Britain: A changing political and economic environment. Flashcards

Question

What was the peace ballot and pledge?

Answer 1

In 1934, millions of householders were asked their opinions on war and security. This Peace Ballot was organised by the League of Nations Union. The 11 million people who answered the questions made it clear that they supported the idea of 'collective security’, (Under a collective security arrangement, an aggressor against any one state is considered an aggressor against all other states, which act together to repel the aggressor.) The Peace Ballot was followed by the Peace Pledge Union. organised by Father Dick Sheppard, the Cannon at St Paul's Cathedral. Over 100,000 men and women sent Sheppard postcards pledging to oppose war.

Answer 2

By 1935 Ramsay MacDonald was very unwell and was forced to step down. He was replaced by Baldwin who became prime minister for a third time and called a general election in October that year. In his manifesto he pledged new houses, jobs and government help for the most economically deprived parts of the country. He also pledged to improve Britain's defences, although there was little desire among the public for rearmament.

Answer 3

By 1935 Ramsay MacDonald was very unwell and was forced to step down. He was replaced by Baldwin who became prime minister for a third time and called a general election in October that year. In his manifesto he pledged new houses, jobs and government help for the most economically deprived parts of the country. He also pledged to improve Britain's defences, although there was little desire among the public for rearmament.

Answer 4

In January 1936, when King George V died, a constitutional crisis began that was to dominate political events that year. After George V's death his eldest son Edward VIII inherited the crown. Edward was a handsome and popular monarch, his glamorous playboy lifestyle as heir to the throne had made him popular with the public. His many affairs with married women were known about by the government but the details were hidden from the general public by self- censoring newspapers. Public attitudes towards sexual morality in the 1930s were very conservative and an heir to the throne behaving in such a manner would have brought the monarchy into disrepute. In the months after his coronation rumours circulated about a relationship with an American divorcee, Wallis Simpson. In November 1936 he informed Baldwin of his intention to marry her and Baldwin replied that the marriage would be seen by many in Britain as morally unacceptable. The British cabinet and the Dominions rejected even a morganatic marriage and presented him with three choices: abandon the marriage plans, marry and risk a constitutional crisis with the government, or abdicate. He chose the final option on 11 December 1936, making way for his brother, George VI.

Answer 5

Throughout Baldwin's premiership and Neville Chamberlain's which followed, the opposition Labour Party continued to be divided on the question of peace and security. The left of the party believed that rearmament made war more likely, not less. The centre of the party, led by Clement Attlee, argued that collective security would make war impossible, and therefore rearming unnecessary. However, world events made collective security seem more and more difficult.

Answer 6

Stanley Baldwin resigned in 1937 due to ill health, making way for his chancellor, Neville Chamberlain, to become prime minister. Chamberlain was prime minister during a period of economic recovery, falling unemployment and stable prices. The main problem that the National Government under Chamberlain, and Baldwin before him, would face was that the breakdown of international order made war increasingly likely, but the antiwar movement in Britain was growing in strength, a factor which made rearmament more difficult. Due, in part, to a desire for peace among the electorate, the National Government allowed a series of concessions to Nazi Germany, as Hitler continued to tear up the Treaty of Versailles.

Answer 7

He is often associated with the policy of appeasement of Hitler; on three occasions he went to Germany in 1938 to try to prevent an outbreak of war by negotiating with Hitler. The Munich Agreement of September 1938 granted nearly all of Hitler's demands and allowed him to annex the Sudetenland of Czechoslovakia. Chamberlain returned to England promising 'peace for our time'. When Hitler attacked Poland in September 1939 Chamberlain declared war on Germany.

Answer 8

-The British government had not expected the war to last as long as it did and to command so much of the nation's resources. -America's banks on Wall Street had loaned Britain large sums of money to enable it to continue the unexpectedly long and expensive conflict. -Britain had been cut off from many of its most valuable export markets by German U-boats, which sank 40 per cent of British merchant shipping. In 1914 Britain's exports accounted for one-third of its total wealth, but by 1918 it had declined to one-fifth. -Britain's industries had been forced to switch to war production instead of supplying export markets. -By 1918 the country had lost over three-quarters of a million men, many of whom were essential to its economic output. -The total financial cost of the war was £3.25 billion.

Answer 9

-The British continued to import the same pre-war level of goods from abroad, but the decline in exports meant that the country experienced a negative balance of payments throughout the 1920s. -The debts that Britain had incurred (amounting to 136 per cent of the country's entire annual economic output in 1919) and the damage to its trade left it greatly weakened. -By 1920 the total British debt was £8 billion. In that year, the government's annual budget came to £800 million, but £300 million went directly on debt repayment. -In 1908 the standard rate of income tax had been one shilling in a pound (5 per cent), but had risen to five shillings (25 per cent) by 1924. Much of this increase was necessary to repay the nation's debts.

Answer 10

-After a brief post-war boom from 1919-20, caused by consumer demand for scarce goods that had been rationed during the conflict, the interwar period was characterised by two recessions, 1920-21 and 1929-34, which hit Britain's heavy industries and the regions they supported hardest. -Even during boom times Britain's overall level of unemployment remained high, on average it remained at approximately 10 per cent of the working population between 1921 and 1938; this figure was double the average unemployment rate of the period 1870-1913. -In the mid-1920s consumer demand gradually increased and unemployment declined across much of Britain, however in declining industrial areas such as south Wales and Tyneside, it stayed persistently high. -Between 1934 and 1939 rearmament and new light industries in the south east and the Midlands developed as a result of growing consumer demand, but heavy industry continued to decline. In some parts of the coal-producing south Wales valleys it stood at over 80 per cent of the adult population.

Answer 11

-The end of the war in 1918 was followed by a short-lived economic boom in Britain that ended in a recession in 1920. -Because of wartime restrictions and rationing, both individuals and businesses had been unable to spend and had accumulated considerable savings in cash and bonds. -Throughout 1919 consumers and businesses spent their savings. Individuals bought luxury items that had been rationed during the war such as coffee, soap, clothes and cigarettes. -There was a huge speculative boom as businesses issued new shares for traders, investors and other businesses to buy and more money poured into the London stock market than at any other time previously in British history. The total amount of new shares issued dramatically increased from 65 million in 1918 to 384 million in 1920. -Investors were keen to buy British shipyards, cotton mills and coal mines, but these were all poor investment choices. The monopoly that Britain had over these industries had vanished during the war and Britain now had new competitors in the USA, Japan and South America. -In addition to this, these industries had become outdated and had received little investment throughout the war years, making them uncompetitive. I -n the case of shipping, there was an assumption by investors that global trade would quickly resume to pre-1914 levels and merchant ships would be in demand. Not only did this resumption of trade not happen as quickly as desired, but by 1919 there was a global surplus of ships. -British wartime industries still in the process of returning to civilian usage could not keep up with the level of demand. Goods in short supply became excessively expensive and, as a result, demand declined and the boom came to an end

Answer 12

The recession that followed was one of the most severe slumps experienced by Britain prior to 1929. Unemployment levels rapidly increased to 12 per cent of the working adult population. By 1921, 2 million workers were unemployed and areas of the country like south Wales and Tyneside were deeply depressed as old industries like coal and ship building collapsed. The crisis in the coal industry led to a wave of strike action. The cost of living had increased by 25 per cent between 1918 and 1920 and wages stagnated, meaning that unions were far more likely to strike to secure higher living standards for their members.

Answer 13

Deflation: The government cut spending by 75 per cent between 1918 and 1920. In addition, in order to return the value of the pound to its pre-war levels, the Bank of England raised the interest rate to 7%. This meant that it suddenly became very expensive to borrow money. These two factors drained available money for spending from the economy. Both the Bank and the government took these measures to try to repay Britain's wartime debts, but by the end of the decade debt had risen from 120% of GDP to 160%. Loss of export trade: The global economy had been transformed by the war. It was no longer dominated by Britain. There were several new foreign manufacturing and financial competitors who had taken advantage of the disruption to British trade during the war. One example of market loss was in textiles. Japan began to supply India and South East Asia with cotton and silk during the First World War, causing the textile industry in the northwest of England to decline. Underinvestment: British industry suffered from long-term underinvestment and by the 1920s this had begun to cause serious problems. In the steel industry, output throughout the interwar period was lower than that of Britain's rivals. By 1920, a growing number of British manufacturers were importing American steel because of its superior quality and price. By 1937 British steel foundries were producing 83,000 tonnes per year, but American foundries were producing 210,000 tonnes and Germany was producing 125,000 tonnes. Industrial relations: In order to prevent a general strike in 1919 Lloyd George had bought off British workers in the main industries (coal, rail, docks) with generous pay and working hours. These workers, many of them former soldiers, were unwilling to lose these conditions when times became tough. The creation of an eight-hour working day (48-hour week) resulted in a 13% decrease in working hours, but no increase in productivity during the hours worked. Wage rates also stayed high, meaning that products remained overpriced and uncompetitive.

Answer 14

Lloyd George believed that there was little choice but to wait for the economy to improve on its own. He was anxious to appease middle-class voters who were experiencing financial hardship after 1920, many of whom wanted to see tax cuts and less government spending. He advocated a policy of spending cuts known as retrenchment. The Geddes Axe: In 1921 Lloyd George appointed Sir Eric Geddes to implement greater cuts in public expenditure. High taxes were blamed on high spending and Lloyd George hoped tax cuts would stimulate the economy. Geddes recommended £87 million of cuts in the 1922-23 budget. Most of these came from the government's military budget, but the health, welfare and housing budgets were reduced from £205.8 million in 1920-21 to 182.1 million in 1922-23. Tariffs and free trade One of the most important economic questions of the interwar years was that of tariffs. For most of the previous century Britain had adopted free trade. The switch to protectionism helped to protect the British domestic industries that are struggling from competition by making the foreign imported goods more expensive, protecting the profits of British manufacturers. The downside to protectionism is it could result in other countries applying tariffs to British exports in retaliation. Because of the depth of the post-war recession, many members of the government began to consider introducing tariffs in order to protect British industry and prevent further increases in unemployment. Lloyd George had always believed in free trade and had opposed tariffs. When he left office in 1922 some in the Conservative Party sought an election victory that would give them a mandate to impose tariffs on imports and protect industry (see box above). This divided the party and led to the establishment of the first Labour government.

Answer 15

MacDonald had campaigned on the issue of unemployment, criticising Baldwin's failed attempts to bring the numbers of jobless down. However, when MacDonald became prime minister he was unable to make any real improvement to Britain's economic fortunes. MacDonald lacked a parliamentary majority with which to carry out major economic measures to deal with unemployment. He was unable to increase spending and taxation to help revive the economy or create jobs, but he was also reluctant to do so. He wanted to present Labour as a moderate party, one that was 'fit to rule', not a party of radical socialist ideas. He wanted the other two political parties, the largely Conservative-supporting press and Britain's upper and middle classes to feel that they had nothing to fear from a Labour administration. Between 1921 and 1924 unemployment had declined from 12 per cent to 6.5 per cent, but started to climb again throughout MacDonald's year in office and rose to 8 per cent in 1925. One positive side effect was the dramatic fall in inflation from 15 per cent in 1920 to just under 1 per cent in 1924. This was not the result of economic strategy however. Inflation fell because spending had collapsed due to unemployment.

Answer 16

Stanley Baldwin's chancellor of the exchequer was Winston Churchill. He had never held the post of chancellor before, and presided over one of the most catastrophic economic blunders of the decade. By reintroducing Britain to the Gold Standard it has been argued that the economic slump was prolonged. The war had led to the suspension of the Gold Standard, but Churchill reintroduced it in his 1925 budget for two reasons. First, a pound that was decreasing in value was bad for British prestige and second, Churchill believed that a competitive economy could not be built by the government simply making things easier for manufacturers. The exchange rate in 1925 was £1 to US $4.85 (the economist John Maynard Keynes believed that the value of the pound was fixed 10 per cent too high). In order to make the pound nearly five times as attractive to foreign investors, interest rates had to be kept high. This meant that foreign investors were attracted to Britain and put their money in British banks, but it also meant that the cost of borrowing money was equally high. As a result businesses found it more difficult to borrow money in order to expand and take on new workers, which added to Britain's problems with unemployment. In September 1931 the Bank of England was forced to concede that it could no longer keep the pound in the Gold Standard. Interest rates were already at 8 per cent and would have to dramatically increase in order to prop up the value of the pound. That month a decision was taken to withdraw the pound from the Gold Standard and devalue; a measure that enabled the British economy to recover more quickly from the depression than many other countries.

Answer 17

In October 1929 a stock market crash on Wall Street in the USA sent shock waves through the US economy, resulting in economic depression. The USA had replaced Britain as the world's largest importer of overseas goods and the financial crisis had consequences for nearly every other country in the world. Global trade contracted by 66 per cent over the next five years. Britain's exports declined by 50 per cent. They were worth one-third of the country's Gross National Product (GNP) and the collapse in trade was catastrophic for several key industries: -coal -dock work -cotton - iron and steel - ship building.

Answer 18

In October 1929 a stock market crash on Wall Street in the USA sent shock waves through the US economy, resulting in economic depression. The USA had replaced Britain as the world's largest importer of overseas goods and the financial crisis had consequences for nearly every other country in the world. Global trade contracted by 66 per cent over the next five years. Britain's exports declined by 50 per cent. They were worth one-third of the country's Gross National Product (GNP) and the collapse in trade was catastrophic for several key industries: -coal -dock work -cotton - iron and steel - ship building. In addition to these industries, the shops and markets where miners, dock and mill workers spent their wages were also seriously affected. Unemployment, which had stood at 1 million in 1929, leapt to 2.5 million in 1930. The increase in unemployment put additional pressures on the government - tax revenue declined, but the number of people applying for financial assistance rapidly increased. In 1931 the British economy shrank by nearly 5 per cent, but despite these problems the government's main priority was keeping the pound in the Gold Standard system and supporting its value through spending cuts and high interest rates.

Answer 19

Britain's huge debts, along with her rising level of unemployment, led to a debate within the new Labour government. The chancellor of the exchequer, Philip Snowden, believed that unemployment relief should come from taxing the wealthy and from corporate profits. However, as these profits slumped, and private, wealthy individuals with money were anxious to protect or conceal it, the cost of providing for the unemployed became unsustainable. The economist John Maynard Keynes suggested government spending on public works, such as new roads, to create jobs, but Snowden refused. He knew that the bankers in New York and London had little patience for further spending, as the value of British government bonds they had purchased during the war would decrease. The only part of the economy that the government invested in and created jobs in during the depression was the defence industry.

Answer 20

The desperation of workers and their families in the most deprived parts of the country from 1921 onwards had led the Communist Party of Great Britain to establish the National Unemployed Workers' Movement. The organisation, which was boycotted by the Labour Party because of its links with communists, organised a series of marches to protest the means test throughout the 1930s, which quickly came to be christened the hunger marches. The protesters were unemployed men from the depressed regions of Britain who walked to London, encountering both support and opposition along the route. The most famous of the marches was from Jarrow in Tyneside in 1936, called by the marchers the Jarrow Crusade. The northeast of England felt particularly forgotten and ignored by the far wealthier southeast and London, and the marchers sought to bring to the attention of the government the scale of the deprivation and poverty in which the region was mired.

Answer 21

The depression did not last as long in Britain as it did in other countries such as America. On average between 1932 and 1937: - real incomes rose by 19 per cent -industrial production rose by 46 per cent -GNP rose by 23 per cent - exports increased by 28 per cent - unemployment fell from 17 per cent to 8.5 per cent.

Answer 22

-A cut in interest rates. Borrowing for businesses and individuals became cheaper, which enabled more spending and job creation. It also made it less attractive to save money so people investing their wealth bought property instead. This fuelled a housing boom in the southeast and Midlands in the second part of the decade as more people could afford to buy houses and the number of new houses built dramatically increased (see Table 2). The cut in rates was referred to as a 'Cheap Money' policy. The total value of mortgages taken out in 1930 was £316 million, but by 1937 it was £636 million, with an extra half a million borrowers buying new homes. -The government was able to allow a degree of inflation by the end of the decade. Instead of trying to prevent inflation completely (therefore protecting the value of the pound and its place in the Gold Standard), the National Government stimulated spending, which had the consequence of letting prices rise slightly. For example, the government spent money on road building, which in turn stimulated the car industry. -The devaluation of the pound made British exports cheaper and more competitive. -Banks became more willing to spend again -The national government also stimulated economic growth by restructuring British war debts, ensuring they cost the country 25 per cent of its tax revenue, as opposed to 40 per cent.

Answer 23

Britain had managed a degree of rearmament before the war, however by 1939 there were still significant shortages in military equipment. In 1940, when Britain appeared to be losing the war, the growth of state intervention resulted in a huge increase in war production and military expenditure. Britain produced 15,000 aircraft in 1940, rising to 47,000 in 1944 and between 6,000 and 8,000 tanks per year.

Answer 24

Between 1939 and 1941 the USA offered Britain considerable economic help, despite the fact that the USA was neutral. The 1939 American Neutrality Act initially allowed the British to buy supplies with cash only, but by December 1940 Britain's cash and gold reserves were spent. Winston Churchill arranged a credit agreement, known as the Lend- Lease Agreement. America would supply Britain with the resources it needed but the bill would be paid after the war. Equally as important were American 'Liberty Ships' - large cargo vessels full of oil, coal, timber, foodstuffs and essential raw materials for the war effort. These provided Britain with an economic lifeline throughout the war as German U-boats in the Atlantic prevented British merchant ships from bringing goods to Britain.