(Economic challenges) Crisis and recovery, 1918-1939

Question 1

What happened directly after WW1?

Why?

Answer 1

Short lived economic boom

A lot of private capital that couldn’t be spent in the war flooded the market.

Question 2

When was there a serious recession as Britain faltered in the transition between wartime and peacetime economy?

Answer 2

1920-21

Question 3

How did the Spanish Flu impact Britain in 1920/21?

What was in the context of?

Answer 3

Reduced GDP by almost 3%

Recession

Question 4

How were Britain’s old industries affected by the recession?

Answer 4

They relied on a strong export market which was suffering as a result of other countries being in a recession too.

Question 5

How did problems with traditional industries build up between 1921-29?
What was this worsened by?

Answer 5

Britain lost out to new competitors & had to make products looks ‘attractive’.

Return to the Gold Standard in 1924 - overvalued British sterling & diminished overseas trade.

Question 6

What had happened by 1929 that the National Government had to work under from 1931?

Answer 6

The Depression

Question 7

Success of dealing w/ problems - what were the 4 economic challenges the government had to deal with between 1918-1939?

Answer 7

Keeping Britain competitive

Geddes Axe worsened economy

New regional divides

Economic shock of Depression

Question 8

Success of dealing w/ problems - keeping GB competitive.

What did WW1 disrupt?
Give evidence (2).

Answer 8

Markets Britain traditionally enjoyed.

British ships were occupied as essential war supplies - 20% sunk in the process.
Economic rivals filled gaps left by decline in British exports.

Question 9

Success of dealing w/ problems - keeping GB competitive.

Name 2 of Britain’s economic rivals after WW1.

Answer 9

US & Japan

Question 10

Success of dealing w/ problems - keeping GB competitive.

What did WW1 mean for trading?
What did this mean?

Answer 10

Britain couldn’t trade at countries it was at war with.

These countries became more self-sufficient, producing goods previously imported from Britain, continuing this after WW1 ended.

Question 11

Success of dealing w/ problems - keeping GB competitive.

Instead of making Britain more dynamic in a global market that was changing due to the rise in nation-states, what did the government introduce after WW1 and why?

Answer 11

Protectionism to protect Britain’s traditional industries, particularly steel.

Question 12

Success of dealing w/ problems - keeping GB competitive.

Britain chose to implement protectionism after WW1. What do many argue a better, alternative choice would’ve been?

Answer 12

Finding ways to make Britain more dynamic in a global market that was changing and expanding due to the rise of more nation-states.

Question 13

Success of dealing w/ problems - keeping GB competitive.

What did the policy of protectionism lead to after WW1?

Answer 13

Other countries introduced higher taxes on what Britain imported, further limiting Britain’s role in international trade & slowing down the economy, creating job losses.

Question 14

Success of dealing w/ problems - keeping GB competitive.

What is considered the most important mistake in trying to keep Britain competitive after WW1?

Answer 14

Chancellor Winston Churchill’s decision to return to Gold Standard in 1924.

Question 15

Success of dealing w/ problems - keeping GB competitive.

One of the most important mistakes in trying to keep Britain competitive after WW1 was returning to the Gold Standard in 1924.
What did this do?

Answer 15

Instead of restoring confidence in the value of the pound, it overvalued it and made British exports even more expensive.

Question 16

Success of dealing w/ problems - keeping GB competitive.

What happened in 1924?

Answer 16

Chancellor Winston Churchill’s chose to return to Gold Standard.

Question 17

Success of dealing w/ problems - keeping GB competitive.

One of the most important mistakes in trying to keep Britain competitive after WW1 was returning to the Gold Standard in 1924.
What was this in the context in that made it disastrous?

Answer 17

Competitive global market

Question 18

Success of dealing w/ problems - keeping GB competitive.

How would you judge the success of dealing with interwar years’ economic problems when considering how the govt tried to keep Britain competitive?
Give evidence.

Answer 18

Unsuccessful.

1937 - Britain producing 83,000 tons of steel a year compared to Germany at 125,000 and USA at 210,000.

Question 19

Success of dealing w/ problems - Geddes Axe worsened economy

In 19__, ______ appointed ___ ____ ______ to implement greater ____ in ______ _________.

Answer 19

a) 1921
b) DLG
c) Sir Eric Geddes
d) cuts
e) public spending

Question 20

Success of dealing w/ problems - Geddes Axe worsened economy

How much cuts were recommended?
Where did this mostly take place?

Answer 20

£87 million

Military budget

Question 21

Success of dealing w/ problems - Geddes Axe worsened economy

What budgets were affected by the Geddes Axe, other than military?
Be specific.

Answer 21

Health and housing reduced from £206 million in 1920-21 to £182 million in 1922-23.

Question 22

Success of dealing w/ problems - Geddes Axe worsened economy

What was the impact of the Geddes Axe of 1922?

Answer 22

Affected productivity, as it exacerbated poverty in a time when infectious diseases were rampant.

Question 23

Success of dealing w/ problems - new regional divides

What did the government seek to protect?
What was there a lack of, despite this?

Answer 23

Traditional industries

No investment to keep them dynamic

Question 24

Success of dealing w/ problems - new regional divides

Where were new technologies and methods of production such as the assembly line adopted?

Answer 24

Newer industries where the domestic market was situated, concentrated in south-east and midlands.

Question 25

Success of dealing w/ problems - new regional divides

Summarise how regional divides uponed up.
2

Answer 25

Govt wanted to protect traditional industries but there was no investment to keep them dynamic.

New technologies & methods of production were adopted in the south-east & midlands.

Question 26

Success of dealing w/ problems - new regional divides

Summarise the impact of new regional divides.

Answer 26

South-east & midlands experienced dynamic economic growth and recovery but areas such as the north and south Wales faced greater economic problems.

Question 27

Success of dealing w/ problems - new regional divides

Give an example of new technologies and methods of production were adopted in the south-east & midlands?

Answer 27

Assembly line.

Question 28

Success of dealing w/ problems - economic shock of Depression

Which govt dealt with shock of depression?

Answer 28

The National Government

Question 29

Success of dealing w/ problems - Geddes Axe worsened economy

Which PM introduced the Geddes Axe of 1922?

Answer 29

David Lloyd George

Question 30

Success of dealing w/ problems - Geddes Axe worsened economy

When was the Geddes Axe enforced?

Answer 30

1922

Question 31

Success of dealing w/ problems - economic shock of Depression

It felt necessary to support British industry at a time when economies around the world were similarly suffering.

How did the government do this?

Answer 31

Introduce the 1932 Imports Duties Act - 10% tariff on most imports.

Attempts were made in line with this to establish Imperial preference by encouraging trading with countries in the British Empire.

Question 32

Success of dealing w/ problems - economic shock of Depression

To support British industry, the govt attempted to establish imperial preference by encouraging trading with countries in the British Empire.

Why didn’t this work?

Answer 32

It wasn’t a coherent system of free trade as many countries in the Empire depended on strong networks with others around the world outside the Empire.

Question 33

Success of dealing w/ problems - economic shock of Depression

What was done to deal with the economic threats?

(5)

Answer 33

Support British industry

Adopt conservative spending measures

Lower interest rates

Break with Gold Standard

Introduce grants where necessary

Question 34

Success of dealing w/ problems - economic shock of Depression

The govt adopted conservative spending measures which helped lower govt spending and stimulate recovery in some areas of the country.

Give evidence of how they did this.

Answer 34

The Unemployment Act of 1934 introduced a “means test” which meant that while most workers were covered by the 1920 Unemployment Insurance Act of 1920, most benefits only lasted for 15 weeks per year.

Question 35

Success of dealing w/ problems - economic shock of Depression

The govt adopted conservative spending measures which helped lower govt spending and stimulate recovery in some areas of the country.

One way they did this was through the Unemployment Act of 1934.
How could this be viewed as NECESSARY?

Answer 35

Without these cuts, the May Report in 1931 had predicted that the spending deficit would be as high as £120 million in 1932.

Question 36

Success of dealing w/ problems - economic shock of Depression

The govt adopted conservative spending measures which helped lower govt spending and stimulate recovery in some areas of the country.

One way they did this was through the Unemployment Act of 1934.
How could this be viewed as BAD?

Answer 36

Spending cuts made the poor poorer and those who could take advantage of other measures like cheaper bank loans tended to be middle-class.

A wealth gap opened up as well as less spending overall which arguably delayed the speed of overall recovery.

Question 37

Success of dealing w/ problems - economic shock of Depression

The govt introduced lower interest rates to encourage borrowing.
Give evidence of this.

Answer 37

6% to 2%.

Question 38

Success of dealing w/ problems - economic shock of Depression

Why did the govt adopt conservative spending measures?

Answer 38

To lower govt spending and stimulate recovery in some areas of the country.

Question 39

Success of dealing w/ problems - economic shock of Depression

Why did the govt support British industry?

Answer 39

It was a time when lots of economies around the world were all similarly suffering.

Question 40

Success of dealing w/ problems - economic shock of Depression

The govt cut interest rates to encourage borrowing.
How is there evidence of this having a POSITIVE effect on the economy?

(2)

Answer 40

Car ownership increased and thus manufacturing in that area improved.

The number of homeowners grew in the 30s, suggesting some could take advantage of more affordable mortgages.

Question 41

Success of dealing w/ problems - economic shock of Depression

What is considered the most crucial step the govt took to dealing with the ‘economic blizzard’?

Answer 41

Breaking with the Gold Standard in 1931.

Question 42

Success of dealing w/ problems - economic shock of Depression

Why is breaking with the Gold Standard in 1931 considered the most crucial step the govt?

Answer 42

Previously in 1924, aligning with the Gold Standard had raised the value of the British pound too high, making countries less interested in “buying British”.

Question 43

Success of dealing w/ problems - economic shock of Depression

How did the govt introduce grants for areas of the country that were particularly affected?

Answer 43

The Special Areas Act 1934

Question 44

Success of dealing w/ problems - economic shock of Depression

The govt introduced grants for areas of the country that were particularly affected in the Special Areas Act of 1934.

Evaluate this.

(2)

Answer 44

The money didn’t work in areas of traditional industry where productivity remained low so employment subsequently suffered.

Where there was recovery, it was in the south-east where newer manufacturing industries were based. These did well as it involved the production of light-manufacturing goods that helped service new homes etc.

Question 45

Success of dealing w/ problems - economic shock of Depression

What did the economic threats and the govt’s approach to saving the country ultimately create?

Answer 45

A regional divide that was drawn along class lines.

Question 46

Success of dealing w/ problems - economic shock of Depression

What did Ramsey Macdonald call the Depression in the 1930s?

Answer 46

An ‘economic blizzard’.

Question 47

Success of dealing w/ problems - economic shock of Depression

Who coined the term ‘economic blizzard’ to describe the Depression in the 1930s?

Answer 47

Ramsay MacDonald, Labour Party leader.

Question 48

How did the legacy of WW1 affect the failure of the economy in the Interwar Years?

(4)

Answer 48

900,000 men killed in war, creating a loss of workers.

Wartime debt was 160% of the national income by 1924 - meant debt & inflation was getting out of control.

Abandoning the Gold Standard in 1914 due to war - meant debt & inflation was getting out of control.

20% reduction in British shipping.

Question 49

How can the economy of the interwar years be overall summed up, considering the economic boom 1920/21, the Depression, legacy of WW1, poor economic decisions and the regional divide?

Answer 49

Bad

Question 50

Success of dealing w/ problems - Geddes Axe worsened economy

The Geddes Axe of 19__ ultimately took away society’s ______ ____ of _______ and ________.

Answer 50

a) 1922
b) safety net
c) welfare
d) benefits

Question 51

Success of dealing w/ problems - new regional divides

What did the standard of living look like in the north?

Answer 51

2.5 million unemployed by 1933.

Question 52

Success of dealing w/ problems - economic shock of Depression

Explain how traditional industries were affected by the Depression.
What did this do?

Answer 52

Lowered demand for coal - 180 million tonnes in 1929 to 158 million tonnes in 1935.

Compounded the regional divide.

Question 53

Success of dealing w/ problems - economic shock of Depression

What 2 things rose?
Give evidence

Answer 53

Inflation & unemployment

25% unemployed by 1933.

Question 54

Success of dealing w/ problems - economic shock of Depression

What did breaking with the Gold Standard in 1931 do?

Answer 54

Lowered the value of the pound.

Question 55

Success of dealing w/ problems - economic shock of Depression

In what town was every man made redundant after the coal mine, steelworks & Palmer’s Shipyard closed?

Answer 55

Jarrow in the North-East.

Question 56

Success of dealing w/ problems - economic shock of Depression

What is important about the town in Jarrow in the North-East that demonstrates the impact of the Great Depression?

Answer 56

Every man made redundant after the coal mine, steelworks & Palmer’s Shipyard closed.

Question 57

Success of dealing w/ problems - economic shock of Depression

How did the Depression affect productivity for the whole country?
Give evidence.

Answer 57

Lowered it.

Demand products such as coal and steel fell.
Coal fell from 180 million tonnes in 1929 to 155 million in 1935.

Question 58

Success of dealing w/ problems - economic shock of Depression

What areas of the UK remained prosperous?

Answer 58

Areas such as London and the South-East.

Question 59

Success of dealing w/ problems - economic shock of Depression

By what percentage did exports fall by?

Answer 59

50%

Question 60

Success of dealing w/ problems - economic shock of Depression

What policy split the Labour government?
What about it specifically?

Answer 60

Cutting spending and maintaining high-interest rates.

10% spending cut.