Great Depression In Canada

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
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 goods and began to stockpile them in warehouses. In the late 1920s they realized that there was not enough demand for their products. Suddenly, there was less demand for Canadian natural resources because factories in other countries using those resources had huge stockpiles of goods and started producing less. Since these foreign factories had huge stockpiles of goods they no longer needed to purchase natural resources from Canada until they had sold all of their stockpiled goods. The government soon raised tariffs on foreign imported goods to protect Canadian businesses and their workers. They did this so that imported products would cost more than domestic goods, causing Canadian consumers to buy domestic goods over the foreign goods due to the price difference,
During the early and mid-1920s many Canadians had a job and spent their wages on bigger homes, faster cars, newer appliances and entertainment. Buying on credit became a popular trend for many Canadians who went into debt to buy when they did not have enough cash. Also many Canadians were optimistic about the future. They believed that as long as they had a job in the future they could afford to make their monthly payments to creditors. They did not even consider the possibility of an economic recession or depression in the future, or how it would affect their future job security.
Another trend that was developing throughout the 1920s was the buying of shares of a company on margin. A share is basically one unit of ownership in a company that can be purchased or sold in a stock market. In the 1920s margin requirements were loose. In other words brokers required their investors to put in very little of their own money.
During the 1920s, buying on margin required investors to put down only 10 percent of the cost of their shares (Bolton 31). The remainder was borrowed which required the payment of interest. This caused the leverage rates of up to 90 percent debt to be uncommon (Conrad 72). Investors also had to put up some collateral to back up the loan in case the price of their shares went down. Investors who were buying on margin