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1. Over-Production and Over-Expansion
Main Things:Agriculture and Industry reached high levels of
production.Profits were spent on building new factories or
expanding existing ones.Supplies of food, newsprint, minerals and
manufactured goods were stockpiled.○ Oshawa and Windsor built 400,000 cars in 1930 and in the
best year only 260,000 were bought.
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Problem this Caused:Eventually owners began to panic and
slowed production.Laid off workers. No job, not money to buy.Wages were not high enough for people
to buy all the products being created by factories
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Impact of CanadaBought too many things Couldn’t buy any moreLost jobsSpent less
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Impact on Canadian Business:Production slowedSales slowedProduced things that cost too much
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2. Canada’s Dependence on a Few Primary Products
Main Things:The Canadian economy depended heavily on a few
primary (basic) products known as staples.Staples included: wheat, fish, minerals and pulp &
paper.Demand= strong prosperous Canada. No Demand=Surplus and a weak suffering CanadaWest faced drought
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Problem this Caused:Canada had to compete with other
countries and the prices began to fall.No rain=No crops=No money to buy
machinery, goods, or pay for the farm/house.
Secondary industries which process the primary goods also suffered (i.e. flour mills) and so a chain reaction begins.
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Impact on CanadaCheap pricesNo money to buy surplus products
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Impact on Canadian Business:Farms closedBusiness lay offsProfits downSurpluses
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3. Canada’s Dependence on the U.S.
Main Things:Canada’s economy was linked to the U.S. We bought 65% of our imports from them and sent 40%
of our exports their way.The U.S. replaced Britain as the largest buyer of
Canadian products When the depression hit the U.S. it was inevitable that it
would hit Canada
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Problems this Caused:US did not buy our products
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Impact on CanadaCouldn’t buy any more Lost jobsSpent less
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Impact on Canadian business:US won’t buySurplusSlow economy
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4. High Tariffs Hurt International Trade
Main Things:Many countries began applying Protective Tariffs to
protect their industries from foreign competition. For example Canada may find that its goods were
being kept out of France. So Canada would place tariffs on products from France. [tax]
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Problem this Caused:Trade between nations began to slow
down. It did protect home industries but it
choked off and limited international trade.
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Impact on Canada:Couldn’t buy any moreLost jobsSpent less
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Impact on Canadian Business:Couldn’t sell to worldSlowed production
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5. Too Much Credit Buying
Main Things:“Buy now, pay later”.People were hopping on to the custom/idea of
buying on credit.Many families got themselves into severe debt
○ For example a $445 piano could be purchased with $15 down and $12 a month for the next 4-5 years. With interest it ended up costing a lot more than it was worth.
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Problem this Caused:No job = no way to keep up payments. If you fell behind the person who made the sale
could repossess it.As the depression worsened many people lost
everything because they were purchased on credit and repossessed.
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Impact on Canada:Lost everything they bought on credit, i.e.,
homes, cars, etc..
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Impact on Canadian Business:Lost money when people couldn’t afford to
pay back loansBanks closed
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6. Too Much Credit Buying of Stocks
Main Things:You could buy stocks on credit just like
home appliances and furnishings. All that was required was a small down payment usually around 10%. The broker loaned the rest to you at a high interest rate!
Many people were ‘buying on margin’ which was when you bought a stock with a small down payment and sell it when the stock went up. You would pay off the broker who loaned you the money and keep the profits for yourself.
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Problem this Caused:Black Tuesday-October 29, 1929 many
people buying on margin panicked. Stocks went down and people began to
sell their stocks at a small loss rather than risk losing more.
In a few hours many people lost millions or everything they had.
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Impact on Canada:Lost everything to debt collectors who took
homes, cars, etc..
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Impact on Canadian Business:Brokers lost money when people couldn’t
afford to pay back loans