1 post-war boom, crisis, and recovery 1918-1939

Question 1

1918 economic damage

Answer 1

• gov thought war would be shorter
• wall st loaned Britain money
• German U boats sank 40% of British merchant shipping
• country lost 750,000 men
• total cost: £3.25b

Question 2

what did the decline of pre-war imports mean

Answer 2

negative balance of payments through the 1920s. By 1920, total british debt was £8b, the same year the annual budget came to £800m, but £300m went straight to debt repayment

income tax rose 25% from 1908-1924 to pay for debt

Question 3

after the post war boom..

Answer 3

2 recessions: 1920-1921, and 1929-1934.
Unemployment remained high even through the boom, it remained 10% of the working population between 1921-1938.
there were periods of recovery after recessions, in the mid 1920s consumer demand increased and unemployment declined in areas of prosperity (not in declining industrial areas…)

Question 4

post war boom

Answer 4

wartime restrictions meant people couldn’t spend as much

through 1919, consumers bought luxury items that were previously rationed (coffee, soap, clothes)

Buisiness issued new shares, so more money went to the London stock market than any time in history

total amount of new shares increased from £65m in 1918 to £384m in 1920

Question 5

recession 1920-1921

Answer 5

UK wasn’t the competitor it once was, with USA Japan and South America taking over, Britain recieved little investment over the years

global trade also didn’t return to pre-war levels as predicted.

British wartime machinery was outdated, Goods were expensive and in short supply.

Unemployment increased to 12%, cost of living 25%

Question 6

how many workers unemployed in 1921 in industry declining areas

Answer 6

2m in Tyneside and South Wales, dperessed as old industries like coal and ship building

Question 7

Factors which led to the recession

Answer 7

1. deflation: gov cut spending 75% 1918-1920, Bank of England raised interest rates by 7%
   it became very expensive to borrow money
   drained money available for economic spending

Question 8

factors which led to the recession:
2. loss of export trade
foreign manufacturing took advantage of the fall in british trade

Japan supplied india and SE asia with cotton/silk instead of Britain

Answer 8

factors which led to the recession:
3. underinvestment

output in steel lower than Britain’s rivals
1937: British steel industries producing 83,000 tonnes per year, americans producing 210,000 tonnes, Germany producing 125,000 tonnes