The Stock Market Crash

“And we all fall down...”

Stock Market Crash

1920s - Canadians were optimistic about the stock market

To gain greater returns, investors began buying on margin

Sept. 1929 - Some investors sell shares for cash

Late October: number of stocks for sale outnumbers demand

October 29, 1929: BLACK TUESDAY

New York Stock Exchange collapses

Toronto Stock Exchange fails as well

Great Depression begins

Cause or Effect

Was the stock market crash of 1929 the cause of the Great Depression or was it an effect?

What’s the difference between cause and effect?

Causes of the Great Depression

The Single Men's Unemployed Association parading to Bathurst Street United Church, Toronto

Overproduction and Over-expansion

Industries produced too many goods that people couldn’t afford

Companies expanded their manufacturing capacity, producing even more goods than people could buy

Huge inventories piled up

Factory owners started to lay off workers

Unemployed people have no money to buy goods

Canada’s Dependence on a Few Primary

ProductsCanada depended too much on the production of wheat, fish, pulp and paper

Less diversity meant fewer products and a smaller market

Canada’s Dependence on the U.S.

Imported 65% of products from the U.S.

Exported 40% of products to U.S.

When the economy collapsed in the U.S., it had to collapse in Canada

High Tariffs Choked off International TradeProtective tariffs in the U.S. and Europe prevented nations from trading goods with one another

Less goods traded = bigger inventory and more unemployed factory workers

Too Much Credit Buying

Canadians encouraged to “Buy Now, Pay Later” to purchase goods

Led to much personal debt

Too Much Margin Buying of Stocks

Many people bought stocks from various companies because profits were always increasing

Stock Market crash wiped out 50% of all stock value in a few hours

Big and small investors wiped out!