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HIS263 The Great Depression Tuesday February 15th 2011
The Crash
2.Overextension of credit
The depression was a worldwide event
1932-33, the value of world trade went down by about half
This global event played out differently in the local and regional spheres
Canada was particularly hit hard by the Depression because its economy was largely
based on exports
There was a major decline in world trade, so Canadas exports decline as well by
about ¼
This is devastating because the key areas of the economy were export-driven
Example: 80% of the products of Canadians farms, forests, and mines were exported
So, a worldwide economic crisis would hit Canada particularly hard
The other problem in Canada was that these international problems intersect with
specific local conditions
Example: an international issue: World wheat markets are glutted by the 1920s (too
much wheat on the world market), which obviously causes the price to go down
This wouldnt be so bad if you could just produce even more wheat to even it out
But, wheat-production in the prairies was in decline in the 20s because there was a
major draught in the late 1920s
Double whammy
Not only are prices falling, but the prairies arent able to produce as much wheat as
So, there was a total collapse of the wheat economy
1927 $1.46 480 million bushels produced
1933 $0.68 282 million bushels produced
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HIS263 The Great Depression Tuesday February 15th 2011
The effect of this: the net income of Saskatchewan farmers in 1933 was 1.5% of what
it was in 1922
Utter devastation
In an economy so dependent on exports, all of the spinoffs of these exports (tractors,
railways, tools, etc.) go down as well
If there is less need for shipping there is less need for trains which means there is
less of a need for train conductors, etc.
So the effect is that from 1929-32 the Canadian economy almost completely collapses
Canadas industrial production falls by a third
The unemployment rate was estimated to be 33% of wage earners… 1 in 3 people
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The federal response throughout the Depression was not innovative or dramatic
William Lyon Mackenzie King was in power
His first response, like that of most Western leaders, was to minimize the crisis
He has an election in 1930 and Canadians react to his calm-down rhetoric in a
negative way
They dont think hes dealing with the problem
His opponent in the election was R.B. Bennett (Conservative, 1930-35) had a
dramatic rhetoric and criticizes King for his inaction
This gets him elected in 1930
In power, Bennetts approach was ambiguous
He does do some things though
He passes the Unemployment Relief Act, which initially gives $20 million of federal
money to provinces for relief of the unemployed, but the figure is extended gradually
Throughout the Depression, the total amount of money the governments spend on
helping the economy was $1 billion
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