Professional Documents
Culture Documents
4 1workbook
4 1workbook
4 1workbook
Student Name:___________________
SCO 4.0: The student will be expected to demonstrate an understanding of the causes and
consequences of the Great Depression in Canada
4.1: Causes of the Great Depression: business cycle, contributing factors, stock market
4.3: Government reaction to the Depression: King’s and Bennett’s response; peoples’ reaction
After the boom years of the 1920s, a dramatic economic shift in 1929
would change the Canadian economy & society.
The good times of the 1920s abruptly ended not just in Canada but in
most industrialized countries
• Recovery (Expansion)
• Prosperity (Boom)
• Recession
• Depression (Trough)
2
Causes of the Great Depression
On the next page you will see characteristics associated with each of
these four stages
3
Causes of the Great Depression
4
Causes of the Great Depression
This is how the business cycle looked from the stock market crash until the
late 1930s during the Great Depression,
The boomtime of the 1920s created such confidence in the economy that
many people bought stocks in businesses
Stocks: ______________________________________________________________________
______________________________________________________________________________
________________________________________________________________________
5
Causes of the Great Depression
People who buy the stock will receive a part of the profits of the company
depending on the number of shares they own (dividend)
If the company is profitable, the value of the stock will rise
Then the stockholder may choose to sell shares at a profit or hold on to
them, hoping the value will increase even more
6
Causes of the Great Depression
While the 1929 stock market crash served as a catalyst of the Depression, there
were underlying contributing factors. These included:
a. Over-production
b. Purchasing stock/buying on margin
c. Purchasing on credit/high consumer debt
d. Overdependence on primary industries
e. High tariffs/limited trading partners/ protectionism
f. Dependence on the U.S.A. for trade
a. Overproduction
7
Causes of the Great Depression
For many people during the 1920s, the stock market seemed an easy
way to get rich quickly with relatively little money
At that time you could __________________________________________ just as
you could a washing machine or phonograph
For only a 10% down payment, a stock broker loaned you the rest of the
money at a high rate of interest
To buy $1000 worth of stock you needed only $100
As soon as your stocks went up in value, you could sell them, pay back
your broker, & pocket the profit
The idea was that as soon as your stocks went up in value, you could sell
them, pay back your broker, & pocket the profit
This risky process was called “_________________________________________”
What if the stocks didn’t go up? Or, worse still, what if they went down?
You would have to sell your stocks or face financial ruin
This is exactly what happened in October 1920
When stock prices started to fall, people freaked, decided to sell and get
out of the market
Prices fell even lower as more and more stocks were dumped
On _____________________________________________________________ stocks
decreased by 50%
Shareholders lost millions & many big and small investors were wiped
out in a few hours
8
Causes of the Great Depression
Much like today, Canada had close economic ties with the U.S.A. during
the 1920s replacing Great Britain as our largest trading partner
During the 1920s the USA was responsible for over 40% of our exports &
65% of our imports
American ____________________ also supplied much of the money used to
finance Canada’s economic development during the 1920s
A downturn (recession) in the American economy would therefore
immediately affect the economy of Canada
9
Causes of the Great Depression
2. Describe the business cycle characteristics associated with Canada during the
“roaring twenties.”
3. Explain the concept “buying on margin.” Why was this risky for the Canadian
investor?
10
Causes of the Great Depression
4. What is protectionism? How did its use strangle international trade leading up
to the outbreak and during the Great Depression?
5. How did Canada’s reliance on trade with the USA and our primary industries
make it more vulnerable to the Great Depression?
11