Causes of the Great Depression

• 1. Overproduction and Over-Expansion

  • Agriculture and industry reached high levels of production – Canadians could not afford it all
  • As a result, large stocks of newsprint, radios, shirts, shoes, and cars began to pile up unsold in warehouses
  • Sales slowed down
  • Produce as many items as you can sell
• 1. Canada’s dependence on a few primary products

  • Wheat, fish, minerals, and pulp and paper
  • If there was surplus goods on the world market, and countries stopped buying from Canada; our economy would suffer 
  • Secondary industries - the processing or manufacturing of primary goods. *would also suffer*
  • Competitions from Argentina and Australia
  • World market price began to fall
  • Western farmers faced terrible droughts in the summers of 1929, 1931, 1933-37
  • Farmers could not purchase machinery and manufactured goods from eastern Canada or pay for mortgages
• 1. Canada’s dependence on the United States

  • 65% of our imports are from the Americans – 40% sent to them
  • USA replaced Britain as the largest buyer of Canadian products and the largest supplier of investment funds for our industries
  • “Branch Plant Economy”
  • When American economy suffered, so did Canada
• 1. High Tariffs Choked off International Trade

  • European countries needed the surplus manufactured goods from Canadian and US markets, however most of them were heavily in debt from the war 
  • “Protective Tariffs” – protect their home industries from foreign competition, they placed high tariffs (taxes) on foreign imports
  • World trade began to slow down
  • Protect home industries, choked off international trade 
• 1. Too Much Credit Buying

  • “Buy Now, Pay Later”
  • Credit buying was a well established custom
  • Many families got themselves hopelessly into debt with credit buying
  • EG the piano costs $445 cash was purchased with $15 down and $12 a month for the next four or five years