Riding the Roller Economic Roller Coaster Flashcards
Growth and Collapse of the National Economy
The 1920s, known as the “Roaring Twenties,” marked a period of economic growth fueled by technological innovation (e.g., automobiles, electricity, radio) and consumerism.
Governments and businesses promoted a laissez-faire economy with minimal regulation.
Rapid expansion of the stock market led to speculative investments, creating an economic bubble.
The unregulated financial sector and overconfidence in endless growth masked underlying weaknesses.
The collapse of the economy in 1929 triggered the Great Depression, which exposed these vulnerabilities, such as overproduction, uneven wealth distribution, and reliance on credit.
The Crash
-The stock market crash of October 1929 signaled the end of the prosperity of the 1920s.
Massive sell-offs of stocks on Black Tuesday (October 29, 1929) caused prices to plummet.
-Investors, unable to repay loans used to buy stocks on margin, defaulted, collapsing banks.
-Confidence in the market and economy evaporated, leading to widespread panic and financial instability.
Six Causes of the Great Depression: Canadas Dependence upon Raw Materials for Export
Much of the prosperity of the 1920s was based on the production and sale of primary products, especially wheat, wood products like lumber and newsprint, and mineral. 80% of this production was sold in International markets.
Six Causes of the Great Depression: The United States as a Major Trading Partner
Canada’s economy was closely tied to world conditions,
especialily those in Europe and the United States.
> As the United States tried to keep its own economy healthy,
Americans stopped investing in places like Canada and focused
on the market.
> The American bankers also demanded payment on loans from.
Europeans. Many Europeans found it difficult or impossible to
repay the loans. The result was that they could no longer
afford to purchase Canada’s products.
Six Causes of the Great Depression: Uneven Distribution of Wealth
> Canadians were earning wages almost beneath the poverty line.
> They were unable to purchase much of what the nations
businesses were producing in such large quantities.
Six Causes of the Great Depression: Failure to Find Ways to Distribute Growing Industrial
Production to the Consumer
> Even before the stock-market crash in October 1929, there
were signs that Canada and other countries were producing
more goods than the markets could absorb.
Newspaper, wheat, and the automobile all fell victim to this.
Six Causes of the Great Depression: Buying on Credit
> As the value of stocks increased through 1926,1927, and
1928, it seemed there was no surer, or faster, way of making
money.
> Investment was made easier because almost anyone could
borrow money to buy stocks. As long as the stock prices were
rising, investors could sell their stocks, pay off their debts,
and still make a profit.
> The more money that people invested, the greater the market
value of stocks increased.
Six Causes of the Great Depression: Speculation on the Stock Market
> On Tuesday, October 29,1929 - ‘Back Tuesday* - Stock
holders over the previous weeks had been growing more
nervous as stock prices climbed ever higher, finally decided
that the stocks were overvalued.
The world wide depression
- In an attempt to relieve the burden of Depression, Prime Minister
R.B. Bennett setup “relief camps” for unemployed, single,
HOMELESS MEN - Men in the camps received food, shelter, army-style
CLOTHING AND 20 CENTS A DAY IN RETURN FOR BUILDING
BRIDGES AND ROADS, CUTTING TREES AND DIGGING DITCHES - Those men who were unemployed but had families were given
VOUCHERS THAT COULD BUY FOOD, CLOTHING AND SHELTER - Those who received this funding were sajd to be “living
ON THE POGEY” - Many people at this time felt that if you were unemployed, then
IT WAS YOUR OWN FAULT BECAUSE YOU WERE EITHER LAZY - Western Canada was hit extra hard during the Depression; they
FACED THE ECONOMIC HARDSHIPS, BUT THEY ALSO FACED DROUGHT - Between 1931 & 1939, the Prairie Provinces
(Alberta, Saskatchewan & Manitoba) received very
LITTLE RAINFALL - This turned the soil into fine dust & dust
STORMS RIPPED THROUGH ALBERTA AND SASKATCHEWAN - Those crops that survived the dust storms and
LACK OF WATER WERE EATEN BY HUGE INFESTATIONS OF
GRASSHOPPERS - IN 1928, THE AVERAGE FARMER EARNED $ 1644 A YEAR, BUT BY 193 3, THIS
NUMBER FELL TO $66 PER YEAR - Between 1931 and 1941, almost 200,000 people moved out of the
Prairie Provinces
