Creating a managed economy, 1939-1951 Flashcards
What was the main purpose of the planned economy from 1939 onwards?
To manage wartime production. The planned economy continued between 1945 and 1951 in order to set-up the recovery from World War Two.
- Rearmament began in 1939. What are some examples of how much Britain produced?
- How did military expenditure increase from 1939-1945?
- 15,000 aircraft in 1940, rising to 47,000 in 1944. 6,000-8,000 tanks were produced each year WW2 went on.
- Military expenditure as a % of GDP: 1939 = 15%; 1945 = 51%
How did borrowing become a huge feature of the wartime economic policy?
By the end of WW2, Britain had accumulated over £4billion of debt w/USA w/interest amounting to £70million every day- put permanent pressure on value of the £, leading to a devaluation in 1949.
Why was the Lend-Lease Agreement necessary?
1939 American Neutrality Act allowed us to buy US supplies with cash only, but by December 1940, Britain’s cash reserves were spent so we could no longer rely on this Act.
Who secured the Lend-Lease Agreement and what was its purpose?
- Churchill secured the Lend-Lease Agreement w/US- allowed US to supply Britain w/what it needed and the debt would be paid after the war.
- Supported by supplies from America being brought to Britain by ‘Liberty Ships’.
How was Britain becoming increasingly dependent on overseas aid, even after the war had ended?
- Immediately after the war, Keynes negotiated a £2.2B loan from US and Canada- this was nowhere near enough.
- Britain also received £2.7 billion of Marshall Aid from 1948, but failed to reinvest in industry- used it for general costs overseas (Korea, W. Germany, Malaya, Kenya), and at home.
What was Britain investment in infrastructure like in 1950 compared to Japan and Germany?
- 9% of GDP, despite having set up the NHS in 1948
- Germany: close to 20%
- Japan also invested heavily in its infrastructure
What was arguably the most important economic change to occur under the new Labor government of 1945?
Nationalisation of key industries between 1946 and 1949:
- Coal
- Power- electicity production + national grid
- Gas
- Railways
- Banking
- Ship building
- Iron and steel
Why did Attlee’s government want to nationalise key industries?
Believed it would allow them to create full employment in the economy as nationalised industries wouldn’t have to shed jobs in economic downturns.
How were the shareholders of formerly private industries compensated?
- Private rail industries bought from owners for £1B
- Total nationalisation bill exceeded £2B
(Commitment to Employment) What was Ernest Bevin’s Essential Work Order of 1941?
Ppl in essential fields of work (eg coal mining) weren’t allowed to leave their jobs for any purpose + made it hard for employers to dismiss them
(Commitment to Employment) What was the 1939 Employment Act?
Allowed semi-skilled workers to take jobs in industries previously viewed as skilled, eg some areas of shipbuilding.
Could’ve improved working class living standards or at least reveals govt’s commitment to welfare
Growth of the state in playing an active role in people’s lives: Healthcare
- Emergency Medical Service = blueprint 4 NHS- it gave govt right to direct voluntary + municipal hospitals across Britain
- National Blood Transfusion service est to get civilians to donate to help civilian/military casualties- set social precedent for ppl taking active roles in health of others.
Growth of the state in playing an active role in people’s lives: Austerity
WW2 austerity- in 1946 ~1/4 of consumer spending was controlled by rationing. This rose to 30% in 1948
How did WW2 set the stage for consensus?
- Nat govt proved ministers from rival parties could cooperate + a broad agreement on key policies could be reached
- Success of collectivism
- War changed role of govt as state forced to take control
- Shift from mainly free-market economy to mixed one
