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Great Depression

            Canada's economy in the 1930's suffered a drastic collapse. That period of economic decline is referred to as the great depression. What were the central causes of the depression? Although many factors contributed to it in Canada three significant causes were: The over production of goods and the over expansion of industry, Canada's huge economic dependence on the United States and the Canadians weakness for buying stocks on credit.
             Canada's economy was greatly affected in the 1920's because of the over-production of goods and by the over expansion of industries. During the 1920's there were high levels of production and many industries were expanding because of the prosperity on the 1920's. But Canadians could only afford to buy so much, so eventually goods that were overproduced started piling up in warehouses. Factory owners didn't know what to do with all the merchandise that nobody was buying. They started to slow down their production and ended up laying off workers. Therefore people didn't have jobs and families had even less money to buy things with. An important economic lesson had been forgotten "produce only as much as you can sell." With an over abundance of products and no consumers the threat of a depression was becoming a reality.
             Canada's economy had always been closely connected with the United States so it was inevitable that when the depression hit the United States that the collapse of Canada's economy was soon to follow. Sixty percent of Canada's imports came from the United States so Canada's economy was dependent on the economy of the United States. The United States was also Canada's most important resource for trading goods. Forty percent of Canada's exports went to the United States. It is not surprising that when the economy of the United States collapsed because many factories were being closed that the need for Canadian goods decreased. The reduction in the amount of Canadian goods imported from and exported to the United States had a huge impact on the Canadian economy.

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