THE GREAT DEPRESSION THE 1930S
The Stock Market Crash 1929
*Crash alone did not cause the GD--
/
/
indicator something wrong with
system
*Buying on a Margin—--in 1920s
investors often bought shares on
borrowed [credit]
*Stock prices decreased b/c of
overproduction...people panicked &
quickly tried to sell stocks
The 6 Causes of the Great Depression
1. Overproduction: Industrial capacity had expanded
beyond the ability of consumers to consume
2. Reliance on Exporting Staple Products: Economy
depended on a few basic staples. Competition became
extreme. Droughts—”Dust Bowl”; caused chain
reaction in economy
3. Dependence on US: 40% of CDN exports sold to USA;
depended on them to buy our staples
4. Stock Market Crash: scramble to sell stocks
caused stock prices to decline rapidly
(in Canada)
5. Economic Protectionism & Tariffs: In 1920s there
was increase towards protective tariffs. The USA
became protectionist—tried to eliminate competition
of foreign goods; protectionism caused countries
such as Canada to lose their major export market
6. Int’l Debt after WW1: USA lent to foreign
nations during WW1; they depended on selling
products back to them to repay loans; when USA
became protectionist, countries lost ability to pay
back loans
USA’s Response to the Depression
Herbert Hoover
1929-1933
Franklin D Roosevelt
1933-1945
Hoover: Refused to introduce any relief measures and figured the Depression could be “toughed out”; shanty towns made out of tarp shacks were named “Hoovervilles”
Roosevelt: Promised a “New Deal” for Americans & would implement it in his first 100 days... New Deal was a set of relief programs which would put Americans back to work
KEYNESIAN ECONOMICS
Believed governments should spend their way out of the Depression
Borrow now & pay later
Said that lack of cash in circulation was making Depression worse each day
CANADA’S 6 RESPONSES TO THE DEPRESSION
Mackenzie King 1921-1930 & 1935-1948
R.B. Bennett 1930-1935
1. Riding the Rails: hitchhiking on freight trains (on
top, inside) to search for employment; later, single
unemployed men rode the rails b/c they had nothing
else to do
2. Pogey: similar to modern welfare; program
developed by gov’t that gave vouchers to be exchanged
for foods or essential items; less than lowest
paying jobs—not sufficient for survival
3. Unemployment Relief Camps: unemployed men worked
on public projects, such as building roads
4. Bennett’s New Deal: Canadian version of
Roosevelt’s New Deal; introduced in 1935: progressive
taxation; max hours in work week; min wage;
regulation of work conditions; unemployment
insurance; health/accident insurance
5. On-to-Ottawa Trek & Regina Riot: Protest where
men boarded trains from Vancouver to Ottawa; “work
w/ wages” & “real jobs”; in Regina stopped by RCMP &
riot broke out
6. Diversion: Stories that allowed CDNs to escape
realities of Depression—Dionne Quintuplets
Q: What was the Stock Market Crash of 1929?A: The Stock Market Crash of 1929 was a significant decline in stock prices that indicated there was something wrong with the economic system but was not the sole cause of the Great Depression.
Q: What does buying on margin mean?A: Buying on margin refers to the practice in the 1920s where investors purchased shares of stocks using borrowed money.
Q: What caused stock prices to decrease during the Great Depression?A: Stock prices decreased due to overproduction, leading to panic as people sold their stocks quickly.
Q: What were the main causes of the Great Depression?A: The main causes included:
Overproduction beyond consumer demand.
Reliance on exporting staple products, making the economy vulnerable.
Dependence on the United States as a market for Canadian exports.
The Stock Market Crash leading to a scramble to sell stocks.
Economic protectionism and tariffs reducing international trade.
International debt incurred after World War I.
Q: How did Herbert Hoover respond to the Great Depression?A: Hoover refused to introduce relief measures, believing the Depression could be weathered, which led to the establishment of makeshift shanty towns called "Hoovervilles."
Q: What was Franklin D. Roosevelt's response to the Great Depression?A: Roosevelt promised a "New Deal" for Americans, implementing relief programs aimed at creating jobs during his first 100 days in office.
Q: What is Keynesian Economics?A: Keynesian Economics advocates for government spending to stimulate the economy during the Depression, proposing deficit financing to support employment projects and increase cash circulation.
Q: What was Canada’s response to the Great Depression?A: Canada's response included several measures such as riding the rails for jobs, pogey for welfare, unemployment relief camps, Bennett's New Deal, and protests like the On-to-Ottawa Trek.
Q: What was Bennett’s New Deal?A: Bennett's New Deal was Canada’s version of Roosevelt's New Deal, introduced in 1935, which included progressive taxation, regulation of working conditions, and unemployment insurance.
Q: What were some social responses to the Depression in Canada?A: Social responses included the On-to-Ottawa Trek, where unemployed men protested for work and wages, and the Dionne Quintuplets' story, providing a diversion from the harsh realities of the Depression.