1930s AP History Study Guide

1930s AP History Study Guide

• Overproduction and Overexpansion:

  • Agriculture and industry production reached high levels in the 1920s.
  • Factories added to capacity, creating massive supplies of goods.
  • Goods stockpiled in warehouses due to low consumer purchasing power.
  • Factories reduced production, leading to layoffs and further economic downturn.
  • Canada overproduced houses in Toronto (43%) and Los Angeles (9%).

• Canada's Dependence on Primary Products:

  • Canada's economy heavily relied on a limited number of staple products (wheat, fish, minerals, pulp and paper, oil).
  • Strong world demand for these resulted in economic prosperity.
  • Surplus of goods and decreased foreign demand negatively impacted Canada's economy.
  • Maritime provinces (fishing) and western provinces (wheat) were particularly vulnerable to fluctuations in demand.

• Canada's Dependence on the US:

  • Canada relied on the US for 65% of its imports.
  • 40% of exports went to the US.
  • The US was Canada's largest trading partner and primary source of investment funds.
  • The worsening economic conditions in the US had a severe impact on Canada's economy.

• High Tariffs Choked International Trade:

  • Europe struggled to recover after World War I.
  • European demand for goods was hampered by significant debt.
  • Many adopted protectionist policies, imposing high tariffs on foreign goods.
  • This hindered global trade significantly.

• Too Much Credit Buying:

  • Easy access to credit led to widespread consumer debt.
  • Canadians bought goods with small down payments and high monthly interest.
  • Often, the cost of goods exceeded the value.
  • Defaults and repossessions became common during the depression.
  • Stock market investments were also bought on margin, leading to risky debt and financial ruin when values decreased.

• October 1929 Stock Market Crash:

  • Stock prices rapidly decreased in October 1929.
  • Investors panicked and sold their shares.
  • Millions in value lost through stock plummeting.
  • Deepening economic crisis led to the Great Depression.

• Economic Prosperity (Pre-1929):

  • Post-World War I, increased consumer incomes allowed for higher spending.
  • Mass production techniques lowered manufacturing costs and increased accessible goods.

• Depression Characteristics (Post-1929):

  • Decreased demand for goods.
  • Reduced production.
  • Fewer sales.
  • High unemployment.
  • Loss of profit.
  • Reduced purchasing power.

• Canadian Prime Ministers (1930s):

  • R.B. Bennett:
    • Faced criticism for ineffective response to the Great Depression.
    • Believed in fiscal conservatism with little interventionist strategies, including limited social welfare programs.
    • Introduced unemployment relief camps.
  • Mackenzie King:
    • Elected after Bennett, focused on gradual economic and social reform.
    • Reluctant to intervene initially but later implemented public works programs and social welfare reforms.
    • Supported creating the Bank of Canada to stabilize the economy.