Causes of the Great Depression

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Causes of the Great Depression by Mind Map: Causes of the Great Depression

1. Underlying Causes

1.1. Dependence on Exports

1.1.1. Canadian Economy relied on exporting resources Wheat from the prairies Newsprint from BC QB ON 80% of Canada's production was exported Farms+Forests+Mines

1.1.2. Canada+USA produced a lot of crops at high prices More countries produced wheat crops More competition in international market wheat was over produced International sales decreased Income dropped

1.2. Debt from the First World War

1.2.1. USA lent many countries money

1.2.2. Protectionism Countries relied on trade with USA to raise money Could not pay debts International trade decreased Countries could not payback loans (Britian and France Relied on Germany for reparation to pay debt

1.3. Speculation and Stock Market Crashed

1.3.1. Companies wanted to expand in 1920s Economy was booming issue shares (or stocks)

1.3.2. Investors bought shares thought companies would do well Stock prices would rise

1.3.3. 1922-1926 Canadian Companies issued 700mil of shares Many investors bought "on margin" buying stocks at 10%

1.3.4. Loans for stock were easy to get high demand drove stocks above value

1.3.5. Investors started to sell stocks make cash profits others followed and sold their stocks Stock prices began to fall

2. Immediate Causes

2.1. Over Production

2.1.1. Produced more goods than sold Economy slowed down

2.1.2. Lowered prices + stockpiled goods

2.1.3. Decrease in production

2.1.4. People lost jobs Not able to afford goods Sales slowed down

2.2. Tariffs and Protection

2.2.1. Close ties with USA Biggest trading partner + largest investor USA economy crashes Canada gets effected Imposed high tariffs

2.3. Economic Edge

2.3.1. Market crashed Many Canadians were affected -not only investors- Companies cut back in production prices of goods dropped people lost jobs

2.3.2. Investors who borrow money went bankrupt