unit 2 Flashcards
prohibition
alcohol is illegal to buy, sell, make, or consume
speakeasy/blind pig
illegal bar
→ the outside looked like a business but the inside was a bar
bootlegger
someone who makes and sells illegal alcohol to the public
rum-runner
someone who illegally smuggled alcohol across borders
MBS
(Mortgage Backed Security)
- investments like bonds
→bundle of home loans and other real estate debt bought from banks or government entities
→ combine mortgages to create leverage
subprime
a loan that is meant to be offered to prospective borrowers with impaired credit records
Goldman Sachs
the largest investment bank in the world
ABX
Asset-Backed Experience
→ strategy in which the sales, marketing and customer success departments work together to provide accounts with a unified, personalized experience throughout the buyer journey (tracks housing bonds)
CDO
Collateralized Debt Obligation
→ complex, structured financial product backed by a pool of loans and other assets
ex. (bad bonds mixed with good → rated AAA when they are BB)
ISDA Agreement
International Swaps and Derivatives Association
→ standardized over-the-counter contract for derivative transactions
synthetic CDO
invests in credit derivatives, like credit swaps, without owning underlying assets (“bets on bets”)
communism
an economic system based on ownership of all property and means of production and distribution by the community or the state
socialism
a political and economic theory in which a democratically elected central government owns, manages, and controls the means of production and distribution
The Communist Party of Canada
founded in 1921 in Guelph, Ontario
→ committed to the worker’s revolution to overthrow democratic governments based on the capitalist system of private ownership
The Co-Operative Commonwealth Federation
in 1932, independent members of Parliament joined together to create the CCF
→ they attacked the negatives of capitalism and promised a policy of socialism
Al Capone
Chicago gangster and mob leader
The Social Credit Party
formed in 1935 in Alberta led by William Aberhart
→ advocated for putting money that was sitting idle in banks and trust companies in the hands of consumers who would spend it and this would start the economy again
The Women’s Christian Temperance Union
led the reform movement for the prohibition of alcohol
William Lyon Mackenzie King
PM of Canada from 1921-1926, 1926-1930, 1935-1948
→ longest running PM (21 years)
Richard Bedford Bennett
PM of Canada from 1930-1935
→ was a lawyer prior to his term as Prime Minister
James S. Woodsworth
elected as the first leader of the Communist Party of Canada
→ leader of the Winnipeg General Strike
William Aberhart
leader of the CCF
→ highschool principal and radio evangelist
the roaring 20s
- jubilant period full of great emotion
- much of this image comes from the movies, novels and music of the time
political life during the roaring 20s
- from 1921-1930, William Lyon Mackenzie King was Canada’s Prime Minister
- King was a man of extreme caution who tended to put off difficult decisions as long as possible
- longest serving PM in history (21 years)
- he was a mystic, he believed he received advice from his mother’s ghost
how long was King PM for?
21 years
economic boom (roaring 20s)
- WW1 created thousands of new jobs and caused industry to expand
- the population grew from 7.2 to 9.7 million in 1928
- high demand for goods = high production, sales, employment, profits, and purchasing power
3 great symbols of an economic boom
1) automobile
2) radio
3) airplane
prohibition (1920s)
- movement led by the Women’s Christian Temperance Union
- they felt that alcohol increased violence, abuse, and crime while decreasing productivity
why did some cities bring in federal police forces to enforce prohibition?
- local police were bribed to turn the other way and many drank themselves
consequences of homemade distilled alcohol
- gut rot
- blindness
- death
what were Canada’s biggest exports (during prohibition)
whiskey and beer
why did prohibition go away?
- by the mid-1970s, prohibition had gone away
- the government decided to regulate the industry and profit from it through taxation
problems with prohibition
- impossible to enforce
- police took bribes
- people always found ways to acquire alcohol
- Quebec never agreed to the law
what were the effects of prohibition in the US?
- increase in organized crime
→ i.e. the mob and gangsters - some Canadians made a fortune smuggling alcohol into the US
3 direct causes of the great depression
1) The Wheat Market
- while the 1920s was an era of economic boom, western farmers did not share in Canada’s general prosperity
- despite the record wheat sales, competition from foreign producers kept the price of wheat down
- in 1929, a terrible drought hits the prairies along with high temperatures and plagues of locusts
→ this lasted for 10 years
- Australia, the Soviet Union, and Argentina had huge harvests of wheat and this forced the price of wheat down from $1.29 a bushel to 34 cents in 1932
2) The Export Market
- during the 1920s, European countries were buying North American products at record levels
- Canadian and American businesses grew and produced more goods
- Europe relied on American loans for many of these purchases and the US banks cut off many of these loans by the late 1920s; and that meant Europe found itself without any buying power
- factories found themselves with warehouses full of goods they could not sell; most cut back production or closed for good
3) Collapse of the Stock Market
- the symbol of prosperity in the 1920s
- prices were always rising
- investors would invest money they did not even have
- the start of the depression was triggered by the stock market crash on October 29, 1929
→ this day was called “Black Tuesday” because prices for the shares collapsed in Canada and the United States
- investors realized that their shares were overpriced and they tried to sell them at once, this is called “panic selling”
→ everyone wanted to sell their stocks before prices dropped even further
- on this day 16.4 million shares were sold and stocks lost 9 billion dollars in value
- many investors lost all their savings and went bankrupt
- banks also hurt because they had loaned out money for the purchase of stocks
when was prohibition in the US?
1920-1933
cause 1 of the great depression
1) The Wheat Market
- while the 1920s was an era of economic boom, western farmers did not share in Canada’s general prosperity
- despite the record wheat sales, competition from foreign producers kept the price of wheat down
- in 1929, a terrible drought hits the prairies along with high temperatures and plagues of locusts
→ this lasted for 10 years
- Australia, the Soviet Union, and Argentina had huge harvests of wheat and this forced the price of wheat down from $1.29 a bushel to 34 cents in 1932
cause 2 of the great depression
2) The Export Market
- during the 1920s, European countries were buying North American products at record levels
- Canadian and American businesses grew and produced more goods
- Europe relied on American loans for many of these purchases and the US banks cut off many of these loans by the late 1920s; and that meant Europe found itself without any buying power
- factories found themselves with warehouses full of goods they could not sell; most cut back production or closed for good
cause 3 of the great depression
3) Collapse of the Stock Market
- the symbol of prosperity in the 1920s
- prices were always rising
- investors would invest money they did not even have
- the start of the depression was triggered by the stock market crash on October 29, 1929
→ this day was called “Black Tuesday” because prices for the shares collapsed in Canada and the United States
- investors realized that their shares were overpriced and they tried to sell them at once, this is called “panic selling”
→ everyone wanted to sell their stocks before prices dropped even further
- on this day 16.4 million shares were sold and stocks lost 9 billion dollars in value
- many investors lost all their savings and went bankrupt
- banks also hurt because they had loaned out money for the purchase of stocks
how long did PM King think the great depression would last?
King thought that the stock market crash of 1929 and the depression would only be a temporary setback to the Canadian economy
what signs said the depression would last longer than King had originally thought?
- factories began to lay off workers
- poor economic conditions began to get worse
- King still though the economy would be on the up swing again by the election of 1930
who was King’s opponent?
Richard Bedford Bennet
→ millionaire lawyer from Calgary
→ leader of the conservative party
why did King believe he would win the election?
he believed he would win based on 3 achievements during his terms
1) he had lowered taxes
2) achieved a balanced budget
3) had increased trade with Britain
why did King call an election in 1930?
his fortune teller told him to
→ he also stated days before the election that he would not increase taxes or borrow money to help the poor
what did Bennett promise?
- to take action:
→ raise tariffs
→ promised to give millions of dollars to the provinces for building projects to help unemployment
when was the election held and who won?
- July 28, 1930
- Bennett (conservatives) won more seats in all parts of the country including Quebec that traditionally votes Liberal
what did Bennett do after the election?
- he moved quickly by granting 22 million in emergency aid to the provinces
- Parliament raised tariffs to their highest level ever
→ this had little effect on the economy
when did the droughts take place and what was Bennett’s response?
- by 1931, it became clear that a major drought was going to hit the southern prairies again
- Bennett passed law to help subsidize freight rates to help farmers transport their grain
→ again this had little effect on the economy
alternative solutions to the great depression
The Communist Party of Canada
→ committed to the worker’s revolution to overthrow capitalist governments
→ some workers during the Winnipeg General Strike of 1919 were sympathetic to the claims of the new Soviet government in Russia under the leadership of Vladimir Lenin
- Bennett hated communism and had the RCMP arrest Tim Buck and seven other communist leaders as a show of force and a warning to potential supporters
The Co-Operative Commonwealth Federation
- attacked the negatives of Parliament and promised a policy of socialism
→ they believed in democracy and free elections to achieve their goals
The Social Credit Party
- advocated putting idle bank and trust company money in the hands of consumers who would spend it and this would start the economy again
The Winnipeg General Strike of 1919
- workers in Winnipeg went on strike because they had seen Russian workers succeed in the Russian Revolution
- affected by factors such as
→ inadequate housing/sanitary facilities
→ division increases between classes - they went on strike in hopes of
→ reducing inflation
→ unionizing
→ improving wages - the government saw this as a sinister plot to overthrow the elected authorities and it affected many sectors
→ many supporters were immigrants/threatened municipal and federal governments
→ speeches started to mention communism which worried the government
conditions of Canada’s Indigenous People
- less than standard conditions
- not allowed to vote in elections
- made to assimilate by forgetting their customs, languages and lifestyles
- they face inferior housing, poverty, alcoholism, poor diet, etc
Canadian Art and Culture
Group of Seven
- important artists
- painted using vivid light and shade (unheard of at the time)
- new style of impressionism shocked Canadians
- leader: Emily Car
- mostly painted Canada’s landscapes
Bluenose Schooner
- boat that won the International Fisherman’s trophy, defeating America
- on the Canadian dime
6 reasons why the temperance groups want the government to bring on prohibition?
- they believed alcohol was responsible for many societal problems
- child and wife abuse rates would go down
- men would become better providers
→ stop buying alcohol and pay cheques and bills - felt it was immoral to drink alcohol
- thought the grain should be sent overseas for WW1 troops
- crime rate would decline
- health concerns for the people
- overall improve people’s lives
underlying causes of the great depression
1) Natural Resources
→ made up most of the exports
2) Buying on Credit
→ using borrowed money to expand businesses
3) Overproduction of Goods
→ less demand for Canadian goods as imported goods were cheaper
4) Raising Tariffs
→ all countries were raising tariffs making them virtually useless
5) Low Standard of Living
→ people could not afford (luxury) goods and services
when did the first wave of panic selling occur?
Wednesday October 23-24, 1929
when was the peak of the stock market
August 27, 1929
how long did it take to match the number of stocks traded on October 29, 1929?
40 years (1969)
how much was lost during the entire first week of the crash?
over $30 billion
how long did the New York Times think the depression would last?
2 or 3 months
5 ways to fix the great depression
- Expanded Public Works Programs
- Implement large-scale projects early
- Create jobs and stimulate local economies
- Increased Support for Agricultural Sector
- Provide direct assistance (price supports, crop insurance)
- Stabilize farm incomes and alleviate rural pressure
- Monetary Policy Adjustments
- Aggressive monetary policies by the Bank of Canada
- Lower interest rates and increase money supply
- Social Welfare Programs
- Establish unemployment insurance and direct aid
- Mitigate effects on vulnerable populations
- Collaboration with Provinces
- Encourage federal-provincial cooperation
- Tailor recovery plans to regional needs
