Answer: 
What impact did Natural Resources have on the Canadian economy? What impact did Electricity have on Canadians?
What impact did the Automobile have on Canada?  What impact did foreign investment have on Canada?
using this info : Chapter 2: The Boom Years 
59 
A Booming Economy 
During the early decades of the 1920s, few could have predicted the booming economy that lay ahead. In 1923, unemployment was at 17 per cent. Inflation was eating up people's life's saving. Exports to war-ravaged Europe were on the decline. It appeared to be a gloomy economic forecast. 
Natural Resources 
In 1924, however, the economy began to improve. Canada's abundant supply of forests, minerals, water, and fertile land fuelled this economic growth. 
Agriculture 
The Prairie provinces enjoyed bumper wheat crops from 1925 to 1928. As agri- cultural prices climbed higher, farmers invested their profits by buying trucks, harvesters, and other equipment. In many areas, farmers organized wheat pools and co-operatives to help market their wheat, cattle, and dairy products. 
Pulp and Paper 
Supplying newsprint to the United States became Canada's second largest industry. From Nova Scotia to British Columbia, vast forests of spruce, pine, and poplar trees were cut down to supply the growing newspaper and magazine business south of the bor- der. By mid-decade, Canada was the world's largest supplier of newsprint. The major producers of pulp and paper were Québec, Ontario, and British Columbia. Six companies controlled 86 per cent of the Canadian market. 
Mining 
The Canadian Shield yielded large deposits of nickel, copper, gold, silver, lead, and zinc. In 1929, mines in Sudbury produced 80 per cent of the world's 
nickel. Copper flowed out of the mines at Noranda, Québec, and Flin Flon, Manitoba. Zinc and lead were unearthed from one of the world's largest mines in Kimberley, BC. The demand for these and other metals steadily increased as more and more automo- biles and electric appliances appeared on the market. 
Energy 
The tremendous growth in the auto- mobile industry increased the demand for gasoline and oil, which were also used for heating and cooking. In 1924, "black gold" was found in Turner Valley, south of Calgary. Alberta was soon providing 90 per cent of Canada's petroleum exports. 
The huge amount of power required for mining and smelting (extracting metal from ore by melting) led to a dramatic increase in the production of hydroelectricity. In addition to Niagara Falls, fast-flowing rivers such as the Saguenay and the Saint-Maurice in Québec were harnessed. Canada became the second-largest producer of hydroelectric power. 
Consumer Goods 
By the mid-1920s, a mood of gaiety and optimism had set in. People found jobs and began to buy consumer items. There was now a large variety of new consumer goods to choose from: electric stoves, refrigerators, and vacuum clean- ers, cars, toothpaste, radios, and sliced bread. The growth of cheap electricity brought new comforts for middle- and upper-income Canadians. Every mag- azine carried ads for products made by General Electric, Westinghouse, Kodak, and Hoover. Large chain stores such as Dominion, Loblaws, Woolworth's, and Eaton's sold groceries, fashions, phonographs, radios, wristwatches, and hair dryers. 
"As public awareness of the immense economic, social, and political ramifications of hydro- electric development increased in the early 20th century, most provincial governments enacted legislation nationalizing private electric companies, thereby ensuring that the benefits of hydro power flowed to their taxpayers rather than to 
utility owners." 
-Keith R. Fleming, The Oxford Companion to Canadian History, 2004 
Chapter 2: The Boom Years 
61 
The Automobile 
crops 
By the 1920s, the automobile had rev- olutionized society. Cars changed peo- ple's lifestyles. They allowed friends and family to visit more often. They enabled farmers to come to town to sell their and buy consumer goods. They made travelling to summer cot- tages possible. They also had a pro- found impact on the physical patterns of cities, allowing them to spread farther out from the urban centres. In 1920, 1 in every 22 Canadians owned a car. At the end of the decade, this figure was 1 in every 8.5. 
Economic Impact 
The automobile had a major impact on the economy. By 1929, more than 16 000 workers had jobs assembling cars. Oshawa, Windsor, and Walkerville were thriving automobile manufactur- ing centres. Thousands of other work- ers manufactured tires and auto parts. The rising demand for materials such as rubber, iron, leather, asphalt, lead, 
gasoline, paint, tin, and glass boosted these industries. Every town had an automobile dealership, gas stations, and repair shops. The growing number of car accidents also led to expanded police forces. New roads required engineers and labourers. Motels and roadside restaurants multiplied. American tour- ists, most of whom came by car, added more than $300 million to the Canadian economy in 1929. 
Canada became the second-largest automobile manufacturer in the world. At one time, about 70 companies, many of them Canadian, sold cars in Canada. Soon, however, the Canadian compa- nies were absorbed by American firms. By 1926, only one Canadian car com- pany remained. By 1929, two-thirds of all cars sold in Canada were manufac- tured by Ford, General Motors, or Chrysler. 
Foreign Investment 
To finance their growth, companies raised money by offering bonds or shares. 
"I resent their presence, I wanted to think that there was one place in 
the world where the strident honk-honk of a car horn could never jar on the scented air." 
-Lucy Maud Montgomery, author, on the automobile coming to PEI 
"Automobile technology has been a prime factor in the social and eco- nomic transformation of modern Canadian society. The automobile industry is a bellwether 
for the economy as 
a whole. The very shape of our cities, our neigh- bourhoods, and even our dwellings has been dictated by the presence of the automobile." 
-Douglas Leighton, The Oxford Companion to Canadian History, 2004 
Figure 2.12 This was an assembly line at a Canadian car factory about 1925. By 1926, 55 of Canada's 70 auto and auto parts factories were located in Windsor. Locate Windsor on a map. Why do you think Windsor was the automobile capital of Canada? 
62 
Unit 1: Forging a Canadian Identity: 1914-1945 
"At this rate, American capital will soon run Canada and Canadians. It's the direct result of the folly of our wartime spending spree. We wanted to play the part of a grand nation: we've gone bankrupt to save 'civilization' and 'democracy.' We are now at the mercy of our neighbours." 
-Henri Bourassa, Québec politician, Le Devoir, 1925 
Foreign Capital Invested in Canada, 1900-1930 
Britain 
US 
14%. 
1% 
85% 
5% 
23% 
72% 
3% 
1900 
1914 
44% 53% 1920 
3% 
53% 
44% 1926 
3% 
36% 
61% 
1930 
Other 
Source: J. Bradley Cruxton and W. Douglas Wilson, Spotlight Canada, 4th edition (Don Mills: Oxford University Press Canada, 2000), 153. 
Figure 2.13 These pie graphs show foreign capital invested in Canada between 1900 and 1930. During which period did American investments increase most rapidly? Why? 
The First World War changed invest- ment patterns in Canada. Earlier, British financiers had invested in Canada by buying bonds. Unlike shares, bonds do not involve owner- ship but provide guaranteed interest payments. American investors pre- ferred to buy shares in natural resource companies. By 1930, American firms controlled 20 per cent of Canada's industries, rising to 40 per cent in such key sectors as mining, smelting, and petroleum. As Figure 2.13 illustrates, American investments surpassed Brit- ain's by 1926. 
To avoid paying tariffs on goods they exported to Canada, some Amer- ican companies established branch plants in Canada. Although these firms were run by American managers and returned profits to the home office, they produced "made in Canada" goods and thus avoided pay- ing tariffs. By the end of the decade, Americans owned 82 per cent of Canada's auto production, 68 per cent of the electronics industry, 64 per cent of rubber, 42 per cent of machinery, and 41 per cent of chemical production. Economically, Canada was becoming tied to the United States. Serious con- cern about foreign investment lay many years in the future. 
The Bust 
The tremendous economic growth con- vinced almost everyone that good times were here to stay. Canada's stock mar- kets were booming. From 1921 to the autumn of 1929, share prices tripled. Every day, the newspapers were full of stories about people making a fortune on the stock market. Each share represented ownership of the company. The amount this share was worth depended on how many people wanted to buy it. The more popular it was, the more it was worth. From 1925 to 1929, it seemed as if every company's shares had increased in value. With secure employment and ris- ing salaries, small and large investors speculated that prices would continue to rise. Billions of dollars were invested in the market as people bought on mar- gin—purchasing stock with a small down payment and borrowing the rest based on the value of the stock as collat- eral. They expected to pay off their loans by selling the shares at a profit. 
Credit was easy to get. Many investors committed their life savings, mortgaged their homes, and cashed in safer investments to make a fast buck in the market. Even banks, wanting to increase profits, speculated danger- ously. As you will discover in Chapter 3, however, it all came to a swift end on Black Tuesday-the "crash heard around the world."