After World War I, Canada faced the Roaring 20s with huge economic growth. Soldiers were back from battlefields, businesses began running up again, and more people entered the workforce. Stable jobs gave workers the confidence to spend their income on consumer goods. Now this branches into different categories that eventually lead to The Great Depression.
Businesses that were making a profit from selling consumer goods decided to expand their company. What better way to make money than from producing more products to sell? But oh no, the increase in productions lead to OVERPRODUCTION. Surplus of products began piling up and businesses began slowing down manufacturing. Employers ultimately began laying off workers or paying lower wages. This started a cycle:
Stock Market Crash:
People with money looked to the American stock market as another source of income. Why be rich when you can spend money to become even richer? Canadians, as well as people from around the world, began investing in stocks.
Speculating: Stocks bought on margin → borrowed money. An individual would sell stocks, repay the loan, and receive massive profit. This resulted in massive inflation of stock prices
Industries such as the Wheat industry began dropping prices due to overproduction and competition with other countries. Companies couldn’t justify their stock prices anymore and they began to drop.
On October 24, 1929, also known as Black Thursday, investors finally realized the drop in stocks and began selling their shares. $12.9 million shares of stocks were sold. This catastrophe continues in a chain reaction and by October 29, 1929, dubbed Black Tuesday, the market crashed. $16.4 million shares were sold and price stickers couldn’t keep up. The market lost $14 billion that day.
Reliance on Exports:
Canada’s economy relied heavily on exporting basic products to other countries. These products (called staples) included wheat, fish, timber, minerals, and crops. In fact, 40% of Canada’s exports were bought by America. From 1925-1929, Canada sold record amounts of crops for record prices but by the end of the 1920s, other countries also had a lot of crops to sell and the competition was tough. Canadian farmers were left with large quantities of unsold wheat and they were forced to drop prices dramatically.
Canadian Prairies faced many droughts through the 1930s. Dry weather and a lack of rain allowed strong winds to pick up dust. Large dust storms, called Dust Bowls, destroyed farms and agriculture land. Without crops to export, many farms and railways went bankrupt.
The consequences of The Great Depression affected the world globally. Canada was hit particularly hard due to our reliance on America and international trade. When the economy started to fall, everyday life for Canadians changed.
People who had personal bank accounts were affected as well. The stock market was so appealing that banks took money from customer accounts to invest. When the market crashed, fractions of their customer’s money was lost. They were only paid back 10 cents for every dollar they had in their account. Hundreds of banks went bankrupt, and many people lost their life savings.
By 1933, 30% of Canada’s population was unemployed and 1 out of 5 Canadians depended on government relief, which was still not enough for basic survival. This lead to poverty and homelessness. Without income, families struggled to provide food and basic utilities for themselves.
As the title of the crisis states, the Great Depression brought hardships and suffering to Canadians. Before the stock market crash, Canadians put their faith in the system. Greed blinded many people as they continued to invest their life savings. It wasn’t until the reality of overproduction settled in when people began selling stocks at record amounts. From the tragedy of the Great Depression, Canadians learned just how delicate the economy was.
Anger was directed to the prime minister at the time of The Great Depression. Richard Bedford Bennet, the leader of the conservative party was elected and ran from 1930 – 1935. Although his promise to end The Great Depression won him the majority of the votes, Bennet didn’t accomplish much until his last year in office. At the same time in 1934, Franklin D Roosevelt created the New Deal to end the Depression in America. Bennet took “inspiration” from Roosevelt and developed a Canadian version in efforts to ease his citizens. His New Deal included:
- Progressive taxation- Increasing taxation on individuals with higher income to equally distribute wealth
- Introduction of minimum wage- stabilizing post-depression workers and protecting them in the labour force
- Firmer regulations on working conditions
- Unemployment insurance program
- Health and accident insurance
These new policies did little to help Canadians during the Depression. The Supreme Court challenged the legislation but would later develop into the Social Safety Net (a collection of services provided the state or other institutions). Today in modern Canada, services to protect workers were put in place by the result of the Dirty Thirties. Welfare, child benefits, and unemployment insurance were all imposed to avoid a second Great Depression. The crisis helped change future lives after history’s greatest economic downfall was experienced.
It was not until World War II when the Great Depression would come to its end. The increase in jobs provided by the demand for industries finally gave workers employment. Ironically, a global tragedy was ended by another.