The Economic BOOM!of the 1920s

But before life got better, it wasn’t great.

A look at Canada’s economy before the boom.

Post-War Problems

#1: Prohibition Ban on Alcohol. Seen as the root of many other problems#2: Labour Unrest When WW1 ends, many munitions factories

closed down Women were under pressure to return to

household duties Thousands of returning soldiers were looking

for work

Labour Unrest Even people who did have jobs were not

much better off: why? Rapid Inflation: prices of basic items (food,

clothing) had increased greatly, but wages had not increased at all! The cost of living had more than doubled from

1914 to 1919! Soldiers, and other workers, wanted to create

unions who would fight with/for them for better job conditions

The Country Strikes

In 1919, workers across the country staged strikes

Miners, steelworkers Cape Breton Machinists Toronto Loggers West Coast Streetcar drivers Windsor None of these strikes were so big as the

Winnipeg General Strike of 1919

The Winnipeg General Strike

May 1919-June 1919 Building and metal trade

workers voted to strike To show their support, 30 000

other workers in Winnipeg walked off the job!

“general strike”: almost all industries and key services were shut down Streetcar operators, garbage

collectors, postal workers, telephone operators, firefighters, and hydro workers all refused to work

The Winnipeg General Strike

Ottawa sends Mounties to Winnipeg to put down the strike

Bloody Saturday: June 21 Violence erupts! Mounties charge a parade

(demonstration) Shots are fired One striker is killed Strike leaders are arrested

and sentenced to jail terms

The Winnipeg General Strike

Together, government, factory owners, and the Mounties had defeated the strikers.

Strikers are forced to go back to work Some are forced to promise not to become a

union member or be involved in union activities

Others were not welcomed back to their job

The Results of the Strike

Draws attention to the social and economic conditions faced by many working people

A royal commission is appointed to investigate the causes of the strike

The commission comes up with 3 reasons: High cost of living Poor working conditions Low wages

Labour leaders turn to politics they want their voices heard!

The BOOM!

Gradually, life started to get better for most Canadians, especially by the mid-1920s

Business picked up because foreign investors gained confidence in Canada

In regions across Canada, industries were growing!

Industry #1: Wheat on the Prairies From 1925 to 1928, the

prairies enjoyed huge wheat crops

War-torn Europe – which had previously made its own – was struggling and wanted Canadian wheat

The world price for wheat also moved up steadily

Farmers traded their horses for tractors, adding more and more machinery

Co-Operatives

Co-operatives are businesses owned by farmers.

Why is this beneficial? Their goal was to loan money to other

farmers at lower interest rates than eastern Canada bankers charged

Wanted to sell seed, grains, cattle, and dairy products so that they could skip the middle man and make more profit

Industry #2: Pulp and Paper 1920s: production of newsprint

became Canada’s largest industry after agriculture

Forests of softwood were used to make newsprint

Most of the American sources had been used up = giant market for Canadian pulpwood

Results: lots of money, but Canada’s forests are being destroyed

PROBLEM!

Canada’s economy is become more and more dependent on the export of raw materials.

Why is this a problem?

Industry #3: Hydroelectric Power Quebec and Ontario are big

producers Niagara Falls had been

used for power since 1895 Rivers were now developed

as resources for water power

Industries were turning to hydroelectric power instead of coal

People wanted electricity for their homes

Canada’s output for hydroelectricity became second in the world

Industry #4: Oil and Gas

Nicknamed the “Oil Age” More Canadians are driving automobiles, so

the demand for gasoline and oil soars Oil and gas are always being used for

heating and cooking October 1924: oil speculators in Alberta

struck it rich Produced a million barrels of oil and large

quantities of natural gas

Problem!

What was used for energy before oil and before hydroelectricity?

Coal! Where was that being

produced in Canada? The Maritimes! To whom were they

now selling their coal? They weren’t…

Industry #5: Mining Large deposits of copper were

found in the Canadian Shield along the Ontario-Quebec border and in northern Manitoba

Sudbury, ON: producing almost 80% of the world’s nickel

BC was a top producer for lead and zinc

Many of these rich mining deposits were developed with American financing

Foreign Investment in Canada At the beginning of the 20th century, Canada’s

biggest foreign investor was…? Britain! Bankers from Britain had invested in

Canadian government bonds and railroads. They did not invest in industries much because they didn’t think they’d make any money.

WW1: British investment slows down

Someone else steps in, though…

The U.S.! Americans wanted to

invest in the rapidly expanding areas of the Canadian economy – the industries

Difference in Investors

British investors usually left Canadian business people to run the businesses in their own way

American investors took greater control over the industries

They introduced the Branch Plant System Branch industries are copies of the American parent

company Produce the same product as the parent, but they get to

have a special stamp: “Made in Canada” Parent company then does not have to pay such high taxes

Branch Plant System

Good thing: Essential to develop

industries Provides jobs Help Canada develop into

a powerful nation

Bad thing: “Americanization” Important decisions made

in the US instead of Canada

Top management jobs = Americans

Profits sent back to the US Complete economic

takeover?

Branch Plant System – a Diagram U.S. Parent Company

Canadian Branch

CompanyP

rofi

ts

Important Decisions

Management Jobs

Foreign Investment Money

Research & Development

Jobs Taxes CDN Products

Questions

1. Why did Americans invest in Canada in the 1920s?

2. Correctly use the following terms in a sentence:

1. Branch plant2. Taxes3. Parent company

3. Complete a pros and cons chart for American Investment in Canada based on your opinion.