1b: Post war boom, crisis and recovery - 1918-1939

Question 1

How much had the war cost Britain and what did this mean?

Answer 1

£3.25 billion.
The war had lasted longer and used up more resources than was expected.
Debt was = to 136% of 1919 economic output.

Question 2

How many men had died and how did this affect the economy?

Answer 2

750,000

This massively depleted the workforce.

Question 3

Why did exports fall and by how much did they?

Answer 3

Exports fell from 1/3 of total wealth to 1/5.

This was because 40% of merchant ships had been sunk and because industries moved to war production.

Question 4

What did Wall Street loans mean for the UK?

Answer 4

It meant debt would only increase.

Question 5

What was the issue with imports after WW1?

Answer 5

We imported the same amount as the pre-war years but were not exporting the same amount.
This led to balance of payments problems.

Question 6

What was debt looking like in 1920?

Answer 6

£8 billion - 3/8 of the budget went to debt repayment.

Question 7

How much did income tax rise by and why?

Answer 7

1908 = 5%
1924 = 25%
Necessary to repay debts.

Question 8

What followed the brief 1919/20 boom?

Answer 8

Two recessions: 1920/21 + 1929/30

These hit areas of heavy industry the hardest.

Question 9

What did unemployment average from 1921-1938?

Answer 9

Persistently high at 10% - this was double pre-war years.
It did decline in times of recovery but remained high in declining industrial areas.
Unemployment in coal-mining areas in Wales = 80%.

Question 10

What type of industries grew and where?

Answer 10

1934-1939: Rise of light industries in the south-east and the midlands.

Question 11

Boom:

Why was there a boom?

Answer 11

People had saved money during the war - result of rations and restrictions.
1919: Consumers and businesses spent savings.

Question 12

Boom:

What type of boom occurred?

Answer 12

A speculative boom:
New shares increased - 1918 = £65 mn
1920 = £384 mn.
This meant money poured into London.

Question 13

Boom:

What did share owners buy into?

Answer 13

Old industries under the assumption shipping would return to pre-war levels.
The industries were outdated and uncompetitive.

Question 14

Boom:

Why did the boom lead to recession?

Answer 14

Industries couldn’t keep up with demand so prices rose.

As prices rose, demand fell.

Question 15

Recession:

What did unemployment rise to?

Answer 15

12%

2 million unemployed in 1921.

Question 16

Recession:

What happened to old industries and what did this lead to?

Answer 16

Old industries collapsed.

Areas (Wales and Tyneside) became depressed and it led to strike action.

Question 17

Recession:

How much did the cost of living increase between 1918 and 1920?

Answer 17

25% - wages stagnated, fuelling industrial unrest.

Question 18

Recession:

How many days were lost to strike action in 1921?

Answer 18

84 million.

Result of high prices and low wages, NOT REVOLUTION.

Question 19

Why was there a Miners’ Strike in 1921?

Answer 19

Wages had been cut and hours lengthened due to return to private hands - impossible to find another job.

Question 20

What was Black Friday?

Answer 20

Railwaymen and dockers abandon the triple alliance - the strike collapses.

Question 21

What was the result of the Miners’ Strike?

Answer 21

They suffered a pay cut.

Wages were 20% lower than 1914.

Question 22

Recession:

What was deflation?

Answer 22

Govt cut spending by 75% (1918-1920)
and
Interest rates rose to 7% - this made borrowing expensive.

Question 23

Recession:

What was the result of deflation?

Answer 23

The measures did not work and debt increased.

120% —-> 160% of GDP.

Question 24

Recession:

Did Britain dominate the global economy?

Answer 24

Not anymore.
Foreign companies dismantled, resulting in a loss of British export trade.
Japan supplied textiles to South Asia meaning a decline in the NW textile industry - loss of jobs.

Question 25

Recession: | How did pre-war underinvestment cause problems?

Answer 25

UK steel produced significantly less than rivals. | 1920: UK manufacturers were importing American steel as it was cheaper and better quality.

Question 26

Recession: | In 1937, how much steel did Britain produce compared to its rivals?

Answer 26

``` Britain = 83k tonnes per year. USA = 210k Germany = 125k ```

Question 27

Solving issues, 1921-1924: | What did DLG implement to appease the middle classes?

Answer 27

Retrenchment: The Geddes Axe cut £87 million in 1922/23 in order to cut tax. This mainly came from the military but key welfare was cut from £205 mn to £182 mn.

Question 28

Solving issues, 1921-1924: | What divided the Tories, leading to their downfall in the 1923 election?

Answer 28

Protectionism vs Free Trade. | Baldwin wanted protectionism and called an election to get a mandate from the public.

Question 29

Solving issues, 1921-1924: | Did MacDonald manage to improve unemployment as he promised?

Answer 29

No. A lack of a majority meant he couldn't spend money to create jobs. Further, he wanted to show the labour party as being moderate and fit-to-rule.

Question 30

Solving issues, 1921-1924: | What happened to unemployment in this period?

Answer 30

It went down from 12% to 6.5% but began to rise under MacDonald, hitting 8% in 1925.

Question 31

Solving issues, 1921-1924: | What happened to inflation?

Answer 31

It fell from 15% in 1920 to <1% in 1924. | DUE TO SPENDING FALL AS A RESULT OF UNEMPLOYMENT, NOT THE GOVT.

Question 32

Baldwin, 1924-1929: | What was the Gold Standard blunder?

Answer 32

Export prices were kept high, making them uncompetitive. This led to wage and hour cuts - employment almost as bad as unemployment.

Question 33

Baldwin, 1924-1929: | Was the pound devalued by the Gold Standard?

Answer 33

NO. Keynes: It was 10% too high. As this and interest rates were too high, businesses could not borrow and expand, thus not creating jobs.

Question 34

Baldwin, 1924-1929: | What was Churchill's reasoning for keeping the pound high?

Answer 34

1) Prestige. | 2) The economy couldn't be competitive if things were made easy for manufacturers.

Question 35

Depression, 1929-1934: | The USA was the largest importer so how did the Crash affect Britain?

Answer 35

``` Global trade shrunk by 60% over next 5 years. UK exports (which were worth 1/3 of GDP) fell by 50%. ```

Question 36

Depression, 1929-1934: | What was the result of the collapse in global trade?

Answer 36

Heavy industries further declined. Unemployment rose from 1 mn in 1929 to 2.5 mn in 1930. The rise in unemployment meant tax revenue went down but govt financial assistance would need to go up.

Question 37

Depression, 1929-1934: | What happened to the UK economy and why?

Answer 37

1931: Economy shrank by 5%. | This was due to the commitment to the Gold Standard - low spending, high interest rates.

Question 38

Depression, 1929-1934: | What did Snowden want to do to improve things?

Answer 38

Tax the rich but was unable to.

Question 39

Depression, 1929-1934: | What was Keynes' suggestion?

Answer 39

Spend money on PWS to create jobs. | Snowden refused as the pound would drop and upset bankers w/ bonds.

Question 40

Depression, 1929-1934: | What brought the Labour govt down?

Answer 40

Rumours that the 1931 budget would be unbalanced led to pound panic selling. Labour proposed spending cuts to reassure financiers and help value - 10% cut in unemployment assistance.

Question 41

Depression, 1929-1934: | What did the National Govt do in September 1931?

Answer 41

Abandoned the Gold Standard.

Question 42

Depression, 1929-1934: | Did the National Govt implement Labour's cuts?

Answer 42

Yes. Public sector workers' wage cut 10%. National Economy Act, 1931 included means testing for unemployment assistance.

Question 43

Depression, 1929-1934: | What was the National Economy Act, 1931?

Answer 43

1 - Disqualified short term workers creating a poverty trap and hurting those in depressed areas. 2 - Benefits could only be claimed for 6 months before reapplying. 3 - Means testing for help after 6 months - had to sell everything as all income taken into account.

Question 44

Depression, 1929-1934: | What did the National Economy Act lead to?

Answer 44

Families needed to break up. | Unemployed parents didn't get benefits in employed children lived with them.

Question 45

Depression, 1929-1934: | What was the Special Areas Act (1934)?

Answer 45

It gave direct assistance but was too little too late. | Slight investment - Steel Works in Ebbw Vale.

Question 46

Depression, 1929-1934: | What was the result of govt action?

Answer 46

Hunger marches - National Unemployed Workers' Movement with the CPGB. 1936 Jarrow Crusade.

Question 47

Recovery, 1934-1939: | What did coming off the Gold Standard enable?

Answer 47

Economic growth - could recover quicker than others.

Question 48

Recovery, 1934-1939: | What examples demonstrate growth (1932-1937)?

Answer 48

Real incomes rose 19%. Industrial Production up to 46%. Unemployment down from 18% to 7.5%.

Question 49

Recovery, 1934-1939: | What was economic growth between 1934 and 1937?

Answer 49

4% a year.

Question 50

Recovery, 1934-1939: | What was the impact of inflation?

Answer 50

It stimulated the economy. | Money on road building boosted car industry.

Question 51

Recovery, 1934-1939: | What did devaluation mean?

Answer 51

Exports became cheaper and more competitive.

Question 52

Recovery, 1934-1939: | What did a cut in interest rates mean?

Answer 52

A housing boom - invest instead of save. Mainly in the south. 1931/32 - 133,000 houses built. 1934/35 - 293,000 houses built.

Question 53

Recovery, 1934-1939: | What did a restructuring of war debts mean?

Answer 53

Money could be invested elsewhere. | 25% of tax, not 40%.