14: The depression and financial crisis

Question 1

What did the USA do to protect their own goods?

Answer 1

Put up high tariff barriers

Question 2

How did the USA tariff barriers affect Britain? (3)

Answer 2

• British manufacturers could no longer sell their goods to America
• Some manufacturers were bankrupt causing loss of jobs
• The loss in trade stopped Britain’s income to pay off debts

Question 3

What did the USA call in?

Answer 3

All their loans made after the war

Question 4

Give a country that was affected by the economic crisis, and why was this a problem for Britain? (2)

Answer 4

• Italy

- They were unable to pay back the money Britain had given during the war

Question 5

What did unemployment rise to and by when? (2)

Answer 5

• 3 million

- 1931

Question 6

Why did government revenue fall sharply? (2)

Answer 6

Because fewer people were paying taxes while government expenditure rose due to the costs of unemployment benefits

Question 7

What did banking failures coincide with?

Answer 7

Balance of payments deficit

Question 8

What did the recommendations of the May report cause? (2)

Answer 8

A further crisis in the confidence of sterling and there was a run on the Bank of England

Question 9

What did foreign investors begin to do and when? (2)

Answer 9

• July 1931

- Began to withdraw gold at the rate of £2.5 million a day

Question 10

What did the bank do and when? (2)

Answer 10

• 1 August 1931

- Began to borrow money from French and American banks