Causes of the Depression
Public confidence was generally high in Canada during the last years of the 1920s, and many Canadians were optimistic. However, the uncertain prosperity of the Roaring Twenties was coming to an end. A dramatic signal of the approaching end took place in October 1929. On October 24, thousands of speculators lost money in a sudden stock market tumble on the Winnipeg Grain Exchange. Five days later, the New York stock market crashed. Too many people had bought stocks using borrowed money. As long as stock prices were rising, speculators could sell their stocks, pay off their debts, and still make a profit. But when stock prices began to fall, they could not cover their debts by selling off stocks. A drop in stock market …show more content…
The Depression was a worldwide economic disaster that affected countries as far as Germany, Norway, Chile, Japan, and the United Stats. It is not surprising that an event as devastating and complicated as the Great Depression had many causes and they were related to factors that revealed the extreme vulnerability of the Canadian economy to world market conditions. Most recent economic studies of the Great Depression suggest that the stock-market crash frightened American consumers and business people, creating what one economist described as uncertainty about future income. American consumers, worried about having less money to spend in the future, stopped buying expensive items. Because of the drop in consumer demand, American manufactures began decreasing the production of consumer goods. As American industrial production declined, workers were made redundant and unemployment grew, causing American consumer spending and business investment to drop even further. Therefore, the Great Depression in the US deepened in the early 1930s. At the same time, other countries also experienced economic problems which worsened as the effects of staggering economies in large countries like the United States and Great Britain spread around the world. Canada was hit especially hard because 33 percent of its gross national income was derived from …show more content…
There was a dramatic fall in wheat exports resulting from the stiff competition from countries such as Argentina, Australia, and Russia. In addition, the European countries tried to protect their domestic products by restricting importing of food. Wheat prices dropped to a record-breaking low: a bushel of NO.1 Northern wheat that was worth $1.63 in 1928 had dropped by 40 percent to 25 cents by 1932. The land was over farmed resulting in the topsoil’s being easily eroded. The meager income and poor soil were further worsened when drought struck the plains of southern Alberta and Saskatchewan in 1934 and again in 1937; the scorching wind blew the topsoil into fine dust which forcing the farmers to abandon their unproductive desert. Grasshoppers and wheat rust further contributed to the crop failures as they destroyed the remaining crops that were struggling to survive. Almost nothing could grow under the onslaughts of nature. In terms of yield per acre, prairies wheat production had dropped to an historic low in 1937. This was less than one third of the yields achieved in 1928. In 1928, the average agricultural income in the Prairies was $1614 in which most families could afford their basic living needs and even to put aside some savings. However, their incomes declined by
Public confidence was generally high in Canada during the last years of the 1920s, and many Canadians were optimistic. However, the uncertain prosperity of the Roaring Twenties was coming to an end. A dramatic signal of the approaching end took place in October 1929. On October 24, thousands of speculators lost money in a sudden stock market tumble on the Winnipeg Grain Exchange. Five days later, the New York stock market crashed. Too many people had bought stocks using borrowed money. As long as stock prices were rising, speculators could sell their stocks, pay off their debts, and still make a profit. But when stock prices began to fall, they could not cover their debts by selling off stocks. A drop in stock market …show more content…
The Depression was a worldwide economic disaster that affected countries as far as Germany, Norway, Chile, Japan, and the United Stats. It is not surprising that an event as devastating and complicated as the Great Depression had many causes and they were related to factors that revealed the extreme vulnerability of the Canadian economy to world market conditions. Most recent economic studies of the Great Depression suggest that the stock-market crash frightened American consumers and business people, creating what one economist described as uncertainty about future income. American consumers, worried about having less money to spend in the future, stopped buying expensive items. Because of the drop in consumer demand, American manufactures began decreasing the production of consumer goods. As American industrial production declined, workers were made redundant and unemployment grew, causing American consumer spending and business investment to drop even further. Therefore, the Great Depression in the US deepened in the early 1930s. At the same time, other countries also experienced economic problems which worsened as the effects of staggering economies in large countries like the United States and Great Britain spread around the world. Canada was hit especially hard because 33 percent of its gross national income was derived from …show more content…
There was a dramatic fall in wheat exports resulting from the stiff competition from countries such as Argentina, Australia, and Russia. In addition, the European countries tried to protect their domestic products by restricting importing of food. Wheat prices dropped to a record-breaking low: a bushel of NO.1 Northern wheat that was worth $1.63 in 1928 had dropped by 40 percent to 25 cents by 1932. The land was over farmed resulting in the topsoil’s being easily eroded. The meager income and poor soil were further worsened when drought struck the plains of southern Alberta and Saskatchewan in 1934 and again in 1937; the scorching wind blew the topsoil into fine dust which forcing the farmers to abandon their unproductive desert. Grasshoppers and wheat rust further contributed to the crop failures as they destroyed the remaining crops that were struggling to survive. Almost nothing could grow under the onslaughts of nature. In terms of yield per acre, prairies wheat production had dropped to an historic low in 1937. This was less than one third of the yields achieved in 1928. In 1928, the average agricultural income in the Prairies was $1614 in which most families could afford their basic living needs and even to put aside some savings. However, their incomes declined by