Great economic growth throughout the 1920s was deeply welcomed by the Canadian society after a hard fought war, however during the 1930s, unsuccessful policies led the nation into an undesirable depression. When progress declined, citizens were left in misery—unemployed and financially volatile. The Canadian government was to blame for this economic breakdown. Likewise, to what extent did the Canadian government’s economic policies from 1920-1933 contribute to the causes of the Great Depression? Increased protectionism caused many industries to suffer and fire their employees as a result. Also the decisions made by the government from buying on margin, overproducing, and relying on the US resulted in the depression, as they were incapable to …show more content…
stand at the same financial level. Ultimately, economic policies of the Canadian government from 1925 - 1933 were reckless and led to an economic depression in Canada. Furthermore, faulty decisions made by the Canadian government were irrational and led to an economic collapse.
A large portion of the investment boom of the twenties in Canada was funded through borrowing from other countries with fixed interest. The West was built on borrowed money. Over 1/5 of all the capital in Canadian private industry was bonded debt, and nearly 30% of prairie farm capital was borrowed at fixed charges. The government was buying on margin supposing that they could pay the loans later. From 1926-1930 interest paid abroad was 10% of total current account receipts; however as current receipts fell in 1931, the ratio rose to 20%. This particularly weakened the economy, as the government had to pay more. As a result the Canadian government was in debt. Almost half the public debt and 4/5 of the private debt were in foreign hands. Since Canada was in debt, it was impossible for them to pay the high interest fees. Thus, the government looked to use taxpayers’ money for help rather than aiding their citizens through the depression. From 1930-1936, the federal government spent more of the taxpayers’ money to service the debt of the Canadian National Railways than it did to provide unemployment relief. Since the government was struggling financially, it could not support its citizens. Therefore when economic activity declined, the government could not increase spending to balance the …show more content…
economy. During the twenties, many industries were expanding and producing a surplus of goods. From 1920 -1929, Canadian production tripled to 2 725 thousand tons. Canadians already owned over a million cars and in the best year, they had purchased only 260 000, however automobiles centres such as Oshawa and Windsor continued to manufacture more vehicles. They manufactured 400 000 cars in 1930. Businesses considerably reduced employees, as outputs declined. Therefore supplies were stockpiled, as individuals did not have the money to buy them since consumers had decreased income. The government was dealing with their issues. With the success of one railway, the government decided to build two more. This was a wasteful decision as it added to their debt. Before the depression, the Canadian government relied on the United States (US) for trade.
We bought 65% of our imports from Americans and sent 40% of our exports to US. From 1926 to 1929, the supply of US dollars to other countries, varied between $7.3 and $7.5 billion. By keeping one major trading partner, the country’s economic fate depended on the US. So when the supply of US dollar declined in 1932 to $2.4 billion, it played an importance in world trade and capital movement. Ultimately intensifying the depression, while making it difficult for the economy to prosper since there was a decrease in revenue from export. Therefore, government decisions made during the twenties were irrational and led to the worst economic
downfall. Without a doubt there was going to be a catastrophe after the Canadian government arranged their policies in the 1930s. The decisions made were awful and definitely ruined the society. This document analysed, to what extent were the financial plans of the Canadian government from 1920-1933 a factor in the Great Depression? The tariff policies choked up trading and slowed down businesses. The decisions by the government to buy on margin, overproduce, and rely on one trading partner led them to a deep depression, ultimately unable to support themselves and their citizens. As said by Ronald Reagan, “Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
World War I had placed great strains on the economies of the most European nations that were involved in the conflict. With trade agreements with countries like Britain, France and United Kingdom America’s economy flourished, as they forced these countries to accept goods in exchange for debt. The economy of America soared to new heights. America’s abundant natural resources and technological advances were used to become leaders in manufactured exports. (Encl) Usually the general public would opposed big business owners to partner with government, but as the lifestyles of many Americans elevated these relationships were accepted. By the end of the decade, 1910 to 1919, annual incomes rose from $580 to $1300 setting the stage for the “crazy years” known as the “Roaring Twenties”.
Canada was a new world society, with a developing farm frontier. 3) There was a working class political pressure. 3 Dependence on foreign trade of wheat contributed to Canada's main cause of the Great Depression. The Weather in the Prairies greatly contributed to the disastrous effects which took place upon the Prairies during the 1930's.
The 1920’s were a period of growth for the world economy as many people experienced great deals of increase with respect wealth as well as technological advancements and electricity, which became crucial living standard in countries such as Canada. A boom in the Canadian economy during this time was a result of middle and lower class families increasing their consumption of mass-produced consumer based items. During this time P.E.I maintained a relatively lower growth percentage then other Canadian Provinces as they experienced less of the economic boom. Those living in P.E.I, or the Islanders, were relatively more prone to hardship as most people located in the province at the time lived strenuous and labour filled lives.
Canadians were frustrating, wonderful, and hard. Soldiers returning from the war expected jobs, but were faced with unemployment, inflation and strikes. Inflation had doubled the cost of living where wages had not and those fortunate to be employed still faced immense financial difficulty. Many people joined unions for better pay and working conditions, 1919 saw the most strikes at a staggering three hundred and six, people were angry and discontented. The 1920s were a time of crime corruption and extreme poverty, yet by mid era difficult conditions began to improve. Foreign investors gained confidence in Canada and as a result new industries were developed, The twenties really did 'roar' and with this boom of change Canada underwent the transformation that was the gateway to the future.
The depression years of 1929 - 1939 proved to be the worst, and some of the best years for Canada and Canadians. It was a time of extreme highs and lows socially, emotionally, and economically. It was a time that Canada came into her own being on the world wide stage.
On the day of October 29, 1929 the Great Depression had begun. This was due to the worth of the New York stock market falling intensely. The Great Depression was a time when Canadians suffered extraordinary levels of poverty due to unemployment. It shaped Canadian’s political views, and also their views about their country and role of the government. Canadians joined together in various new political parties, labor groups and other organizations that represented detailed regional, economic or political interest. Canadians scrambled through the crisis with a makeshift blend of private and public charity. Private Citizens in wealthier provinces recognized the dilemma of Saskatchewan and sent hundreds of carloads of fruit, vegetables and clothing westward. This showed that Canada is a crew of kind and supportive individuals.
The Great Depression was a terrible point in Canadian history, and for most of the world. It was a point in time where thousands of people lost their jobs, and even lost their homes because of the depressed economy. Business was booming in the early 1920s, but when companies tried to expand, and therefore issued stocks, the economy was thrown off. Some investors sold their stocks for high prices, and as a result, everyone else followed. With less of a demand, stock prices became fractions of what they used to be, and on October 29, 1929, the New York Stock Exchange collapsed, followed by the Toronto and Montreal Stock exchanges. This collapse of the stock markets caused a depression like which the world had never seen before. It was important for governments to find methods to deal with the depression, but the Canadian government wasn't very successful in its attempts to deal with the Great Depression.
During the 1920’s, America was a prosperous nation going through the “Big Boom” and loving every second of it. However, this fortune didn’t last long, because with the 1930’s came a period of serious economic recession, a period called the Great Depression. By 1933, a quarter of the nation’s workers (about 40 million) were without jobs. The weekly income rate dropped from $24.76 per week in 1929 to $16.65 per week in 1933 (McElvaine, 8). After President Hoover failed to rectify the recession situation, Franklin D. Roosevelt began his term with the hopeful New Deal. In two installments, Roosevelt hoped to relieve short term suffering with the first, and redistribution of money amongst the poor with the second. Throughout these years of the depression, many Americans spoke their minds through pen and paper. Many criticized Hoover’s policies of the early Depression and praised the Roosevelts’ efforts. Each opinion about the causes and solutions of the Great Depression are based upon economic, racial and social standing in America.
The economic progress Canada made after the war lead to the growth of the country. New industries emerged from innovations of products like automobiles, radios, television, digital computers and electric typewriters (Aitken et al., 315). Canadians quickly adapted back to the “buy now, pay later” strategy rather than careful budgeting during the Great Depression (Liverant). Almost everything that Canadians did was influenced from new inventions; television was the most influential. Canadians conversations, humour, and lifestyle were influenced from television (Aitken et al., 315). Trade relations between the United States and Canada had become more efficient due to the St. Lawrence Seaway. The mass development of the St. Lawrence Seaway, in 1954, was to provide a large wate...
The baby boom generation’s first memorable contribution to Canada was to raise the Canadian economy to a higher stage with the emergence of greater number of people with varying abilities. With the sudden increase in the population, more demands for more products and services were undoubtedly created, helping the economy to strive forward and advance Canada to be competitive in the global market. Before the baby boom period, Canada was suffering from the aftermath of the Great Depression. There was a lack of jobs and people did not have the sufficient funds to spend on any extra luxuries and this created a vicious cycle of economic crisis. However, due to thou...
Many Canadians thought the depression was brought about by the wheat crop crash and not the stock market crash because many Canadians and farmers were dependent on the growth of wheat because it made up a majority of their exports, but seeing as the wheat provinces were hit with a severe drought the wheat crops crashed leaving many farmers out of jobs and money, causing a great affect on Canada. The causes of the great depression were due to over-production and over-expansion because Canadian companies expanded their industries of goods so that they could generate more profits. Yet economic activity shrank in the late 20’s and companies were left with a heavier debt and lack of...
The Great Depression was not just a little event in history, hence the word “great”, but a major economical setback that would change Canada, and the world, forever. The word “great” may not mean the same thing it does now; an example of this is the ‘Great’ War. These events were not ‘good’ or ‘accomplishing’ in any way, quite the opposite, but in those times it most likely meant ‘big’. What made it big are many factors, both in the 20’s and 30’s, which can be categorized into three main points: economics, politics and society. With all these events, compressed into ten years, this period of economic hardship of the 1930’s truly deserves the title the “Great Depression”.
When the Great Depression occurred right around 1930, William Lyon Mackenzie King and his government did not respond strongly . Although the depression was evidently obvious, King believed that the economic crisis was temporarily and only patience was needed to overcome it . It took a while for King to realize how the depression was affecting the politics . King believed that welfare was a provincial responsibility and no one else’s . During the depression, all provinces wanted to increase the tax in Ottawa, but he did not understand the concept of it since other provinces were going to use the tax for themselves. King thought that it was necessary for the provinces to take initiative and increase their taxes . As the depression hit rock bottom many Canadians were unemployed. As Canada was changing right in front of his eyes, King’s perspectives did not show change. In one of his speeches he declared, “I submit that there is not evidence in Canada today of an emergency situation which demands anything of that kind” . King did not face with depression in the most orderly matter but he was a great Liberal leader, he kept the Liberals together when the Conservatives were falling apart and new political parties were developed to compete for the votes . During the depression, King held an election that was one of the most important events that occurred in...
The United States faced the worst economic downfall in history during the Great Depression. A domino effect devastated every aspect of the economy, unemployment rate was at an all time high, banks were declaring bankruptcy and the frustration of the general public led to the highest suicide rates America has ever encountered. In the 1930’s Franklin D Roosevelt introduced the New Deal reforms, which aimed to “reconcile democracy, individual liberty and economic planning” (Liberty 863). The New Deal reforms were effective in the short term but faced criticism as it transformed the role of government and shaped the lives of American citizens.
The US government’s role in the Great Depression has been very controversy. Different hypothesizes argued differently on the causes of the Great depression and whether the New Deal introduced by the government and President Roosevelt helped United States got out of the depression. I would argue that even though not the only factor, the US government did lead the country into the Great Depression and the New Deal actually delayed the recovery process. I will discuss five different factors (stock market crash, bank failure, tariff and tax cut, consumer spending and agriculture) that are commonly accepted to cause the depression and how the government linked to them. Furthermore, I will try to show how the government prolonged the depression in the United States by introducing the New Deal.