14: Changes to economic policy

Question 1

what were the 5 different views on how to deal with the economic crisis?

Answer 1

• Orthodox
• Keynes’
• Oswald Mosley’s
• Conservative
• Extreme left-wing socialist

Question 2

Who held and shared the orthodox view? (4)

Answer 2

• Held by Philip Snowden
• bankers
• economists
• business men

Question 3

What were the Orthodox ideas? (3)

Answer 3

• Keep to traditional economic policies such as free trade, balanced budgets and the gold standard
• Maintain the confidence of international bankers and traders in Britain by cutting government spending
• Keep the value of the pound based on gold

Question 4

What were Keynes’ ideas? (4)

Answer 4

• The government should borrow money to spend on projects which would provide more jobs
• Employers and workers would be spending more due to wages and profits
• This would increase demand helping industries
• The money in the economy would be used over and over again due to the ‘multiplier effect’

Question 5

What were Oswald Mosley’s ideas? (3)

Answer 5

• borrow money and spend more on roads, schools, hospitals and services. This would provide jobs and better facilities at lower costs
• Introduce tariffs to protect jobs
• Increase pensions and benefits to boost consumption

Question 6

What were the Conservative ideas?

Answer 6

Orthodox ideas except they argued for protection instead of free trade

Question 7

What were the extreme left-wing socialist ideas? (2)

Answer 7

• Capitalism was collapsing

- Governments should not try to save it but use the collapse to create a socialist economy and society

Question 8

When was the other run on the pound?

Answer 8

September 1931

Question 9

Why was there another run on the pound?

Answer 9

Investors heard of a mutiny among naval troops protesting against pay cuts at Invergordon in Scotland

Question 10

What happened to the gold reserves and what did the Governor of the Bank of England decide to do?

Answer 10

• The reserves were depleted

- The gold standard would have to be suspended

Question 11

How much did the pound devalue by?

Answer 11

30%

Question 12

How did the devaluation of the pound affect British exports?

Answer 12

British exports turned out to be cheaper and easier to sell

Question 13

Why was the effectiveness of the suspension of the gold standard limited? (2)

Answer 13

• Other currencies also left the gold standard and they depreciated in value too
• Many countries introduced protective tariffs which made exporting difficult

Question 14

What did coming off the gold standard do for the government?

Answer 14

They no longer needed to maintain the value of the pound which required high interest rates to attract investors to put money into Britian

Question 15

What were interest rates reduced from (1931) and to (1932)?

Answer 15

• 6%

- 2%

Question 16

What was the policy off lowering interest rates called?

Answer 16

cheap money

Question 17

How did cheap money help the recovery?(2)

Answer 17

• Making it easier for industries to borrow money to invest in modern machinery
• Making it easier for consumers to borrow money on mortgages to buy houses

Question 18

Due to the private house-building boom, how many homes were built in the 1930s?

Answer 18

2 million

Question 19

What did house building provide? (3)

Answer 19

• work
• demand for furniture and fitting
• a revival in the construction industry

Question 20

What were the limitations of the private house-building boom? (3)

Answer 20

• The houses were built mainly for the middle class who were more likely to have steady jobs and so could take advantage of the cheap mortgages and low prices
• The houses were mostly built by the private sector
• There was much less local government house building

Question 21

How many council houses were built in total between 1931 and 1940

Answer 21

700,000

Question 22

What were the Conservatives united in belief about?

Answer 22

the introduction of tariffs could make a real difference to Britain’s economy

Question 23

What did Chamberlain introduce in 1932 and what did it do? (2)

Answer 23

• Introduced the Import Duties Bill

- imposed a general duty of 10% on all goods entering Britain

Question 24

What were the believed benefits of exempting goods from the British Empire from tariffs?

Answer 24

-Empire would become a self-supporting economic unit enjoying free trade within its borders but protected from the outside world by tariffs

Question 25

When was the Ottawa Conference?

Answer 25

July and August 1932

Question 26

What happened at the Ottawa Conference?

Answer 26

• Dominions such as Australia and Canada expressed concern that the free trade would mean that their own industries suffered in the face of competition from British goods
• A series of trade agreements were made so that Britian