hopelessly in debt as a result
        • When one could no longer make payments, creditors were allowed to repossess goods leaving many families with nothing
  • Too Much Credit Buying of Stocks
        • Stock market is a quick way to get rich
        • Buy stocks on credit
        • When the value of the stocks dropped, people panicked and sold out driving prices even further into the ground
causes of the great depression assignment
Causes of the Great Depression – Assignment
  • Using your text pages 182-187 and the handout provided, you are to create a comic strip or a mind map on the causes of the Great Depression. Your causes should include the all the causes discussed in this presentation (they are in the text).
            • The Stock Market Crash
            • The Drought
            • Over-production and Over-Expansion
            • Canada’s Dependence on a Few Primary Products
            • Canada’s Dependence on the United States
            • High Tariffs Choked Off International Trade
            • Too Much Credit Buying
            • Too Much Credit Buying of Stocks
the worst years
The Worst Years
  • By 1933, one third of Canadians out of work
  • Riding the Rails – many roamed the country, hitching rides on trains looking for work
  • No money from jobs meant no money for food, clothing and other necessities
  • Many suffered from malnutrition
  • For those who could not find work, there was government relief
      • Relief was emergency financial assistance given to some of the unemployed to keep them from starving
governments and relief
Governments and Relief
  • Government slow to act – thought best way to deal with depression was to wait it out
  • “five-cent piece” speech
      • PM King believes relief is responsibility of provinces
      • Refuses to give money to non-liberal provincial governments
      • As a result, loses 1930 election to Richard Bedford Bennett
  • Bennett’s policies do little to ease hardships
      • Dumps money to provinces who in turn provide money to municipal governments to deal with unemployment
      • 1932 creation of relief camps across country for unemployed single men
          • Paid 20¢ a day for eight hours of work cutting brush, moving rocks, etc.
          • Also provided with shelter and food
          • Viewed as slave labour
slide18
On-to-Ottawa Trek
      • Organized by relief workers who were unhappy with government’s inactivity in June 1935
      • Aim to protest government’s lack of initiative
      • Stopped in Regina by Mounted Police because Bennett believed they were trying to overthrow the government
      • Led to riot where some men were killed
      • Overall was ineffective because did not inspire government to act
windows on life in the thirties assignment
Windows on Life in the Thirties - Assignment
  • Using the picture gallery on page 188-189, complete the 5 questions on page 188.
  • Read pages 191-193, and 194-195. Pretend you are a person living in Canada during the Great Depression
      • Your situation is so terrible, you have no choice but to write Bennett and ask for his assistance to prevent starvation.
      • Make sure your letter clearly describes your living conditions.
      • Letter must be a minimum of ½ page.
windows on life in the thirties assignment1
Windows on Life in the Thirties - Assignment
  • Initially you played the role of a Canadian living in the Great Depression. Now you will have the opportunity to play R. B. Bennett.
      • Write a short response (2-3 sentences) to the person whose letter is sitting in front of you. If there wish is reasonable, your response may be positive – if it is extreme, you may decline their request.
      • Return the response to the person once you have finished answering.