Free Essays, Term Papers, Research Papers at Anti Essays

Causes of the Great Depression


There were a variety of problems that led up to the Great Depression. Very few people saw the Great Depression coming. The politicians had been to caught up in the long run of prosperity in the 1920’s. An early sign that depression was coming was the stock market crash on October 29, 1929. Prime minister King thought that the stock market crash would only be a temporary setback for the Canadian economy. Stockholders had lost more then 40 billion dollars. The stock market began to regain some of its losses, but it wasn’t enough.


Canada was well known for there resources, in particular wheat, pulp and paper. Farmers would produce large supplies of wheat with the intention of easily selling it because of prosperity. Other countries felt the stock market crash and were hesitant of buying supplies from other countries, especially America, Canada’s number one buyer. In the 1930’s Canada suffered drought conditions. This caused farmers to have a hard time producing food and also paying taxes, which led to farms being closed down.


Drought conditions were not the only reason for slow trade between countries. The American government created the Smoot- Hawley Tariff to help American companies. This charged high taxes for imports, which lead to less trade between Canada and the U.S.



Bank failures were also a reason that caused a break in the prosperity cycle. Throughout the 1930’s over 9000 banks failed. Bank deposits were uninsured so when the bank would go bankrupt people lost their savings that they had in the bank. This then led the customers that lost their money to be very tight with their money. Because the businesses were not making money, companies had to lay off thousands of workers because of the depression.