From Boom to Bust

Election of 1921

Mackenzie King was elected Prime Minister of Canada and led Canada’s first minority governmentKing announced that Canada would

now sign its own international agreements

The first was the Halibut treaty of 1923 signed between Canada and the United States

1921-1925Between 1921 and 1925 the

depression in Canada easedAutomobile factories and mines

helped to ease the tensionsWhen King was elected in 1921 he

had promised the Maritimes many things, which he did not live up to

Election 1925King lost much support in the East and as

a result, the election of 1925 saw the Liberals finish second to the Conservatives who failed to win a majority

There was also much pressure from the United States to stop Canadians from selling liquor South of the border where prohibition was still in effect.

Because of this lack of a majority King refused to dissolve his parliament

King-Byng CrisisIt became evident that some of

King’s ministers were protecting the individuals and even profiting off of the illegal liquor sales to the United States

King approached Governor General Lord Byng, and requested that an election be called only months after one had just been held!

King-Byng Crisis cont’d…

Byng refused to concede to King’s demands and rather than face his own party, King chose to resign.

In 1926, Arthur Meighen took over as Prime Minister of Canada, reluctantly because he had not won by election.

The liberals and King argued that there had been a violation of the Constitution

King-Byng Crisis cont’d…

Although no violation of the Constitution arose, King managed to convince the Progressives the Governor General was wrong to not support the PM.

Because the Progressives had originally supported the Conservatives, Byng was forced to call an election.

Sept 14, 1926, King won majority.

BoomThe outcome of the 1926 election

was due in large part to prosperityWorkers in factories North and South

of the border were pouring out radios, refrigerators, cars and other consumer products

Grand hotels were being built across the country drawing American tourists

AmericanizationProsperity came from a

new sourceCanada had formerly

traded East and West with Britain and Asia

Britain could no longer afford to invest in Canada following the war.

The United States had made a lot of money from the war and was looking to Canada as a consumer market, and vice versa

Americanization Cont’d…

Many American companies created branch plants in Canada to avoid tariffs.

Many highways were built linking Canada to the United States, and we began driving on the right side of the road

Air travel, radio, and telephone links began to network into the U.S.

Average work week was reduced from 50-60 hours per week to 44-50 hours increasing leisure time substantially

The Roaring 20’sMore and more powers being turned

over to provincial governmentsWomen voters demanded pensions

for widows, low income mothers, and the disabled

Much of Canada relied on natural resources which fell under provincial jurisdiction.

The Roaring 20’sQuebec, BC, and Ontario were the big

winners under this systemIn 1929 after five years of good times, the

average household income was $1200 dollars.

Canadians read American books and watched American movies

Emergence of service clubs such as Kiwanis and Knights of Columbus

American entertainment at it's finest: what we watched in the 1920's.

The Roaring 20’sA nation of 10 million was buying 2

million movie tickets a weekAmerican pro baseball became the

big pass time in North AmericaThe NHL had 6 teams, (2 Canadian)Artwork became prominent and work

such as that by the Group of 7 and Emily Carr became well known.

Red Maple by A.J. Jackson

Roots of Depression

Canada’s prosperity in the 1920’s had two great flaws:

Most Canadians could not afford the mass goods being produced

Canada was a resource export economy, meaning we were heavily dependent on the world economy

Signs of Sickness

The wheat market had been dominated by Canada for much of the 1920’s however many other countries were now exporting

Drought destroyed much of the 1929 crop in Canada, and wheat prices were falling quickly from $2 to $1.09 per bushel

Black TuesdayEurope had no money to buy Canadian

goodsUS raised tariffs to highest ever to protect

their own goodsCanadian factories began to closeShareholders in companies began to sell

and prices fell quicklyOctober 29, 1929 the stock market

crashed

R.B. BennettThe new Conservative leader in CanadaKing was convinced that Bennett was trying to blame the depression on himMost people thought the depression would

be over in months.King announced that Ottawa had financial

aid for western farmers, but not even a “five cent piece” for conservative supporters.

The Business Cycle• The business cycle is marked by three stages• 1. The first stage is a period of prosperity where the

economy approaches full employment. This stage is often accompanied by inflation as full employment and high income levels drive up the price of labour and goods.

• 2. In stage two the economy slows down bringing about a recession. Few new jobs are created and some jobs are lost, as companies reduce their production of goods and services. This is known as cyclical unemployment.

• 3. The final stage is a period of economic recovery where production increases in response to increased consumer demand. New jobs are created and the cycle starts over.

A depression occurs when the period of economic decline is prolonged and severe. During a depression prices of goods and services fall dramatically. This is known as deflation. Wages also fall. Generally wages fall faster than prices during a depression

An Example of the Economic Cycle

Note how the unemployment always goes up and down, with varying severity.