Contemporary Period

Economy

Quizzle

1867 - 1920

1. Give one economic factor that lead to the creation of the

Dominion of Canada

2. Put the following elements in the appropriate jurisdiction:

FederalJurisdictions

ProvincialJurisdictions

SharedJurisdictions

Immigration - Money making – Agriculture - Banks - Taxing people of the province - Regulating exports - Helping with trade between Canada and other countries - Developing the economy - Administering land to the people- Exploitation and export of natural resources and raw materials

3. The Second Phase of Industrialization was

characterized by the development of industry, which was prompted

by the development of new energy sources. One was oil and

the other was ________________

4. Why did the mining, iron, steel, and clothing industries see a growth between the years of

1914 – 1918?

5. In the early 20th century, the main economic activity was still

agriculture. What sector of agriculture saw the biggest

growth after the 1880s? (Hint: Think about what we make and

export that we are rather renowned for…)

6. Short answer question:

Young Canada implements a National Policy in 1879 to protect the Canadian market against strong/large American companies flooding the Canadian market with goods. Did the implementation of this policy help or hinder the Canadian economy in the decades to come (1880s to 1920s) ?

From WWI to the Roaring 20s

• During the 1920s, the Canadian and Quebec economies experienced a period of prosperity.

• Europe, which had been gravely affected by the First World War, invested in reconstruction and began, once again, to obtain supplies in different markets.

• It thus pumped money into the world economy as European countries purchased materials from all over the world.

The 20s

• As a result of companies selling more, production was up and workers were filling their bank accounts with improved salaries.

• With this came an increase in consumers’ purchasing power, people could now buy whatever they wanted!

Depressing 30s…• new purchasing power was not able to

absorb all that was produced, and surpluses accumulated in warehouses.

• Trying to fix it:– companies curbed their rate of production

and proceeded to lay off workers, which consequently, depreciated the value of companies on the stock exchange.

• This created a climate of insecurity among investors, who then stopped entrusting their hard earned money to banks. Deprived of this money (called capital) banks went bankrupt.

Crash of 1929

• This sequence of events culminated in the Crash of 1929, when stock prices on the New York Stock Exchange collapsed.

• Therefore, the root of the crash was an overproduction problem.

Crash of 1929

• The fall of stock prices marked the beginning of a serious economic crisis not only in the United States, but also throughout the rest of the world.

• The Canadian economy was badly affected by the recession, as it relied mainly on exports to the United States.

The mechanics of the crisis of the 1930s

1. Overproduction and accumulation2. Fall of prices3. Loss of investor confidence4. Decline in stock values5. Profitability problems of companies6. Production decline7. Layoffs and unemployment8. Weak consumer purchasing power

Overproduction and accumulation

•Companies were making more products than they were selling.

•Products were piling up.

Fall of prices

•Company now desperately needed to get rid of their products that are piling up.

•They drop prices to get people to want to buy these products.

Loss of investor confidence

•People investing money in these companies began to worry about the state of the companies they invested in.

Decline in stock values

•Since companies are not doing well in terms of production, the value of these companies stocks on the stock market go down.

Profitability problems of companies

•These companies were now unable to encourage investors to invest their money so there are less profits being made.

Production decline

•Now that companies are unable to make much of a profit, they cut down on the production because it costs a lot.

Layoffs and unemployment

•Low production means there is less of a need for workers. People are being laid off.

Weak consumer purchasing power

•Since many no longer have a job, they now no longer have money to spend as they please so their ability to make purchases declines.

http://www.mccord-museum.qc.ca/scripts/projects/CH/

animCH.php?tourID=GE_P4_1_EN&Lang=1&type=

quicktimeA quick video

The Great Depression of the

1930s:• The effects of the stock market

crash were felt for almost a decade.

• Between 1929 and 1933, Canadian exports fell by 50%.

• In 1933, when the Great Depression was at its worst, more than a quarter of Canada’s active population was out of work.

State Intervention

• When the federal government decided to do something about the situation, it did so by putting into place a protectionist trading policy.

• The government was trying to encourage purchasing of domestic products (made in Canada) and block international competition from selling their products in Canada.

• The protectionist trading policy forced any outside competition to pay a high tax if they wanted to sell their products in Canada.

• Unfortunately, this idea only worsen the situation as it deterred other countries from wanting to purchase Canadian products.

• This led to a slowdown of industrial output.

Important words for this time period

1. Prosperity2. Depreciate3. Bankrupt4. Overproduction5. Recession6. Protectionist7. Victory Loan Bonds

Prosperity• An economic state of growth with

rising profits and full employment. This means companies are making money and nearly everyone has a job and is getting a salary.

Depreciate• To reduce in value over time. The

worth of companies during the Great Depression went down or reduced because they were not able to make as much of a profit since consumers were not purchasing their goods.

Bankrupt• To formally declare an inability to

pay off debts (money) owed. Companies or banks were unable to pay back the money they owed so they declared themselves bankrupt.

Overproduction• To manufacture or produce too

much of a product such that it is not all being purchased. To produce in excess, more than what is needed.

Recession• The state of the economy declines. Not as

much is being produced, distributed or consumed and therefore companies will lose money

Protectionist• An economic rule put into place that limits

and controls trade between countries, through methods such as tariffs (taxes) on imported goods. The purpose is to protect the country’s economy.

Victory Loan Bonds

• The Canadian government issued Victory Loan Bonds to the public to raise money for its involvement in World War I.

• Canadians would buy Victory Loan Bonds from the government as a way of temporarily lending money to help in war efforts.

• With this money, the government would be able to pay for all of its war expenses.

• All money would be given back to Canadian, with interest, when they cashed in their bonds.