History of Canada - Unit 2 - Lesson 5
Autonomy and the Stock Market Crash
Objectives:
Learn about actions to make Canada a more autonomous nation
Examine the factors leading to the Stock Market Crash
Explore life in Canada during the Great Depression
Requirements:
Item
Greater Autonomy handout
Business Cycle and Economy handouts
Six Factors of the Stock Market Crash handouts
Stock Market Game
Task
5-1
Greater Autonomy for Canada
Read and discuss some of the events in the 1920s bringing
greater Canadian nationhood and autonomy from Britain
(outline attached)
5-2
Stock Market Crash
Examine the ideas of a Business Cycle and American branch
plants
Learn about the factors leading to the Stock Market Crash of
1929. There are six factors (handouts in binder). Working in
teams of three or four, each student group reads and
summarizes one factor. The group reports to the class their
findings. Students take notes. The factors are summarized and
discussed as a class
5-3
Stock Market Game
Play the Stock Market Game (outline attached, stock certificates
in binder)
5-4
Per Capita Income by Province
Use the data in Table 1 to calculate the drop in per capita
income by province from 1928 to 1933.
Interpret the table…How did the Depression impact each
province?
Grade 10 History of Canada – Unit 2 Lesson 5
The Great Depression
29 October 1929 Stock Market Crashes – Black Tuesday
Setting the Stage
FOREIGN INVESTMENT
At the beginning of the 20th Century, Canada’s biggest foreign was Britain. The
British invested in low risk enterprises.
With WW1, British investments slowed and USA investment increased.
Americans invested in rapidly expanding and more high risk areas of Canada’s
economy (e.g., mining, pulp and paper)
Americans took greater control over the Canadian businesses and introduced
branch plants. These plants produced the same products as the American parent
plant. To avoid paying taxes and tariffs, the American marked the products
“Made in Canada”.
What would be the possible positive impacts of American investment? …negative
impacts?
Positive
USA investment would help develop Canadian industries
USA investment provided jobs
USA investment could help develop Canada as a world economic power
Negative
Decisions were made in USA
Top jobs in management were only held by Americans
Profits earned by Canadian branch plants were sets to USA
Fear of economic takeover by USA
Research and development (intellectual wealth) in USA only
Grade 10 History of Canada – Unit 2 Lesson 5
The Great Depression
29 October 1929 Stock Market Crashes – Black Tuesday
Setting the Stage
FOREIGN INVESTMENT
At the beginning of the 20th Century, Canada’s biggest foreign was Britain. The
British invested in low risk enterprises.
With WW1, British investments slowed and USA investment increased.
Americans invested in rapidly expanding and more high risk areas of Canada’s
economy (e.g., mining, pulp and paper)
Americans took greater control over the Canadian businesses and introduced
branch plants. These plants produced the same products as the American parent
plant. To avoid paying taxes and tariffs, the American marked the products
“Made in Canada”.
What would be the possible positive impacts of American investment? …negative
impacts?
Positive
Negative
BUSINESS CYCLES
Note – The Stock Market crash was not the cause of the Great Depression, rather it
was a symptom.
Economic conditions constantly change. When the economy is good, business
grows. When the economy is bad, business declines. The up-and-down swings
are called a Business Cycle.
A Business Cycle
has four stages:
Prosperity,
Recession, Trough
or Depression,
and Recovery.
During the 1920s,
the economy was
in the Prosperity
stage.
As a Recession
set in during the
late-20s, business
began to slow.
Sales began to
fall. Production
slowed and jobs
were lost.
Unemployed
workers had less
money to spend.
As the Recession spread, it became a Depression.
bankrupt. More jobs were lost.
Many businesses went
STOCK MARKET CRASH – BLACK TUESDAY
In the 1920s, many people invested in the Stock Market.
On 29 October 1929, the stock market crashed. There were many reasons for
the crash
Overproduction and Over-Expansion
Canada’s Dependency on a Few Primary Products
Canada’s Dependence on USA
High Tariffs Cut Off International Trade
Too Much Credit Buying
Too Much Credit Buying of Stocks
STOCK MARKET GAME
The aim is to learn about stock losses during Black Tuesday.
Instructions
1. Three students serve as stockbrokers. The brokers set up offices in the corners
of the classroom. Brokers are given a supply of stock certificates and a record
page.
2. Other students are investors. Each investor keeps an expense sheet. Each
investor has $5,000. that they plan to invest in stocks. The investor may spend
any amount of her/his money on one, two or three stocks.
3. The investor cannot sell their stocks between periods until advised. Rather, each
investor records gains or losses.
Period 1 – 1925
Stocks are a hot commodity. Everyone wants to make a fast buck. Without
researching the value of the companies, investors purchase shares in Canadian
companies or branch plants.
In this period, investors must buy stocks. They have five minutes to make
transactions with any stockbroker. All transactions are recorded by the broker and
the investors (e.g., Investor A bought 100 shares of International Nickel @ $25/share.
Investor A spent $2,500 for this stock purchase).
Period 2 - 1927
Two years have passed. The economy is strong. Stocks have increased in value.
By 1927, railway stocks increased annually by 10% as USA investors sought to build
more access to Canada’s west. The value of utility stocks also went up by 15%
annually in this period. Finally, investors were flooding to resource extraction and
metal company stocks. These stocks increased by 25% annually.
Each investor calculates the increased paper value of their stocks and records the
new value on their record sheet.
Investors cannot sell stocks for cash, but they have the option of trading one stock for
another stock.
Period 3 – September 1929
The stock market is showing signs of weakness. Since 1927, railway stocks have
annually lost 5% of their value. However, utility stocks and metal stocks continue to
grow at a healthy annual 5% respectively. Investors decide not to sell their stocks.
Each investor calculates the new paper value of their stocks and records the new
value on their record sheet.
Period 4 – Black Tuesday
The market crashes. Almost instantly, stock prices fall. The volatile metal stocks
lose 75% of their value. Utility stocks also drop significantly. Utility stocks lose 50%
of their value. Finally, railway stocks drop 25% of their value.
Each investor calculates the new paper value of their stocks and records the new
value on their record sheet. If the investor wishes, he/she can sell their stocks back
to the broker at the reduced value
Period 5 – 1932
There are signs of a recovery, but stock values continue to fall at the same rate as
during Period 4.
Each investor calculates the new paper value of their stocks and records the new
value on their record sheet.
Debriefing
a. In September 1929, what would you do as an investor with your profit?
b. How would you feel about your profits?
c. What do you think investors and companies in the real world did with their
profits in September 1929?
d. How did you feel about your losses?
e. What would you do if this were real life?
f. How would your actions impact the economy?
g. Would you start buying stocks in 1932?
Stock Market Game – Record Sheet
Consolidated Steel
Period
Number of
Shares
Initial Value in this
Period
Rate of Increase or
Decrease
Gain or (Loss)
Final Value in this
Period
Number of
Shares
Initial Value in this
Period
Rate of Increase or
Decrease
Gain or (Loss)
Final Value in this
Period
1925
1927
September
1929
October 1929
1932
Maritime Electric
Period
1925
1927
September
1929
October 1929
1932
International Nickel Company
Period
Number of
Shares
1925
1927
September
1929
October 1929
1932
Initial Value in this
Period
Rate of Increase or
Decrease
Gain or (Loss)
Final Value in this
Period
Grade 10 History of Canada – Unit 2 Lesson 5
The Great Depression
Calculate the Percent Decrease in Per Capita Income for each province of Canada between 1928 and 1933.
Table 1. Per Capita Income by Province in 1928-1929 and 1933
Province
1928-1929
Average Per Capita Income
(A)
1933
Average Per Capita Income
(B)
Percent Decrease
(100 – ((B / A)100))
British Columbia
594
314
47
Ontario
549
310
Alberta
548
212
Saskatchewan
478
135
Manitoba
466
240
Quebec
399
220
Nova Scotia
322
207
New Brunswick
292
180
PEI
278
154
Did the Great Depression impact all provinces equally?
Which provinces were most impacted? Provide one reason why you think these provinces were most impacted.