chapter 4– the thirties – a decade of despair. the market economy canada operates on a market...
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Chapter 4– The Thirties – A Decade of Despair
The Market Economy
• Canada operates on a market economy• Controlled by Supply and Demand• Supply – availability of a product• Demand – how badly people want product
Big supply Low Prices
Low supply High Prices
Business Cycle
• Market economies go through a cycle of prosperity and recession every 5 or 6 years
• Can also go through a boom (extreme prosperity – 1920s) and bust (deep depression – 1930s)
THE 1920’S WAS A PROSPEROUS TIME
BUT THE PROSPERITY WAS NOT SHARED
EQUALLY
MANY PEOPLE, LARGELY DUE TO NEWLY
INTRODUCED INSTALLMENT BUYING, COULD AFFORD TO
BUY CARS, RADIOS AND OTHER NEW PRODUCTS OF
THE 1920’S. FARMERS, HOWEVER, WERE IN A
DEPRESSION THROUGHOUT THE WHOLE DECADE.
The Great Depression
• In 1929, the Great Depression had begun that affected Canada, the USA, and the world in general
• The causes of the Great Depression are…
.
1. OVERPRODUCTION IN INDUSTRY• PRODUCED MORE GOODS THAN WERE SOLD
• At first manufacturers lowered prices, then cut back and produced fewer goods = layoffs in factories = people not able to afford goods = sales slow more
• THE SURPLUS PRODUCTS COULD NOT BE SOLD OVERSEAS DUE TO HIGH TARIFFS AND LACK OF
MONEY IN EUROPE.
Effects of Overproduction
• Too many goods were produced and unsold goods piled up
Manufacturers produce less goods
Workers are laid off jobs
Can’t afford to buy products
More workers are laid off, etc…
EFFECTS:
-charities can’t keep up with demands (NO unemployment insurance)
-shantytowns emerged
2. Protectionism
• 1920s, many countries put tariffs on imported goods
• USA became very protectionist (protecting domestic producers) because they did not need raw materials from other countries
• Caused slowdown in world trade• Canadian exports (wheat) decreased as
U.S and other countries stop buying
3. WAR DEBTS
• U.S. lent several countries money during and after the First World War
• AT THE END OF WORLD WAR ONE, EUROPEAN NATIONS OWED OVER $10 BILLION ($115 BILLION IN 2002 DOLLARS) TO THE UNITED STATES. THEIR ECONOMIES HAD BEEN DEVASTATED BY WAR AND THEY HAD NO WAY OF PAYING THE MONEY BACK.
• NATIONS DEPENDED ON SELLING PRODUCTS TO USA TO REPAY LOANS, BUT COULD NOT – PROTECTIONISM
• France and Britain relied on Germany’s reparation payments, but their economy was in ruins, so they could not pay their debts either
4. Canada’s Reliance on Exporting Staples
• Economy depended on exporting staples (basic products – crops, timber, minerals)
• Two in particular:• 1.) Wheat from prairies• 2.) Newsprint from B.C., Ontario and Quebec• 80% of Canada’s production on farms, and in forests and
mines was exported• Bumper crops of wheat around the world led to a huge
wheat supply that farmers could NOT sell because other countries were producing their own
• Problems made worse because of drought – dustbowl on prairies
5. Dependence on United States
• 40% of exports sold to USA• Protectionism made it difficult• When US economy failed, our economy
failed
6. Stock Market Crash
• Black Tuesday – October 29, 1929New York Stock Exchange Collapsed, followed by Toronto and Montreal Stock Exchanges• Causes of the Crash:
– Buying on margin: buying stocks on borrowed money with the hope that the stock will rise significantly in a short time,
– Speculation: The belief that a stock will rise; stockholder can re-pay the loan after selling his/her shares.
The Stock Market CrashTuesday October 29, 1929
STOCK MARKET CRASH AND FINANCIAL PANIC
WALL STREET ON THE DAY OF THE CRASH, OCTOBER 29, 1929
“BLACK TUESDAY”
Despair
Unemployment
Poverty
Loss of jobs and incomes
Evicted from homes
Loss of hope, dignity, respect
MIGRANT CAMPS IN
CALIFORNIA WHERE
REFUGEES CAME TO MAKE A NEW START
4.2 Consequences and Response to the Great
Depression*Only write notes in BLACK*
Consequences of the Depression
1. Unemployment• At the height of the depression (1931-32), 26%
of Canadians were unemployed• Turned to government for help
2. Racism • People thought immigrants were taking their
jobs• 1931 – gov’t stopped immigration for year
Unemployment
It was said by the Federal Department of Labor that a family needed between $1200 and $1500 a year to maintain the "minimum standard of decency."
At that time, 60% of men and 82% of women made less than $1000 a year.
As the depression carried on 1 in 5 Canadians became dependent on government relief.
30% of the Labour Force was unemployed
Despair
Unemployment
Poverty
Loss of jobs and incomes
Evicted from homes
Loss of hope, dignity, respect
Effects of Great Depression
• Prime Minister Mackenzie King (Liberal) said provincial and municipal governments responsible BUT they’re broke
• R. B. Bennett (Conservatives) became Prime Minister in 1930 election when King said he wouldn’t give a “five-cent piece” to a Tory provincial government
• Conservatives – 137 seats • Liberals – 88 seats
King vs. Bennett1930 Election
William Lyon Mackenzie King
Liberal, Prime Minister
R.B Bennett
Conservative, Prime Minister
Bennett’s Response
• Gave provinces $20 million for public works programs
• Increased tariffs to protect Canadian industries– Failure – other country’s raised tariffs and Canada
can’t export goods• 1931 – banned Communist Party (worried about
revolution)• Created work camps for unemployed men
– Build roads, clearing land– Terrible conditions
Protests
1. On-to-Ottawa Trek• 1935 – 1, 000 men left work camp and
rode on freight trains to take complaints to Ottawa
• Men detained in Regina – only leaders allowed to continue
• 1 man killed and 30 arrested in Regina in stadium
Protests
• Workers organized sit-ins to protest lack of government support
• Cooperative Commonwealth Federation (CCF) formed (J. S. Woodsworth)– Appealed to farmers, labourers, socalists,
intellectuals– Regina Manifesto – stated support for public
ownership of industries and social programs
Change in Government
• In 1935, Mackenzie King (Liberals) returned to power– Still did not spend enough money to create
public works programs– Rowell-Sirois Commission suggested
equalization payments to provinces, and establishment of unemployment insurance, and other social benefits
Overall Government Reactions to Depression
• Government would have to take a more active role in helping the poor
• Unemployment insurance, sick benefits, child benefits, and welfare were proposed during the Depression and implemented later.
• Laissez faire economic policy dead
• Governments began to manage the economy through tax policy and monetary policy
Causes of the CrashBuying on margin: buying stocks on borrowed money with the hope that the stock will rise significantly in a short time,
Speculation: The belief that a stock will rise; stockholder can re-pay the loan after selling his/her shares.
Causes of the DepressionProtectionism
Protective Tariffs: Tariffs are duties collected on goods coming into a country.
A country can protect home industries from the competition of foreign goods by discouraging imports through protective tariffs.
When the United States began protectionist policies this caused other countries to lose their export markets (e.g. wheat from Canada).
.
Slowdown in World Trade• Decrease in production led to
layoffs in factories
• Less spending on consumer goods
• Further decrease in production
led to additional layoffs in factories
Consequences of the Depression
Unemployment
1 in 5 Canadians became dependent on government relief.
30% of the Labour Force was unemployed,
The effects of unemployment were very severe because employment insurance and welfare payments were not yet in place.
Ways in which some Canadians tried to address their economic problems.
Some Canadians tried to sell:
products door to door,
they panhandled,
hey approached churches and charities for help,
they “rode the rails”,
and they collected public relief.
King v. BennettRichard Bennett was brought into power when his opposition, Mackenzie King, reported that he would not give "a five-cent piece" to "any Tory Government".
In the election, of 1930, the conservatives got 137 seats in parliament and the Liberal representation was 88 seats.
William Lyon Mackenzie King
Liberal, Prime Minister
R.B Bennett
Conservative, Prime Minister
Government responses to the Depression
Government would have to take a more active role in caring for the poor.
Unemployment insurance, sick benefits, child benefits, and welfare were proposed during the Depression and implemented some time later.
Laissez faire* was dead. (*Leave it alone)
Governments began to manage the economy through tax policy, and monetary policy
Bennett’s Response to the Depression
• Relief Camps
The Conservative government of Bennett set up work camps to prevent the growing unrest among this wandering mass of young unemployed workers.
The camps were located in remote areas such as northern Ontario and B.C.'s interior. Inmates called these camps "slave camps".
They lived on war surplus clothing, bunked in tar-paper shacks, ate army rations and were forced to work six and a half days a week for twenty cents a day
Dear Sir: I wish to give my opinion of relief. First it is a shame for a strong man to ask for relief in this country... The best thing that can happen to a young man is to toss him overboard and compel him to sink or swim, in all my acquaintance I have never known one to drown who was worth saving...It takes hardship to make real men and women so cut out of relief...There are some people in this country who are in hard circumstances, but I can safely say there is no one having hardship that we pioneers had 28 or 30 years ago.
Blaine Lake, Saskatchewan
Letters to Bennett
Bennett’s “New Deal” by ranking each point in order of what you think best protects individuals in times of economic crisis.
Progressive taxation;
maximum number of hours in a work week, minimum wage;
stronger regulation of working conditions; unemployment insurance;
health and accident insurance;
revised old age pension plan;
agricultural support;
a board to regulate wheat prices.
LETTERS TO BENNETTDear Sir: I am writing you as a last resource to see if I cannot, through your aid, obtain a
position and at last, after a period of more than two years, support myself. The fact is this day I am faced with starvation and I see no possibility for counteracting it or even averting it temporarily.
I have applied for every position that I heard about but there were always so many girls who applied that it was impossible to get work... First I ate three very light meals a day; then two and then one. During the past two weeks I have eaten only toast and a drunk a cup of tea every other day.
Day after day I pass a delicatessen and the food in the window look oh, so good! So tempting and I'm so hungry!...The stamp which carries this letter to you will represent the last three cents I have in the world, yet before I will stoop to dishonour my family, my character or my God, I will drown myself in.
Hamilton, Ontario
Dear Mr.Bennett: I suppose I am silly to write this letter but I haven't anyone else to write to...we are just one of many on relief and trying to keep our place without being starved out...trying to get a start without and money and 5 children, all small... I am sure we can make a go of this place...if we could just manage until next fall. Just had 70 Acres in last year and the dry spell just caught it right along with the grasshoppers. Please help me by standing me some money and will send you my engagement ring and wedding ring as security...My two rings cost over $100 over 15 years ago but what good are they when the flour is nearly all done and there isn't much to eat in the house... Burton, Alberta
