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Great Depression

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–After the booming 20s came the Thirties: A

Decade of Despair

Crop failures

Jewish refugees

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Phases of the Economic Cycle

• Recovery=upward spiral after a recession • Expansion (Prosperity)=economic expansion (or

boom). • Decline (recession)=downward economic spiral• Depression: Employment is low, incomes are low, and

business production is low. • Other terms-see terms of economic cycle worksheet

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Falling off the Economic Edge-Causes

1)Buying on the Margin•1922-26 Canadian companies issue new shares ($700 Million)—profits increase•many investors buy shares with only a 10% down payment (assumed that when prices of stocks increased remaining 90% paid)-buying on the margin•loans for stocks easily obtained•people want to get rich quickly, so buy stocks•careful investors start selling stocks to get money•value of stocks go down people go bankrupt

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Present-day example of buying-on the margin

Let’s say I wanted to get rich fast!!!I would think about investing in stocks. I wanted to

buy some Nike stocks which are selling for $4.95. If I’m a big player I would buy about 100 stocks. Obviously, I don’t have $495.00, so I would have to borrow the money from a bank and put down a small down payment (let’s say $200). If the value of the stocks increase I’m making money. Let’s say the stock goes up to $5.00, and I have a 100 stocks that means my stock is now at $500, so I made $5! Good times!! But what would happen if my stock went down to $1.00. That means that the value of my stocks is now $100. I owe the bank $100 (with growing interest) and I’m not making any extra money!

Bankruptcy! That is what happen to those buying stocks during the G.D.

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•Oct. 29, 1929-Black Tuesday•NY market Collapsed—Toronto-Montreal Stock markets collapse•Devastating effects-investors go bankrupt•Beginning of Depression (severe socio-economic hardships, massive unemployment, suffering) YOuTube Clip Then and Now Tent Cities

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Stock Market CrashStock Market Crash

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CausesCauses of Depression of Depression2. Rise of consumerism led to the overproduction of

manufactured goods– Radios, cars, kitchen appliances were made in

mass quantities on the assembly line3. Overproduction of wheat – led to problems for

Canadian farmers who bought new equipment with credit

– Wheat prices peaked in 1924– Over-cultivation of fields depleted nutrients in soil

which worsened the effects of the “Dust Bowl” when drought began in the early 1930’s (led to soil erosion!)

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Assembly LineAssembly Line

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Dust BowlDust Bowl

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Causes of the Depression – Causes of the Depression – cont’dcont’d

3. Protective tariffs (taxes) made domestic prices cheaper than imported goods from foreign countries.– Led to the decline in world trade, and

turned the Depression from a crisis in the USA into a global problem

• US imposes high tariffs on foreign goods to protect US domestic market

• Link to 21st century recession-youtube clip

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Canada and the Depression: Why does

Canada go deep into a depression?

•Dependency on the export of primary resources (wheat/newsprint)•Markets no longer able to afford Canadian wheat and newsprint=unemployment•Unemployed cannot afford commodities (cars, radios, telephones)=more unemployment for factory workers•Canada’s economy was affected by depression because it was dependent on US

Great Depression relief project in British Columbia

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Drought on the Prairies

•collapse of wheat market•families struggle•drought, dust storms, plague of grasshoppers

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Desperate Years-social Effects

•Wealthy/middle class Canadians not as affected•Factory workers lose jobs•Businesses close down•Evictions (people cannot afford rent)

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Cont’d

• Loss of job=loss of respect• Government relief payments

given (people wait in queues, declare financial failure, receive voucher for food)

• Private charities-Soup kitchens• 1933=unemployment/

homeless/freight trains • Some were so desperate they

committed suicide!http://www.iasp.info/pdf/papers/

mishara_suicide_and_the_economic_depression.pdf

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Effect on Minorities•Women•few jobs•blamed for “taking the jobs” of men after the war

•Aboriginals•on relief•got $5/month•expected to “live off the land”

•Immigrants•viewed with hostility when competing for scarce jobs•Jews (anti-semitism) not allowed to work particular jobs/barred from organizations/club•deported•immigration stopped (restricted)

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Responding to the Depression -

Political

•King who was PM when the Depression hit had no answersKing who was PM when the Depression hit had no answers•The federal government tried to pass off responsibility to the provincesThe federal government tried to pass off responsibility to the provinces•Provinces passed the buck to cities and townsProvinces passed the buck to cities and towns•Towns and cities passed the responsibility to churches and local charitiesTowns and cities passed the responsibility to churches and local charities•Everyone blamed OttawaEveryone blamed Ottawa•King in a moment of stupidity promised not to give “a five- cent piece” of relief to a King in a moment of stupidity promised not to give “a five- cent piece” of relief to a province with a Tory government (provincial exam question)province with a Tory government (provincial exam question)•R.B. Bennett promised he would end unemployment or perish in the attemptR.B. Bennett promised he would end unemployment or perish in the attempt•Gets elected as PMGets elected as PMRead their biographies in counterpointsRead their biographies in counterpoints

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“One of the greatest assets any man or woman can have on entering life’s struggle

is poverty” R.B. Bennett

• Bennett defeated the King government

• Bennett born in New Brunswick was a Calgary lawyer and a business tycoon

• Bennett believed in the free enterprise system (Laissez-faire approach!)-problem with this?

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What did Bennett do?

•Gave $20M for work-creation programs, but economy didn’t improve•Raises tariffs=other countries do the sameWe can’t sell our goods our economy suffers!•Bennett the target of people’s anger=still jobless, homeless•Bennett feared a revolution would start by Communists=bans Communist Party•Federal Government=creates work camps for unemployed and single men (known as relief camps)•“Pogey”—modern day welfare system (lower than the lowest paying jobs to discourage people from wanting to go on it)starvation/diseases

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THE NEW DEAL

Elements of the “New Deal”:• Progressive taxation (the more you make

the more you pay); maximum number of hours in a work week, minimum wage (provincial responsibility); stronger regulation of working conditions; unemployment insurance (not a federal responsibility until 1940) ; health and accident insurance (provincial); revised old age pension plan (not federal till 1951); agricultural support; a board to regulate wheat prices-do you see the problem with the new deal?

• Prairie Farm Rehabilitation Administration Act, 1935 helped farmers build irrigation systems and reservoirs—people leave farms/more elsewhere

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Depression ~ Depression ~ Prime MinistersPrime Ministers

Bennett King

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Bennett’s Infamy Bennett’s Infamy

Even though Mackenzie King had very little success helping Canada emerge from the Great Depression, PM Bennett has taken the greatest amount of criticism for his policies.

As a result, he has left behind a legacy of jokes such as Bennett buggies and Bennett blankets

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Riding the Rods andRiding the Rods and •Slave Labour in Canada Slave Labour in Canada Displaced workers began Displaced workers began “riding the rods”“riding the rods”•Big fear of “red menace” Big fear of “red menace” this would lead to a this would lead to a revolution!revolution!•Jumping rail cars in search Jumping rail cars in search of workof work•Many moved towards the Many moved towards the west coastwest coast•Bennett started deporting Bennett started deporting immigrants without jobsimmigrants without jobs•As many as 30,000 new As many as 30,000 new Canadians were deportedCanadians were deported

•Bennett over reacted and set up work Bennett over reacted and set up work camps-To stop a revolutioncamps-To stop a revolution•These work camps were for These work camps were for unemployed, single men.unemployed, single men.•Working in the “bush” these men Working in the “bush” these men were paid 20 cents a day.were paid 20 cents a day.•They worked on projects such as They worked on projects such as building roads, clearing land, and building roads, clearing land, and digging drainage ditches.digging drainage ditches.•The food was terrible and the bunks The food was terrible and the bunks were often bug-infested. were often bug-infested. •Over 170,000 men lived and worked Over 170,000 men lived and worked in these terrible conditions.in these terrible conditions.

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Result?The On-to-Ottawa Trek1935• Protest against camp conditions in BC• Relief Camp Workers Union-decide to take

complaints to Ottawa=On-to-Ottawa Trekstarted in BC and picked up protestors along the way.

• The RCMP confines them in local stadium when they arrive in Regina—only leaders allowed to proceed to Ottawa.

• Union leaders meet with Bennett—labeled them radicals/troublemakers (leave unsatisfiedRCMP ordered to clear trekkers from stadium-chaos-1 killed many arrested.

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•Trouble in Vancouver•Last protests by the unemployed in Vancouver•Federal government closed relief camps (1937)•Provincial government reduced relief payments=workers feel lack of support•April 1937—1600 protesters occupy Vancouver Art Gallery/main post office/Georgia Hotel/”sit-ins”/battles between police and protesters

Politics of Protest•Ottawa struggles for solutions to Depression•Canadians lost trust in government=look at other political parties

                   

                          

 Camping out to protest lack of affordable housing is nothing new in Vancouver-in the Dirty Thirties, out-of-work men took to the streets and built shacktowns from tin and scrap wood.

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Bennett the Good!

• R.B. Bennett was not a likeable man, however he did a number of good things.

• 1932 saw the creation of Canadian Radio Broadcasting Commission forerunner of the CBC.

• In 1934 he created the Bank of Canada to regulate currency and monetary policy.

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“Bennett never forgave Canada for failing him”

• In 1935 under the banner of “King or Chaos” the Liberals returned to power

• Bennett left Canada to become a member of the British House of Lords and is buried in Britain.

• King passed Bennett’s New Deal to the Supreme Court where it was ruled unconstitutional because most were provincial matters.

• Canada’s First Nations were neglected.

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Politics of ProtestCommunist Party

• The Communist Party of Canada was formed June 1921 in Guelph, Ontario.

• The Communist Party was outlawed during the depression.

• In August 1931 Tim Buck, the leader, and eight other members were imprisoned for holding the wrong ideas.

• Buck avoided assassination in prison.

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 Politics of Protest=Cooperative

Commonwealth Federation=Federal Alternatives

•Both PMs had a laissez faire approach to the economy this led to people looking to new parties Both PMs had a laissez faire approach to the economy this led to people looking to new parties for support!for support!•Appealed to disillusioned Canadians (formed in 1932)Appealed to disillusioned Canadians (formed in 1932)•Included farmers, labourers, socialists, intellectuals and discontented liberalsIncluded farmers, labourers, socialists, intellectuals and discontented liberals•Leader Woodsworth-Socialist PartyLeader Woodsworth-Socialist Party•supported the workerssupported the workers•Regina Manifesto—support for public ownership of key industriesRegina Manifesto—support for public ownership of key industries•for social programs to assist people( the elderly, the unemployed, the homeless, the sick etc) for social programs to assist people( the elderly, the unemployed, the homeless, the sick etc) •urged the government to spend money on public works to create employmenturged the government to spend money on public works to create employment •““Create a minimum wage and a system of social insurance for workers. Build public Create a minimum wage and a system of social insurance for workers. Build public works to create employment.” 1932 (provincial exam)works to create employment.” 1932 (provincial exam)•The party did not win many seats in the 1930s but it did provide people with an alternative. The party did not win many seats in the 1930s but it did provide people with an alternative. In 1961 the CCF joined with the Canadian Labour Congress to form the In 1961 the CCF joined with the Canadian Labour Congress to form the New Democratic PartyNew Democratic Party..

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The Original “NDP”The Original “NDP”

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Social Credit Party•1935-Election in Alberta•leader William Aberhart (“Bible Bill)-capitalism not good-banks collected money, prevented customers from buying goods.•Government should release money into the economy so people can spend it•Appealed to Albertans because Depression ruined their economy—did not like power and control of banks•Promised $25 month to each citizen•Federal government thought it was wrong for province to make their own money/Supreme Court did not allow Alberta to do this•Social Credit popular•Provincial exam very popular – m/c question!

                        Acting on its monetary theory, Alberta's Social Credit

government printed 'Prosperity Certificates' which were issued in lieu of money. However, the federal government

declared them illegal.

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 Quebec (1936)Union Nationale Party (Maurice Duplessis), Nationalist French-Canadian Party, support of Catholic Church/rural votersBlamed English minority for Quebec’s socioeconomic problemsPadlock Law=Which Charter of Rights and Freedoms does it violate?http://www.mysteriesofcanada.com/Quebec/padlock_law.htm

B.C. (1933)Pattullo, Liberal, believed in provincial spending power, the New Deal from US (=introduced reforms to better working condition/public works projects) Federal government did not like Pattullo

Provincial Solutions

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•1935—voters against Bennett•King PM again, still did not intervene to better economy•National Employment Commission: “unemployment still a problem-government should spend money to create jobs”

A Change in Government

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•Increased Tension in Federal-Provincial Relations•King creates another Royal Commission (1937), Rowell-Siroise Commission, examined federal-provincial relations•Cause of bad relationship between federal and provincial governments=unemployment, tax money (which government should collect tax money/spend money to assist people??)•The Commission Federal government should control taxation and give money to poorer provinces (=equalization payments)be responsible for social and employment assistance (UI and Welfare)•Commission wasn’t important because economy began to turn around and WWII began to take place

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Distractions from DespairEntertainment=movies, magazines, and radio become popularUS programs more popular Fed. Government responds with creation of the Canadian Broadcasting Corporation (CBC) in 1936 in an effort to win over Canadian listeners1934-birth of the Dionne quintuplets—“miracle babies” were placed under the Ontario government’s control put on display and government earned millions from themGrey OwlEnglishman Archie Belaney lived the Aboriginal way of life and took on identityspent years on preservation of Canadian forests and the disappearing beaver=conservation

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Road to World War-Rise of Dictators

•European countries also suffered a period of Depression•People became divided =some believed in communism to solve economic and social suffering, others believed strong military to restore law and orderStalin=Soviet Union/Russia•Ruthless and cruel leader whose policies caused million of deaths amongst Soviet Union workers•Leader of Communist Party•Totalitarian State=an undemocratic state in which the government demands total obedience from citizens and controls all aspect of society)Mussolini•Il Duce•Fascist Government=totalitarian and nationalist•Opposed Democracy•Extreme loyalty and love for country (Extremely nationalistic)•Relied on military and police power to maintain absolute control=media, propaganda•Influenced Hitler and his creation of the National Socialist Party (Nazi)

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Germany after the War•Unhappy with Treaty of Versailles•“War Guilt Clause” and reparations angered them•Economy ruined after the war=it could not pay reparations and make its own country strong•Printed a lot of currency=value of money decreased•Inflation=prices of products was really high•Great Britain, France and US decrease reparations to help Germany•Economy gets better, but STOCK MARKET CRASHES=ECONOMY weakens

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Hitler comes to PowerHitler’s government was against the government, which agreed to Treaty of Versailles.Depression helped him gain power.1933=Hitler became Chancellor (prime minister)-->party controlled governmentStopped paying reparationsExpanded armed forces (action against the Treaty)Helped farmers rebuild farmsBuilt Autobahn=public project which create highwaysUnemployment went down and economy improvedAbolished all political parties and trade unionsA.K.A Der Fuhrer (The leader)Ruled by Fear and intimidation like Mussolini-->killed anyone who opposed

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On the Road to War

On the Road to War1931: Manchurian incident=Japan invaded Chinese industrial province of ManchuriaChinese asked the League of Nations for help=supposed to promote world peace, but was weak-->said that Japan’s action was wrong and tried to make peace between Japan and ChinaJapan did not listen-->withdrew membership1935=Abyssinia Crisis-->present-day EthiopiaItaly invadedLeague imposed trade sanctions on Italy-->stopped trading, but still allowed Italy to import oil (important in powering war machine)-->poor decision by League Germany on the Offensive1936Hitler orders troop into Rhineland (demilitarized zone)

League and Nations around the world did nothing to stop Hitler

In 1935, Emperor Haile Selassie of Ethiopia condemns the Italian invasion of Abyssinia in his address to the League.

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1936•Spanish Civil War=Fransisco Franco and fascist army attacked Spanish government•Support from socialist countries=Mussolini and Hitler•Becomes leader-->Spain a fascist state-->again Democratic countries did nothing. The Policy of Appeasement•No one wanted to go to war-->made concession (allowances) to Hitler=peace•1938•Germany takes over Austria-->German-speaking country•Demanded to be able to take over Sudetendland, a German –speaking part of Czechoslovakia•Munich Conference-->Britain, France, and Germany-->Germany promises this will be the last territory claimed•1939•Takes over the rest of Czechoslovakia•1939•Wanted to invade Poland, but feared that Russia would fear this move and start war•Non-aggression Pact with Stalin=they would not fight each other in case of war•Divided Poland•Hitler invaded Poland•Britain and France told Hilter to take troops out of Poland-->he didn’t listen-->WWII began!

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Canada’s Response to Growing Tensions

Isolationism=interested in internal affairs not external•Viewed Treaty of Versailles as harsh-->Pacifist attitude because so many Canadians died in WWI•King visited Hitler in 1937-->didn’t believe that Hitler wanted war•BUT he showed his isolationist and anti-semetic attitude when he didn’t allow Jewish refugees who were escaping persecution from Hitler•1939•St. Louis Incident, a ship filled with 900 Jewish refugees, went to CAN. They were sent back to Europe-->died in concentration camps-->Canada=Anti-Semitic•Not all of Canada was Anti-Semitic=protest. (SHOW VISUAL!) http://www.ushmm.org/museum/exhibit/online/stlouis/story/voyage/

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Policy of Isolationism--Protectionism