From Boom to Bust Election of 1921 Mackenzie King was elected Prime Minister of Canada and led Canada’s first minority government King 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 1921-1925 Between 1921 and 1925 the depression in Canada eased Automobile factories and mines helped to ease the tensions When King was elected in 1921 he had promised the Maritimes many things, which he did not live up to Election 1925 King 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 Crisis It 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. Boom The outcome of the 1926 election was due in large part to prosperity Workers 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 Americanization Prosperity came from a new source Canada 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’s More and more powers being turned over to provincial governments Women 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’s Quebec, BC, and Ontario were the big winners under this system In 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’s A nation of 10 million was buying 2 million movie tickets a week American pro baseball became the big pass time in North America The 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. 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 Tuesday Europe had no money to buy Canadian goods US raised tariffs to highest ever to protect their own goods Canadian factories began to close Shareholders in companies began to sell and prices fell quickly October 29, 1929 the stock market crashed R.B. Bennett The new Conservative leader in Canada King was convinced that Bennett was trying to blame the depression on him Most 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.