ECO322H1 Lecture Notes - Lecture 10: Overproduction
Lecture 10 – ECO322
Causes of the Great Depression and Incomplete Recovery of the 1930s
- A.E Safarian proposes that the GD in Canada was caused by collapse in exports and an absence
of investment opportunities due to the reliance of Canada on exports and the explosive growth
seen from 1900-1929 in Canada limiting investment opportunities
Growth between 1900-1939:
- Growth was more rapid in Canada than in the US from 1900-1929; sharp recession in 1920/21
but growth until 1929; prices also rose consistently
- Depression from 1929 to 1933 for both Canada and the US
World War 1: Expansion of wheat production and manufacture:
- acreage of wheat jumped from 4m acres to 10m acres from 1904 to 1910 ($0.75 to $1)
- only increased from 10m to 12m as price went from $1/bushel to $0.9/bushel 1910-1915
- third largest exporter behind Russia and the USA
- WW1 drove price up to $1.3/bushel in 1914 and $2/bushel in 1916; government steps in to
control prices via the Canadian Wheat Board
- high prices led to jump in wheat acreage from 12 to 17 million acres 1915-1920
- Russia stopped exporting in the 1920s and the US focused its supplies domestically, making
Canada the #1 wheat exporter in the world
- supply of wheat shifted the price; the price fluctuations didn’t stimulate more supply
- Animal products also remained strong in production and fell off during the depression but
recovered quite quickly in the mid-1930s
- Pulp and paper grew in the 1920s, fell off during the GD
- Exports collapsed during the GD along with the manufacturing industry
Financing WW1:
- Government borrowed from the public to finance $2B in spending
- introduced new business and income taxes to finance the spending
1920s: 1921-1929:
- The US stalled during the 1925-1927 period before one more growth spurt in 1929
- Canada grew all the way through the 1920s, leading Safarian to say we exhausted investment
opportunities; we grew in exports of agriculture and forestry products, along with infrastructure
- technological change and innovation led the charge for growth in the production of cars
- amount of HHs with electricity in 1920 35% vs 68% in 1930; flushing toilets 20-51%
Wheat Overproduction in Canada before the Great Depression:
WW1 devastated European production of wheat
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Document Summary
Causes of the great depression and incomplete recovery of the 1930s. Growth was more rapid in canada than in the us from 1900-1929; sharp recession in 1920/21 but growth until 1929; prices also rose consistently. Depression from 1929 to 1933 for both canada and the us. World war 1: expansion of wheat production and manufacture: Acreage of wheat jumped from 4m acres to 10m acres from 1904 to 1910 (sh. 75 to ) Only increased from 10m to 12m as price went from /bushel to sh. 9/bushel 1910-1915. Third largest exporter behind russia and the usa. Ww1 drove price up to . 3/bushel in 1914 and /bushel in 1916; government steps in to control prices via the canadian wheat board. High prices led to jump in wheat acreage from 12 to 17 million acres 1915-1920. Russia stopped exporting in the 1920s and the us focused its supplies domestically, making. Canada the #1 wheat exporter in the world.
