Do we remember the period in Canada’s history in which Canada experienced an economic boom? Of course we’ll have trouble remembering because this period was followed shortly afterwards by one of the worst depressions in Canada’s history. This period is referred to by many as the “Roaring Twenties”. This “Golden Age” of Canada was followed by the Great Depression. How could a depression that lasted for ten years occur after a period of economic prosperity? A major reason is because the economic conditions and lifestyles of Canadians during the 1920s had a very large impact on the prosperity of the 1930s. If Canadians and business owners were less optimistic about the future during the 1920s they would have been affected less by the depression of the 1930s. If Canada were to have been less reliant on the sale of exports and natural resources in the 1920s they would have been devastated less by the depression. If Canadians were to have changed their lifestyles by buying fewer items on credit they would have been devastated less by the Great Depression. If Canadians were to have bought less shares of a company by buying on margin in the 1920s they would have been devastated less by ‘Black Tuesday’. Although the 1920s of Canada were considered the “Roaring Twenties”, the lifestyles of Canadians and the Canadian economic underpinnings of this period were the underlying causes of the Great Depression.
The optimism of Canadians and business owners were a long-term cause of the Great Depression. Most Canadians and business owners in the early 1920s were overly optimistic about the future. They believed that the good times would last forever and that their quality of life would continue to improve. This belief caused many farmers in the prairies to borrow money from financial institutes to purchase more land. They believed that as long as they had produced a successful harvest each year they could afford to make their monthly payments to their creditors. Since they believed that the economic prosperity of the 1920s would last forever they would always produce a bountiful harvest each year, allowing them to pay their monthly payments to creditors. This belief of the farmers caused the agricultural production in 1922 – 1928 to increase by 20% (The 1920s Economy: A statistical portrait).Unfortunately they failed to even consider the possibility of an economic recession let alone a depression in the future that would make them unable to pay their monthly payments to their creditors. The optimism of the farmers was shared with many Canadian business owners too. Many businesses in Canada had expanded by going into debt with the assumption that their prosperity would continue. They started to purchase more factories and machines for their businesses and even hired extra workers. They did this because they believed that the demand for their goods and services would steadily increase. This belief of theirs caused them to spend an extra $0.3 billion in 1929 than 1928 for advertising their goods and services (The 1920s Economy: A statistical portrait). They assumed that the period of economic prosperity that most Canadians were sharing would last forever. They thought that as the standard of living in
Canada was increasing, more and more Canadians would have extra money in their pockets to spend on the goods and services provided by their businesses. They too failed too recognize that the period of economic prosperity would not last forever and were unable to foresee the future of their business if Canada was struck with a period of economic recession or depression. Thus, the optimism shared by many Canadians and business owners about the future in the 1920s was one of the underlying causes of the Great Depression.
Canada’s dependence on the sale of exports and natural resources in the 1920s was another underlying cause of the Great Depression. Due to their optimism of the future many businesses had overproduced their...
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