From Boom to Bust
Election of 1921
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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
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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
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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
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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…
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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…
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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
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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
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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…
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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
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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
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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
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American entertainment at it's finest: what
we watched in the 1920's.
The Roaring 20’s
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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
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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
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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
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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
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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
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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.
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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.
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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
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An Example of the Economic Cycle
Note how the unemployment always goes up
and down, with varying severity.