History Docs: The interwar years
 

Consequences of the Great Depression

This set of primary and secondary sources includes newspaper articles, photographs, interviews, political cartoons and government documents that describe major social, economic and political consequences of the Great Depression.

Format: PDF
Subject: Social Studies, History
Grade: 7, 8, 9, 10, 11, 12
Type of resource: Source Documents
Language: English

Student Tasks

What were the major social, economic and political consequences of the Great Depression?

Historical Context for Teachers

The Great Depression

  • The Great Depression plunged the world into an unprecedented economic downturn that lasted from 1929 till World War II in 1939.
  • The collapse of the New York Stock Exchange on October 29, 1929, dramatically signalled the beginning of an economic depression. While many in Canada thought the crash would be a temporary dip in the economy, the years following proved otherwise.
  • During the Great Depression, only the United States suffered a greater economic decline than Canada. From 1929 to 1933, the Gross National Product in Canada fell by 42 percent. National income in 1933 was 51 percent of what it was in 1929. Industrial activity in the first quarter of 1933, the very depth of the Depression, was 57 percent of the average yearly figures for the late 1920s.

Causes

  • Prior to the Great Depression, many governments advocated a laissez-faire approach to economics—the belief that prosperity is best achieved when governments do not involve themselves in regulating economic activities (e.g., adjusting interest rates, or controlling the money supply to combat inflation).
  • During the economic boom of the 1920s, many industries became very profitable and, confident that the boom would continue well into the 1930s, used their profits to expand their businesses and increase production. When demand began to slow, many manufacturers continued to produce goods. This led to overproduction, a situation in which manufacturers began to stockpile excess manufactured goods, because the supply of goods surpassed consumer demand and the ability of consumers to purchase products.
  • Manufacturers responded by slowing down production and laying off workers; however, this only made the situation worse, as unemployed workers had even less money to spend on buying goods, causing sales to slump even further.
  • Another cause of the Great Depression in the 1920s was that many governments began implementing protective tariffs to protect domestic industries and ensure their economic self-sufficiency. Tariffs are taxes that are collected on goods coming into a country. Through this process, imported products cost much more than domestic goods, making domestically produced goods much more attractive to consumers.
  • Once the protective tariff trend began in the United States, other countries had little choice but to protect their own industries and products by also raising tariffs. This cycle only made the problem worse and restricted trade even further.
  • The tariffs implemented by the United States made life particularly difficult for European nations recovering from World War I. These nations had come to depend on their ability to sell their products to the United States to pay back their war debts, but with the United States’ protectionist tariffs, it was no longer profitable to do so. International trade was reduced, and these countries lost the ability to pay back money they had borrowed during the war.
  • United States protectionism was especially devastating to the Canadian economy that relied heavily on exporting raw materials (e.g., crops, timber and minerals) to other countries. When the United States created protectionist tariffs, it closed off the American market to Canadian exporters of raw material.
  • The situation was particularly difficult for Canadian farmers. During World War I and the early post-war years, Canadian farmers enjoyed a prosperous decade as war-decimated Europe was hungry for Canadian agriculture. By the late 1920s, however, most European economies had recovered from the war and began producing their own food supplies.
  • The European demand for Canadian agricultural imports was also reduced by protective tariffs that caused wheat prices to decline, and closed markets that had previously been open to Canadian grain.

The Dust Bowl

  • In addition to the decreased international demand for agricultural goods, the prairie wheat belt was also hit by natural disaster. An unprecedented drought struck the prairies from 1930 to 1937. The combination of drought and severe dust storms removed fertile topsoil, and caused significant ecological damage to the once abundant farmland. In some areas, clouds of locusts and grasshoppers eliminated whatever was left of the crops.
  • In Saskatchewan in 1937, there were virtually no crops. Two thirds of the province’s rural population were forced to seek public assistance, and more than 95 percent of rural municipalities were on the brink of bankruptcy.
  • As a result of the War of 1812, it became clear that Upper and Lower Canada would survive as British colonies in North America and there was a growing sense of national identity for both the British colonies and the United States. Many Americans viewed the war as a second war of independence and the country experienced a renewal of unity among political groups.

Recovery

  • The recovery that took place following these early difficult years was uneven and interrupted by another severe recession from 1937 to 1938, and it was not until the start of the World War II that any type of recovery began.
  • After the World War II began, industrial and agricultural activity increased rapidly to meet the demand for military equipment, supplies and food. By 1942, there was full employment in the Canadian economy and there was such a need for employees that women began entering the labour force in unprecedented numbers.
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