The Causes Of The Great Depression In Canada

Amazing Essays
Causes of the Depression

Public confidence was generally high in Canada during the last years of the 1920s, and many Canadians were optimistic. However, the uncertain prosperity of the Roaring Twenties was coming to an end. A dramatic signal of the approaching end took place in October 1929. On October 24, thousands of speculators lost money in a sudden stock market tumble on the Winnipeg Grain Exchange. Five days later, the New York stock market crashed. Too many people had bought stocks using borrowed money. As long as stock prices were rising, speculators could sell their stocks, pay off their debts, and still make a profit. But when stock prices began to fall, they could not cover their debts by selling off stocks. A drop in stock market
…show more content…
The Depression was a worldwide economic disaster that affected countries as far as Germany, Norway, Chile, Japan, and the United Stats. It is not surprising that an event as devastating and complicated as the Great Depression had many causes and they were related to factors that revealed the extreme vulnerability of the Canadian economy to world market conditions. Most recent economic studies of the Great Depression suggest that the stock-market crash frightened American consumers and business people, creating what one economist described as uncertainty about future income. American consumers, worried about having less money to spend in the future, stopped buying expensive items. Because of the drop in consumer demand, American manufactures began decreasing the production of consumer goods. As American industrial production declined, workers were made redundant and unemployment grew, causing American consumer spending and business investment to drop even further. Therefore, the Great Depression in the US deepened in the early 1930s. At the same time, other countries also experienced economic problems which worsened as the effects of staggering economies in large countries like the United States and Great Britain spread around the world. Canada was hit especially hard because 33 percent of its gross national income was derived from …show more content…
There was a dramatic fall in wheat exports resulting from the stiff competition from countries such as Argentina, Australia, and Russia. In addition, the European countries tried to protect their domestic products by restricting importing of food. Wheat prices dropped to a record-breaking low: a bushel of NO.1 Northern wheat that was worth $1.63 in 1928 had dropped by 40 percent to 25 cents by 1932. The land was over farmed resulting in the topsoil’s being easily eroded. The meager income and poor soil were further worsened when drought struck the plains of southern Alberta and Saskatchewan in 1934 and again in 1937; the scorching wind blew the topsoil into fine dust which forcing the farmers to abandon their unproductive desert. Grasshoppers and wheat rust further contributed to the crop failures as they destroyed the remaining crops that were struggling to survive. Almost nothing could grow under the onslaughts of nature. In terms of yield per acre, prairies wheat production had dropped to an historic low in 1937. This was less than one third of the yields achieved in 1928. In 1928, the average agricultural income in the Prairies was $1614 in which most families could afford their basic living needs and even to put aside some savings. However, their incomes declined by

Related Documents

  • Decent Essays

    There were many causes and effects of the Stock Market Crash of 1929, but the aftermath known as Black Tuesday stunned the Wall Street investors which led to the Great Depression in the 1930s. The Stock Market was the top dog of the income factor for the United States in the 1920s. It started falling in the late spring and early summer of 1929. Banks started loaning out too much money and were not getting their money back from the loans…

    • 1206 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    Over the course of these few years, consumer spending and investment dropped significantly which in turn caused steep declines in industrial output and increased levels of unemployment as failing companies laid off workers. Many factors led to the Great Depression, but some of the main causes included the stock market crash of 1929, bank failures, high unemployment rates, and the Dust Bowl are what brought on the hardships of numerous Americans.…

    • 1391 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    As stock prices drastically went down on Black Tuesday many people watched as they fell into debt. Any hope that the roaring 20’s had put into the minds of citizens was quickly shattered as stocks hit rock bottom prices and were sold off rapidly to avoid any further loss (Canada History, 2013). When the stock prices fell many Canadians had bought substantial amounts of stocks on loan hoping to make profit off them when they go up because…

    • 1188 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    The great recession that is known as the “Great Depression’ started in 1929 and continued until about 1933 in United States. This severe economic phenomenon that was originated in United States not only affected the USA economy but also shook the economy of almost all the countries of the world. This great depression led to severe decline in the real output, acute unemployment rate and consequently all the economic sectors and variables were negatively affected. As a result, the living standard of people declined at a high rate. Declines in consumer demand, financial panics, and misguided government policies caused economic output to fall in the United States.…

    • 1350 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    Throughout the 1930s, more than 9000 banks failed. As banks failed, individuals lost their savings because banks deposits were not insured. Surviving banks stopped their willingness to create loans because they were not sure about the economic situation but more concerned with their survival. This even exacerbated the situation thus resulting in less and fewer expenditures causing the depression. The stock market crash, as well as bank failures, decreased the spending power of the stockholders who lost money.…

    • 1748 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    After Black Tuesday, millions of shares became worthless and investors who had bought on margin were “wiped out”(1). During the 1920s, Americans were always wanting more and more which lead to them buying things on credit that they could not afford to pay back. The greed of the American people led them to make reckless budgeting decisions that got them in huge debt that would weaken the American economy. The uneven distribution of income among the working class also contributed to the depression. According to Sarah Carroll, the average person’s wages stayed the same, despite the climb in prices for goods (3).…

    • 1262 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    Throughout the years that came “Consumer spending and investment dropped, causing steep declines in industrial output and rising levels of unemployment as failing companies laid off workers”. As years went on there was a mass incensement of unemployment and is documented to be on of the worst times of American employment. And although we are well aware of the crash of the stock market to be one of the main causes there were also many other reasons to the contribution of the depression such as lack of diversification in the American economy, maldistribution of purchasing power, and the credit structure of the economy. And it was throughout all this and the years to come that would eventually lead the U.S out of the depression and into a great progressive nation.…

    • 1074 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    The Great Depression started because of a huge crash in the stock market within our society. From 1929-1933 the unemployment rate rose drastically from 3.2% to 25%. Reason being is because the country couldn’t keep up with the production of the full employment of the labor force. The output expected wasn’t reached due to the U.S.…

    • 1767 Words
    • 8 Pages
    Decent Essays
  • Decent Essays

    After the stock market crash, many people went into a panic and tried to sell their stocks to any willing buyer. In the book titled, The Crash of ‘29 and The new Deal, Bruce Glassman wrote on page 28 that “On Tuesday, October 29 more than 16 million shares of stocks changed hands, and many stocks closed at half the value they showed that morning”. The value of stocks had dropped to a devastating level so when the stockowners tried to sell their stocks they made little to no money off of it. That put many Americans in the red because they were not able to pay off the loans they took from the bank. In turn, that meant, combined with their already building debt, the banks did not have enough money coming in.…

    • 1478 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    Many economists and historians believe the Great Depression was an effect of the crash, but the crash only signaled what was already the start of the Depression. The effects were seen in finances and unemployment, and because the stock market crashed, the economy of America plummeted. Many lost life savings, bankers and brokers had no money to loan so were forced to close, unemployment…

    • 1174 Words
    • 5 Pages
    Decent Essays