Causes Of The Great Depression In Canada

It is estimated that during the 1930s, a Canadian earned only one dollar a day, but people still thought it was a high wage and desired it very much. Actually, this is ascribed to the Great Depression, which, as the name suggests, is considered “the longest and most severe depression ever experienced by the industrialized Western world”(“Great Depression”,2018). The most important cause for it is certainly the high tariff, as it exacerbated the unemployment and debts problems, and is the root of many other causes leading to the Great Depression.

First, the high tariff increased the unemployment rate to a great extent in Canada. Due to the Smoot-Hawley Tariff implemented by the USA around 1929, “about 900 import tariffs were increased by an

Raw materials like steel and aluminum were among the goods that were put on high tariff, and consequently, products that were made of or contained steel and aluminum such as automobiles, refrigerators and even canned drinks all experienced soaring prices in Canada. This made people hardly have the capability to afford them. Companies could not sell their products well, so they cut production and fired workers working in the steel and aluminum field accordingly, which raised the unemployment rate. In addition, the Smoot-Hawley Tariff of the USA could also trigger the high tariffs of many other countries including Canada, mainly because they were dissatisfied with spending more money importing American goods, and they also used high tariffs as a way of revenge. This made the International trade almost experience a decrease of 30% , as countries all retreated from their business partners due to the pretentious import prices. Canada had a severe problem exporting their products such as paper and pulp,

During the 1920s, Canada was a country that depended heavily on the exports of certain agricultural products such as wheat. They sold 80% of the total amount of wheat to other countries, and among these, a half were exported to the USA. However, Canada decided to impose high tariff on wheat at that time, which made other countries less willing to import wheat from them. It is estimated that the trade between Canada and countries globally “fell by roughly a third and trade with the United States fell more than a half” (“Trade, Relative Prices, and the Canadian Great Depression”, 2016 ). Farmers could not sell their wheat well, so they did not have a source to earn enough money. They did not have purchase power, but they still needed to afford their daily expenses as well as buy seeds to try to grow crops, which was the only way for them to survive. As a result, they began to borrow money from the rural banks and purchase seeds on debts. Since the high tariff was still carried on, there was not any improvement in the foreign trade, so it became impossible for the farmers to have a higher income and pay back their debts. Farmers continued to borrow, and were also charged certain amount of interest on their debts, which caused them to owe more and more money. Besides, when Canada imposed high tariff on their goods, the decreasing export rate had a devastating effect on “Canada’s Gross National Product which fell 43