The Winnipeg General Strike

This strike affected Winnipeg for several days, effectively paralyzing the city. Many of the events
that took place during this time had nationwide repercussions.
HISTORICAL CONTEXT
With the expansion of a working class since the 19th century and the evolution of the union
movement in Canada since the 1880s, the growth of a city like Winnipeg, ville champignon and
highly multi-cultural, benefited enormously from its position as a railway crossroads in the
settling of the prairie provinces by newcomers. Fearing the encroachment of Communism in
Canada, government authorities were on the alert, especially since North America had
experienced its first general strike in 1919, a strike in Seattle (USA) that lasted five days and
briefly paralyzed the city.
SUMMARY
After three months of unproductive negotiations between the employers of the Winnipeg
Builder's Exchange and the unions, grouped together under the Building Trades Council, a strike
was launched on May 1, 1919. The next day, after refusing to negotiate with the Metal Trades
Council union, the employers of the three leading metalwork factories also found themselves
with striking workers. After being informed by the two unions of a refusal to negotiate, the
Trades and Labour Council of Winnipeg decided to join the strike already in progress. The
general strike officially began on May 15, 1919, at 11 o'clock and thousands of non-unionized
workers joined the strikers. Faced with this problem, a committee of citizens was created to end
the strike that was paralyzing the entire city. The strike committee met with the citizens'
committee to try to agree on the continuance of certain essential services, such as milk
distribution. On May 22, the Justice Minister and Labour Minister travelled to Winnipeg to meet
with the representatives of the citizens' committee, but the strike committee was not invited to
participate in the talks. When, on May 30, the police were asked to sign a contract to prevent
them from joining unions, they refused, but declared that they would continue to maintain law
and order. A few days later, the entire police force was fired. On June 1st, 10,000 soldiers back
from the front converged upon the provincial Legislature and the mayor's office to announce
their solidarity with the strike. The Federal Government then added amendments to the Law on

Immigration in order to be able to deport anyone born outside of Canada accused of insurrection.
It is believed that the strike was a pretext for the advancement of the communist movement.
Many arrests were made in order to start deporting strikers under the cover of the new
amendments. A storm of protest erupted across the country, and more than half of the people who
had been arrested were freed. Riots broke out and one person was killed. The general strike
ended on June 26 at 11 o'clock after the strike committee told its supporters that the next battle
would be waged on a political level; this would begin with the dispatch of several labour
representatives to all levels of government. While other strikes took place during that same year
in Canada, there has been much debate since about the violent methods used to attempt to repress
the Winnipeg strike.
Concepts
Communism
Political and social concept of a classless society, in which personal property would be abolished
and all citizens would be equal, particularly in the distribution of wealth. An alternative to
capitalism, which is based on the possession of goods, communism as it was developed in theory
failed in practice, as it was unable to fulfill the ideological aspirations for which it aimed.
Strike
Work stoppage decided by workers in a bid to put pressure on employers for better working
conditions.
Union
Representatives of a group of workers who negotiate working conditions that suit their interests.
Amendment
Modification made to a law.
Insurrection
Planned uprising to overthrow the government in power

Responses to the Winnepeg General Strike

"Winnipeg Is Fighting The One Big Union. The Winnipeg Strike"
The Gazette, May 17, 1919 (Montreal)
The strike which is in progress in Winnipeg presents features which merit serious consideration. The
trouble, which was confined previously to the metal and building trades, has become general. From
fifteen to twenty-five thousand employees have left their work, and all branches of commercial and
industrial activities of the city are affected. That would be sufficiently serious, but there is more. The post
office employees, firemen and street railway employees, telephone, power and waterworks employees
and yardmen and shopmen of the steam railways have walked out. Newspapers have been forced to
suspend. This means that not only has the business of the city been paralyzed, but the public services have
been abandoned, and would be completely out of commission except for the action of volunteer citizens.
"No Soviet At Winnipeg"
The World, May 20, 1919 (Vancouver)
It is not correct to say that Soviet control has replaced civil government in Winnipeg. What has happened
is merely that through the withdrawal of the trades of unionists from their usual occupations the leaders of
labor associations are temporarily in a position to dominate the city's commercial and industrial activities.
Soviet control is a very different thing. As practised in Russia, Soviet control means the power of life and
death over a whole community. There is no power above the Soviet except a central authority in which all
Soviets are represented. There are no laws except those which the Soviets pass and can enforce.
In Winnipeg the law, British law is still in force and enforceable.
[...]
No one in Winnipeg is deprived of his vote or his civil status because he does not happen to belong to
belong to a trade union. Which is what happens in Russia.

"Clean Out The Bolchevists"

The Times, May 20, 1919 (Toronto)

Winnipeg is a warning to the rest of Canada. The object of the One Big Union is plain. It is the
aim of the Reds who dominate that organization to use mass-power, in defiance of agreements,
for the overturning of organized society.
[...]
The Times agrees with Major-General McRae that there should be a "clean-up" of the
revolutionary agitators and foreign undesirables who infest the country.

"OUR CAUSE IS JUST" Western Labor News, May 21, 1919 (Winnipeg)
Never have the workers of Winnipeg had so much confidence in their cause as today. Never has there
been such unanimity as to absolute necessity of settling once [and] for all the two points at issue, namely:
1. THE RIGHT TO COLLECTIVE BARGAINING, and
2. THE RIGHT TO A LIVING WAGE.
[...]
Wages only 18 cents higher than in 1914 - Cost of living up 80 per cent - Bosses say demands of men
reasonable and necessary to maintain standard of citizenship- But others must take responsibility for
increase men demand.

P
r
i
m
e
M
i
n
i
s
t
e
r
R
i
c
h
a
r
d
B
The "On to Ottawa" Trek
.
B
e
n
Plagued by problems caused by the Depression of the 1930s and economic hardship, single,
n
e unemployed men had no option but to check into local relief camps for the unemployed. In
t British Columbia these men, dissatisfied with their living and working conditions, decided to
t march to Ottawa to protest and air their concerns about the measures taken to counteract the
( social and economic problems Canada was experiencing.
N
a HISTORICAL CONTEXT
t After the stock market crash of 1929 in New York City, the most serious economic crisis in
i
o history struck the Western world. Canada felt the impacts; unemployment reached staggering
n proportions and poorly designed government policies provided no assistance to the hordes of
a jobless. In 1932, the Federal Government set up relief camps for the unemployed, where single,
l
A
r
c
h

homeless men were given shelter, food, clothing and paid 20 cents per day for 44 hours of public
work per week, all under the direction of the Ministry of National Defence in cooperation with
the Labour Department. The men who chose to move into these camps did so of their own free
choice.
SUMMARY
Dissatisfied with their living and working conditions, 1,500 men left the relief camps in British
Columbia to go on strike in April 1935 and head toward Vancouver, alleging that the relief camps
offered them no viable future. Mayor McGeer told the strikers that the Municipal Council had
limited powers and therefore could not do anything about their claims. Instead, he offered them
an alternative: to return to the camps and to finance a delegation to send to Ottawa in order to
discuss their demands, but the strikers refused. On June 3rd and 4th, after seeing the
government's indifference to their plight, more than 1,000 men decided to go to Ottawa to
present their grievances, hoping to create awareness for their cause. They set out first by train,
but after receiving a decree from Prime Minister Bennett, they were denied access to the train
cars. Eight men undertook the walk to Ottawa to argue their case, while 2,000 others settled in
Regina, where they were fed and lodged by private citizens while being sustained by the
government of Saskatchewan. The Prime Minister refused the delegation's demands and the eight
returned to join the Regina group. On July 1st, 1935 they organized a public protest that was
broken up by police squads who came to arrest Arthur Evans and a number of other speakers.
This act prompted a riot, with the marchers throwing stones at the police officers. Two people
died in the clashes, including a local constable; dozens of people were injured; and 130 were
arrested. A few days later the marchers returned to their camps, with funds from the government
of Saskatchewan so that they could travel by train. The failure of the "On to Ottawa" Trek was a
tough blow for the career of Prime Minister Bennett, who was widely criticized for his handling
of the situation.
Concepts
Stock market crash
A drastic drop in share prices, having serious repercussions on the economy.
Economic crisis
Significant drop in economic activity, leading to various problems, such as a rise in the
unemployment rate and decreased production. The economic crisis of the 1930s (the Great
Depression) set in after the Wall Street stock market crash on Black Thursday (October 24,
1929). The crisis was felt on a worldwide scale.
Unemployment
Period of enforced work stoppage affecting people who cannot find a job.
Grievance

A reason to complain about a given subject.

Decree
Measure taken toward a person or a group of persons imposing a decision made by an authority,
such as a government authority.
Riot
Popular uprising, usually spontaneous and disorganized, accompanied by fighting and screaming.
A riot, unlike an insurrection, is not meant to overthrow the established powers.

Responses

Ottowa

to On to

Interview with Colonel Foster about men in relief camp

The Vancouver Sun, le 5 avril 1935
"I don't think that any intelligent citizen will not agree that a system which offers to young men
as yourselves no hope of any other future but life in a camp is entirely wrong... however... the
city feels that the provision of food and shelter for you is not Vancouver's responsibility."

Statement by the Prime Minister, in Canada, House of Commons, Debates, June 7, 1935
So far as the Government is aware, a number of men have left Vancouver as trespassers on
freight trains and are travelling East, some by the Canadian Pacific and some by the Canadian

National. No complaints have been made by the railway companies against the trespassers, and
until such time as such complaints are made, the provincial authorities are not, as I understand
the situation, disposed to take any proceeding against these men. The government is ready and
willing, if called upon by the provincial authorities, to render such assistance as may be
necessary in the premises, but at the moment no such occasion has arisen.
The Interview between the Delegation of Strikers and the Prime Minister and his Cabinet

June 22, 1935

After staying there two months and when all attempts of negotiations had failed we decided on
this trek to Ottawa. We realized the hazards of the trek, that we might go hungry, that there
would be considerable privation and the possibility of injury to members of our ranks in the trek.
We realized there would be police interference. We discussed these things with the camp strikers
before they left, but the hatred of the workers for these relief camps and the hopelessness they
bring to the workers in these places was of such a nature that we left.

Debate in the House of Commons, Mr. MacInnis, June 26, 1935

"They easiest way to provoke a person into taking action which possibly he should not take is to
ignore his rightful claims. I contend that these men in the camps have rightful and just claims
which have been ignored by this government."
Debate in the House of Commons, Mr. Guthrie, June 26, 1935

"The attack was made in the first instance by the strike marchers, and the city police were
called upon to defend themselves. Subsequently the mounted police joined for the purpose of
maintaining the order. Shots were exchange. Shots were fired by the strikers, and the fire was
replied to by shots from the city police. No shot whatever was fire by the mounted police."

Canada and the Great Depression

Free Trade

The Canadian economy has long depended on exports. Even back

1891 electoral campaign
in the time of New France, furs were being sent to France. Over
poster against free trade.
the centuries our exports have changed, but one thing remains the
(National Archives of
same: the health of the Canadian economy depends heavily on its
Canada, C-095466)
ability to export to foreign markets. We have enjoyed privileged
trading relations with France and Great Britain, but our "natural"
trading partner has always been the United States, thanks to its
proximity and market size. As a result, we have negotiated several trade treaties with the U.S.
Two are presented here: the Reciprocity Treaty of 1854 and the 1989 Canada-U.S. Free Trade
Agreement.

RB Bennett and Mackenzie King in the Depression

THE GREAT DEPRESSION: CANADA RB Bennett and Mackenzie King
RB BENNETT
Historical Context

When the crisis began, King urged Canadians to wait it out. A similar approach was
being taken by Hoover in the US.
Bennett became prime minister in 1930, defeating King in the elections because of his
failure to address the problems of the depression.
The early depression years saw massive surpluses of wheatover of about a hundred
million bushels.
The 1930s were also years of natural disasters. Droughts hit the prairies starting in 1929.
The unemployed and the prairies farmers were the largest groups on relief in the decade
but there was another category of relief recipients, the "single, homeless, unemployed".
Relief and Reform
1.
First was a bill to provide $20 million towards relief for the winter of 1930. This was a
significant amount because the federal budget at this time was $500 million.
a.
Since the majority of ratepayers were being affected, municipal revenues would
decline and provincial governments would be forced to give aid. It was radical because
no federal government accepted responsibility for supporting the unemployed before this.
2.
In 1932, the Bennett government created relief camps under military control to house
single, unemployed, transient men.
a.
The government saw these men as a potentially explosive group that should be
kept separate from society until economic conditions improved. By the end of 1932,
about 2 million men were employed and given a means of living.
3.
In January 1935 Bennett talked of major reform in a series of five radio broadcasts,
referred to as Bennetts New Deal.
a.
Bennett realized that although FDRs New Deal never lived up to expectation, it
was successful in psychologically restoring and winning the support of Americans.
Bennett wanted to employ a psychological New Deal in Canada.
4.
The Prairie Farm Rehabilitation Act was passed in 1935 in response to the widespread
drought, farm abandonment and land degradation.
a.
Though its total effects were insufficient, some money was given to farmers for the
purpose of improving their farming practices.
5.
The Dominion Housing Act of 1935 provided $20 million in loans and helped finance
4900 units over three years.
a.
Though its effects were not significant, active federal initiative was taken to
improve the coniditons of Canadian people.
6.
In 1935 Bennett introduced legislation to regulate hours of work, minimum wages, and
working conditions for social security. They had little effect in gaining public opinion because
people had no jobs to be improved.
7.
The 1934 Bank of Canada Act made provisions for a central back in Canada, with its
central function to regulate credit and currency in Canada.
a.
It was thus in a position to determine the supply of currency and credit on the basis
of the needs of the community.
b.
Under Graham Towers however the Bank of Canada established a policy of easy
money and had money to lend at low rates of interest.
Tariffs

8.
The second measure was an increase of tariffs (Bennett Tariffs) on most manufactured
goods that could be produced in Canada. It was the sharpest increase in tariffs since 1879.
a.
The tariffs were to give Canadian manufacturers a monopoly in the Canadian
market.
b.
Effects of the tariff were merely counteracted by Hoovers Hawley-Smooth tariff,
and foreign trade was hit.
9.
By 1935 there was an unsold surplus of two hundred million bushels of wheat
a.
Tariffs were reducing export of Canadian goods and producers were feeling the
effects of this worse than manufacturers since it was easier for manufacturers to adjust to
supply and demand than producers.
10. An Imperial Economic Conference was held in Ottawa in the summer of 1932. Bennett,
who was the chairman of the conference, was looking for a Commonwealth solution to the tariff
problem and Great Britain complied in finding a solution because it had by this time given up its
policy on free trade as well.
a.
The conference was not effective because nations wanted to increase exports
without increasing imports from other Commonwealth countries.
b.
Several goods imported to Canada from the US would now be imported from Great
Britain. This helped to preserve an export market but was unable to boost prices of farm
products because Britain could not buy all of Canadas surplus production.
Failures
11. Until 1932 Bennett produced no substantial policy to address the depression because the
situation was thought to be temporary and the effects of the 1930 relief grants and raised tariffs
were still being observed.
a.
Conditions continued to worsen due from inactionfrom 1929 to 1933, income
per person had declined by 75 per cent in Saskatchewan.
12. Poor conditions in the relief camps, offering a lowly wage of 20 cents per day, led to unrest.
a.
The number of Canadians already on relief (approximately two million by 1932)
made it impossible for the federal government to fund public works programs adequately.
b.
Camps generated hopelessness, housed radical politics and bred communism due
to their poor conditions
c.
Eventually camps were abolished by King in 1936.
13. In June 1935, over a thousand 1000 camp men in British Columbia travelled towards
Parliament Hill in the On-to-Ottawa trek to for better economic conditionslike increased
wages and a true system of social security.
a.
They were stopped by Mounted Police in Regina and Bennett regarded them as
lawbreakers.
b.
Like Hoover, who harshly responded to the Bonus Army in 1932, Bennett was
criticized for his harsh handling of the situation. He appeared unsympathetic to the plight
of Canadians affected by the depression.
14. Bennetts New Deal was heavily criticized. Bennett associated it strongly with FDRs new
deal, as he declared in his five broadcasts: reform means Government intervention I nail the
flag of progress to the mast-head.
a.
Bennetts cabinet was alarmed with his announcements because the phrase New
Deal was associated with FDRs radical experimentation in the US, but Bennetts New

Deal was to be much less radical. Bennetts New Deal was declared unconstitutional
because it breached into provincial responsibilities
b.
Critics thought that this was Bennetts attempt at appealing to the public before the
1935 election.
c.
The result was a number of hastily drafted bills and Bennetts New Deal never
lived up to expectations.
15. In 1935 Bennett introduced legislation to regulate hours of work, minimum wages, and
working conditions for social security.
a.
They had little effect in gaining public opinion because people had no jobs to be
improved.
16. Shanty towns were called Bennett boroughs and makeshift vehicles pulled by farm
animals were called Bennett buggies.
a.
People began to blame Bennett for their poor conditions.
17. Ultimately Parliament was dissolved in July 1935. R. B. Bennett during his five years in
office had lost the confidence of most Canadians in his party and in his government

MACKENZIE KING
1.
In the initial six months following the stock market crash, King took little action to address
problems like unemployment. When asked where the proceeds of raised taxes would go, King
answered I would not give them (a Tory government) a five-cent piece.
a.
King took a hands-off approach to the situation because he believed the economy
would fix itself. He appeared unwilling to address the problems of the depression.
2.
He began a policy of freer trade. Within three weeks of taking office he had signed a trade
agreement with the United States (1935).
a.
This marked the turning away from the ever-increasing tariff barriers between the
two countries which had reached their peak with the Hawley-Smoot tariff and the Bennett
tariff, both in 1930.
b.
A further trade agreement was signed three years later involving Great Britain as
well as the United States.
3.
Soon after taking office King appointed a National Employment Commission, which was
assigned to reorganize the administration of all relief expenditures, and recommend measures
which to create employment opportunities.
a.
The NEC was ineffective. Most of the relief was administered by provincial and
municipal governments and, even though the federal government was providing much of
the money, there was little the federal government could do to change the system.
4.
The 1938 budget included $25 million in additional expenditure after pressure from the
NEC.
a.
This was a turning point in Canadian fiscal policyfor the first time a government
had consciously decided to spend money to counteract a low in the business cycle. This
was the application of Keynesian economics, which saw that governments should
deliberately invest into the economy during times of depression in order to
counterbalance the deficiency, because private enterprise was not in the position to do so
itself.

5.
In addition to the expenditures in the budget the government also offered loans to
municipalities for local improvements and passed a National Housing Act to encourage the
building of homes. Consistent with this Keynesian approach, the government also reduced some
taxes and offered some tax exemptions for private investors.
Its not quite enough to live on, and a little too much to die on. George Stubbs, Manitoba judge
commenting on relief payments during Bennetts term.
Barry Broadfoot, Ten Years Lost 1973
these carved up cars, named after [Bennett], a constant reminder that hed been prime minister
when the disaster struck. Barry Broadfoot, Ten Years Lost 1973
JM Keynes, The Means to Prosperity. 1933. multiplier effect
When the economy has high unemployment, an increase in government purchases creates a
market for business output, creating income and encouraging increases in consumer spending,
which creates further increases in the demand for business output.
If a free society cannot help the many who are poor, it cannot save the few who are rich JFK
I never worry about action, but only inaction. Winston Churchill
G. Blair Neatby, The Politics of Chaos. (1972)
Bennett believed that "what was needed in Canada was a psychological New Deal."
Ralph Allen, Ordeal by Fire: Canada, 1910-45. (1961)
"Weak positions were protected, high-cost producers were kept in production and obsolete
equipment was preserved by rising tariffs."

Vargas and the Depression

LATIN AMERICAN RESPONSE TO THE DEPRESSION: BRAZIL AND VARGAS
GETULIO VARGAS
Historical Context

1.
a.
2.
a.

3.
a.

4.
a.
5.
a.

b.
6.

The stock market crash of 1929 had adverse effects on the Brazilian economy, which depended
on staple products like coffee. The economic and political turmoil that resulted produced
favourable conditions for Vargas to rise to power.
Until 1930, the political scenery was dominated by the states of So Paulo and Minas Gerais
(which were the largest producers of coffee and also benefited from their incipient industries).
The period became known as Old Republic (Republica Velha), or epoch of the coffee-and-milk.
Vargas came to power after the revolution of 1930, which was a bloodless coup detat that saw
the removal of a corrupt presidential candidate (Jlio Prestes).
Vargas main aim upon securing power was to reform the Brazilian economy.
Vargas Policies
Up until 1930, Brazil was dominated by the ruling class of Sao Paulo and Minas Gerais who
showed little concern for the new middle class.
Vargas understood that with the breakdown of direct relations between workers and owners in
the expanding factories of Brazil, workers could become the basis for a new form of political
power--populism.
The New York crash of 1929 had a severe impact on Brazilian economy, which depended on
producing coffeeprice of coffee fell from $200,000 a bushel in 1929 to $21,000 in 1930.
The Brazilian economy relied on exports of a few staple products, which was dangerous in the
case that export of these products could not be maintained. This is what occurred during the
Depression, and it encouraged Vargas to try and develop industrial self-sufficiency in Brazil.
(Industrial self sufficiency would prevent Brazil from becoming dependent on foreign nations for
imports of manufactured goods.)
Vargas created the post of interventor, which was a federally appointed officer to take over
governance of states or cities that were not obeying orders from the Federal Government.
Vargas presided over a shifting of power from the states to the central government and from
landowners to middle- and lower-class urban residents. Vargas sought to transform Brazil from a
plantation-based economy into an industrialized powerhouse, under the guidance of government
intervention.
The Constitution of 1934 gave the Brazilian government the right to nationalize industry. Using
the new Constitution Vargas increased workers rights and in return labor unions went under
strict government control.
It contained some electoral reforms, including women's suffrage, a secret ballot, and special
courts to supervise elections.
In November 1937 Vargas assumed dictatorial powers based on European fascist models
(Franco of Spain and Mussolini of Italy). The new regime was called the Estado Nvo (New
State).
Increased industrialization and urbanization diminished power of agricultural elites, and the
elites of the old state ptrias gave up their independent military power in return for federal
protection of their interests. Furthermore, armed forces would support group they thought would
secure order and progress.
This style of government allowed massive intervention in all matters by the State, and gave
Vargas a means to implement huge change.
Under the Estado Nvo Brazil started an Import Substitution Industrialization (ISI) program
where Brazil placed protective tariffs on products they wanted to produce locallyand industrial
production doubled.

a.
b.
7.
a.
8.
a.
9.
a.

ISI programs meant that countries had to import expensive technology and led to balance of
payment deficits.
ISI programs led to urbanization, increased industrialization, high prices, foreign debt, and
inflation.
Vargas created the DASP - Administrative Department of Public Service, to adapt the civil
service to the new times.
DASP was the beginning of professionalization of civil servants in Brazil, contributing the
establishment of a working middle class.
Vargas instituted the minimum wage in Brazil and passed a labour legislation, which is enforced
still today.
Vargas took measures to bring social security to the middle class. Because of these acts, which
benefited a mass of urban workers, Vargas is often referred to as Father of the Poor.
Vargas declared war on the Axis powers, taking advantage of the fact that US and United
Kingdom wanted to have Brazil as ally during the World War II.
This led to Vargas most notable contributionslaying the necessary foundation for
infrastructure, industrialization and modernization in Brazil. Vargas negotiated funds for the
installation of heavy industries in Brazil with Allied aid, such as the first steel mill of Brazil;
Vargas also laid the basis for the creation of future petroleum and electricity national companies.
R. S Rose. One of the Forgotten Things. (2002)
for the middle class, [Vargas] was the one who brought stability
James M. Malloy. The Politics of Social Security in Brazil. (1979)
the first realization of the volatile nature of social insurance policy occurred when the
Vargas sought unsuccessfully to reform and rationalize the system.
Karl Lowenstein. Brazil under Vargas. (1942)
During these first years of the dictatorial regime the ground was laid for many of the subsequent
efforts toward the social reconstruction of Brazil.
I never worry about action, but only inaction. Winston Churchill
If a free society cannot help the many who are poor, it cannot save the few who are rich JFK

Great Depression: Causes in the US and Canada

THE GREAT DEPRESSION: POLITICAL AND ECONOMIC CAUSES IN THE
AMERICAS
CAUSES IN THE UNITED STATES

Historical context
- The 1920s were seen as a period of boom in the US because of technological advancements,
economic efficiency and minimal government interference in business.
Unemployment never exceeded 3.7% between 1922-9.
- Harding and Coolidge administrations favoured a laissez faire approach to the economy.
- US began to show first signs of becoming a mass consumption society. The mechanization and
modernization of all aspects of industrial production saw that business prospered.
1.

2.

3.
4.

5.

6.

Overabundance
The largest problem for farmers was overabundance.
a. Prices had fallen below those of 1914 during the 1920s, for example wheat fell from
$2.50 per bushel to $1.00.
i. As farmers became more efficient through mechanization and new
techniques (such as the use of improved fertilizers), they simply over-produced
and prices fell.
b. Though farm population fell by 5%, production increased by 9%.
i. Technological advancements saw that more crops would be produced on the
same or even reduced acreage.
ii. Farmers were reluctant to under produce voluntarily because they could not
trust their neighbours to do the same.
c. The demand for crops decreased due to various factors.
i. The growth of synthetic fibres saw lessened demand for natural ones, e.g.
cotton.
ii. Prohibition cut the demand for grains previously used in manufacturing
alcohol.
High tariffs protected the domestic US market, but depressed conditions with trade partners.
a. For example, 1921 Emergency Tariff Act placed high tariffs on imported foodstuffs.
i. Foreigners retaliated by placing similar tariffs on US foodstuffs, therefore
farmers could not export their surplus.
In Our economic society and its problems (1934) by Rexford Tugwell of FDRs Brain Trust,
Tugwell states that overproduction was an important cause of the Depression.
Reckless spending (credit spending and buying on margin)
There was excessive and reckless purchasing of credit at all social levels.
a. Get-rich-quick schemes resulted: in the 1920s, Charles Ponzi scammed thousands
of gullible individuals to invest in his ventures since he guaranteed 50% profit within 90
days.
i. Money lost to reckless speculative ventures was very common, especially
since the situation was perfect for conmen to scam others.
From 1927-9, spending on Wall Street increased significantly stocks in the Radio Corporation
of America rose from 85 to 420 points in the course of 1928.
a. The public could buy stocks on the margin, on credit with loans from their broker.
i. This fuelled reckless spending in the stocks, and prices became dangerously
high since the public was buying shares and stocks to make a quick profit.
By 1929, almost $7 billion worth of goods was sold on credit.
a. This resulted in excessive debt to bank.

b. Massive credit spending coincided with a run on the banks, and banks were
ultimately unable to provide cash to back savings accounts.
7. Roger Babson, a financier, commented in September 1929 that the prosperity of the time was
based on a state of mind rather than economic facts.
a. In response to prices being dangerously highconfidence in the economy was
exceptionally strong because credit buying could be done so easily.
Poor banking system
8. There were 12 regulatory reserve banks in the US, headed by the Federal Reserve Board.
a. Reserve banks acted in the interest of bankers and could not be relied to act in the
best interest of the nation.
9. Dietmer Rothmond. Global Impact of the Great Depression, 1929-39 (1996). The
members of the twelve regional central banks knew next to nothing about the problems of
money supply.
a. The Reserve banks sold credit at high interest rates during periods of recession and
low interest rates during periods of boomwhen they should have done the exact
oppositewhich fuelled easy credit and enabled reckless spending.
10. There were 30 000 small banks in the US during the 1920s.
a. Small banks were not a part of centralized national banks, and therefore were more
susceptible to financial problems and bankruptcy.
Foreign economies
11. Private investments by the US in foreign countries rose from $7000 million in 1919 to $17 200
million in 1930.
a. International reliance on US investment would have devastating effects on the global
economy.
12. In February 1922, Congress established the Debt Funding Commission to oversee repayment of
international debts left to the US following WWI.
a. European countries, still suffering from depressed economic conditions arising from
the war, could not afford to repay their loans. Americans resented this.
13. German reparations were an issue. The US established the Dawes Plan in 1924 to help Germany
pay its reparations.
a. Following Dawes, US investments in Germany increased to $3900 million, and
therefore the US was effectively paying back itself back with its own money.
b. The process would have been simpler had the US had taken the money out of one
treasury building and put it in another (Peter Clements, Prosperity, Depression and
the New Deal: USA, 1890-1954 2008)
i. The Dawes plan only served to make the international tangle of debt more
complex.
Immediate causes
14. Loss of confidence in the bull market in October 1929 led to a severe instability in the stock
market.
a. Rumours of big stock players, such as Barnard Baruch and Joseph Kennedy, selling their
stock.
b. Rumours that the Federal Reserve Board was going to tighten credit, making it harder to
buy.

15. Robert Himmelburg, Great Depression and the New Deal. (2001). erosion of public
confidence in banking led to runs.
16. In this atmosphere, people began selling their stocks and lenders began demanding for their
repayments.
a. The Stock Market Crash of October 29th, 1929 occurred as a result. The crash was a catalyst
for subsequently failures in other sectors of the economy.
17. Individual and businesses lost billionsthe President of Union Cigar jumped off a building to
his death after his stocks fell from $113.50 to $4.00 in one day.
a. Significant losses demonstrate the degree of instability in bull market economy leading up to
the Crash.
CAUSES IN CANADA
Historical context
- Canada was experiencing a period of significant prosperity in the 1920s.
- By the middle of the decade, the economy was on the upswing and many sectors of industry
prospered.
For example, the Marquis wheat was being grown across Canada in the 1920s. By 1928, Canada
had a record wheat crop and a major share of the world market.
- Significant improvements in the standard of living, and luxury items like radios and flush toilets
became commonplace.
Overproduction and overexpansion
1.

Many industries expanded and reached high levels of production.

a. Automobile centres such as Oshawa and Windsor produced over 400 000 cars in
1930.
i. Huge supplies of manufactured goods were produced and simply stockpiled
even in the best year of sales, only 260 000 cars were purchased by Canadians.
2. Large stocks of newsprint, radios, shirts, shoes and cars piled up unsold.
a. In the 1920s, wages were simply not high enough for people to buy all the products
turned out by the factories.
3. In Our economic society and its problems (1934) by Rexford Tugwell of FDRs Brain Trust,
Tugwell states that overproduction was an important cause of the Depression.

4.

Trade imbalances
Canada had few primary staples, including wheat, fish, miners, and pulp & paper.
a. After the big crop of 1928 the Wheat Pools (wheat farmers co-operative) had an
unsold carry-over of about a hundred million bushels. Heavy reliance on few primary
products would prove extremely dangerous during the Depressionforeign countries
stopped buying, and this seriously hurt the economy.

5.

During the 1920s, Canada faced competition from other wheat-exporting countries like
Argentina and Australia.
a. Canadian farmers lost some of their European customers forever, for the Argentine,
which had been content to sell its crop at the going price, had for the first time in history
outsold Canada
b. This hurt Canada severely because wheat was the staple product.
6. Western farmers were faced with terrible droughts in the summers of the late 1920s and early
1930s.
Dependence on the US
7. 65 per cent of our imports came from the US and 40 per cent of our exports went to the US.
a. When the US economy began to weaken (markedly after the stock market crash), it
was inevitable that the Canadian economy would suffer as well.
8.

9.

High Tariffs
RB Bennett employed protective tariffs in 1930 as an attempt to protect home industries and
bring the nation out of depression
a. While the high tariffs might protect the domestic market, the market was not
sufficiently large enough to consume enough manufactured goods to help Canadas
suffering economy.
b. In many cases, other nations retaliated with their own protective tariffs.
Reckless spending
All throughout the 1920s, banks advertised credit buying with slogans such as buy now, pay
later.
a. Credit buying had become a well-established custom, and many families got
themselves into severe debt since they could not keep up with payments.
b. Stocks

10. On October 29 1929, the value of most stocks on the Toronto and Montreal stock exchange fell
more than 50 per cent.