Causes of the Great Depression
Second, there are the monetarists, who believe that the Great Depression started as an ordinary recession, but that significant policy mistakes by monetary authorities (especially the Federal Reserve) caused a shrinking of the money supply which greatly exacerbated the economic situation, causing a recession to descend into the Great Depression. Related to this explanation are those who point to debt deflation causing those who borrow to owe ever more in real terms.
League for Social Reconstruction
The Canadian economy had boomed during the late 1920s and showed no sign of weakness, but during the 1930s the Great Depression swept across Canada and provoked mass unemployment, and this incited the LSR into action. The LSR believed that the roots of the Depression were laissez-faire capitalism and governance, and that the "free" market was anything but. Politicians worked closely with business, securing interest-free loans, developing tariffs, and managing labour disputes; in short: manipulating markets. A small group of political businessmen controlled public policy and economic development, and guided the centralization of finance and power into private hands. Widespread unemployment marked the Depression, and served to underscore financial inequity. In the eyes of the LSR, the problem facing Canada was not an economic depression, it was a corrupt political economy.