(Economic challenges) Crisis and recovery, 1918-1939 Flashcards
What happened directly after WW1?
Why?
Short lived economic boom
A lot of private capital that couldn’t be spent in the war flooded the market.
When was there a serious recession as Britain faltered in the transition between wartime and peacetime economy?
1920-21
How did the Spanish Flu impact Britain in 1920/21?
What was in the context of?
Reduced GDP by almost 3%
Recession
How were Britain’s old industries affected by the recession?
They relied on a strong export market which was suffering as a result of other countries being in a recession too.
How did problems with traditional industries build up between 1921-29?
What was this worsened by?
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.
What had happened by 1929 that the National Government had to work under from 1931?
The Depression
Success of dealing w/ problems - what were the 4 economic challenges the government had to deal with between 1918-1939?
Keeping Britain competitive
Geddes Axe worsened economy
New regional divides
Economic shock of Depression
Success of dealing w/ problems - keeping GB competitive.
What did WW1 disrupt? Give evidence (2).
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.
Success of dealing w/ problems - keeping GB competitive.
Name 2 of Britain’s economic rivals after WW1.
US & Japan
Success of dealing w/ problems - keeping GB competitive.
What did WW1 mean for trading?
What did this mean?
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.
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?
Protectionism to protect Britain’s traditional industries, particularly steel.
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?
Finding ways to make Britain more dynamic in a global market that was changing and expanding due to the rise of more nation-states.
Success of dealing w/ problems - keeping GB competitive.
What did the policy of protectionism lead to after WW1?
Other countries introduced higher taxes on what Britain imported, further limiting Britain’s role in international trade & slowing down the economy, creating job losses.
Success of dealing w/ problems - keeping GB competitive.
What is considered the most important mistake in trying to keep Britain competitive after WW1?
Chancellor Winston Churchill’s decision to return to Gold Standard in 1924.
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?
Instead of restoring confidence in the value of the pound, it overvalued it and made British exports even more expensive.
Success of dealing w/ problems - keeping GB competitive.
What happened in 1924?
Chancellor Winston Churchill’s chose to return to Gold Standard.
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?
Competitive global market
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.
Unsuccessful.
1937 - Britain producing 83,000 tons of steel a year compared to Germany at 125,000 and USA at 210,000.
Success of dealing w/ problems - Geddes Axe worsened economy
In 19__, ______ appointed ___ ____ ______ to implement greater ____ in ______ _________.
a) 1921
b) DLG
c) Sir Eric Geddes
d) cuts
e) public spending
Success of dealing w/ problems - Geddes Axe worsened economy
How much cuts were recommended?
Where did this mostly take place?
£87 million
Military budget
Success of dealing w/ problems - Geddes Axe worsened economy
What budgets were affected by the Geddes Axe, other than military?
Be specific.
Health and housing reduced from £206 million in 1920-21 to £182 million in 1922-23.
Success of dealing w/ problems - Geddes Axe worsened economy
What was the impact of the Geddes Axe of 1922?
Affected productivity, as it exacerbated poverty in a time when infectious diseases were rampant.
Success of dealing w/ problems - new regional divides
What did the government seek to protect?
What was there a lack of, despite this?
Traditional industries
No investment to keep them dynamic
Success of dealing w/ problems - new regional divides
Where were new technologies and methods of production such as the assembly line adopted?
Newer industries where the domestic market was situated, concentrated in south-east and midlands.
Success of dealing w/ problems - new regional divides
Summarise how regional divides uponed up.
2
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.
Success of dealing w/ problems - new regional divides
Summarise the impact of new regional divides.
South-east & midlands experienced dynamic economic growth and recovery but areas such as the north and south Wales faced greater economic problems.
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?
Assembly line.
Success of dealing w/ problems - economic shock of Depression
Which govt dealt with shock of depression?
The National Government
Success of dealing w/ problems - Geddes Axe worsened economy
Which PM introduced the Geddes Axe of 1922?
David Lloyd George
Success of dealing w/ problems - Geddes Axe worsened economy
When was the Geddes Axe enforced?
1922
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?
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.
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?
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.
Success of dealing w/ problems - economic shock of Depression
What was done to deal with the economic threats?
(5)
Support British industry
Adopt conservative spending measures
Lower interest rates
Break with Gold Standard
Introduce grants where necessary
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.
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.
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?
Without these cuts, the May Report in 1931 had predicted that the spending deficit would be as high as £120 million in 1932.
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?
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.
Success of dealing w/ problems - economic shock of Depression
The govt introduced lower interest rates to encourage borrowing.
Give evidence of this.
6% to 2%.
Success of dealing w/ problems - economic shock of Depression
Why did the govt adopt conservative spending measures?
To lower govt spending and stimulate recovery in some areas of the country.
Success of dealing w/ problems - economic shock of Depression
Why did the govt support British industry?
It was a time when lots of economies around the world were all similarly suffering.
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)
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.
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’?
Breaking with the Gold Standard in 1931.
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?
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”.
Success of dealing w/ problems - economic shock of Depression
How did the govt introduce grants for areas of the country that were particularly affected?
The Special Areas Act 1934
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)
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.
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?
A regional divide that was drawn along class lines.
Success of dealing w/ problems - economic shock of Depression
What did Ramsey Macdonald call the Depression in the 1930s?
An ‘economic blizzard’.
Success of dealing w/ problems - economic shock of Depression
Who coined the term ‘economic blizzard’ to describe the Depression in the 1930s?
Ramsay MacDonald, Labour Party leader.
How did the legacy of WW1 affect the failure of the economy in the Interwar Years?
(4)
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.
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?
Bad
Success of dealing w/ problems - Geddes Axe worsened economy
The Geddes Axe of 19__ ultimately took away society’s ______ ____ of _______ and ________.
a) 1922
b) safety net
c) welfare
d) benefits
Success of dealing w/ problems - new regional divides
What did the standard of living look like in the north?
2.5 million unemployed by 1933.
Success of dealing w/ problems - economic shock of Depression
Explain how traditional industries were affected by the Depression.
What did this do?
Lowered demand for coal - 180 million tonnes in 1929 to 158 million tonnes in 1935.
Compounded the regional divide.
Success of dealing w/ problems - economic shock of Depression
What 2 things rose?
Give evidence
Inflation & unemployment
25% unemployed by 1933.
Success of dealing w/ problems - economic shock of Depression
What did breaking with the Gold Standard in 1931 do?
Lowered the value of the pound.
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?
Jarrow in the North-East.
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?
Every man made redundant after the coal mine, steelworks & Palmer’s Shipyard closed.
Success of dealing w/ problems - economic shock of Depression
How did the Depression affect productivity for the whole country?
Give evidence.
Lowered it.
Demand products such as coal and steel fell.
Coal fell from 180 million tonnes in 1929 to 155 million in 1935.
Success of dealing w/ problems - economic shock of Depression
What areas of the UK remained prosperous?
Areas such as London and the South-East.
Success of dealing w/ problems - economic shock of Depression
By what percentage did exports fall by?
50%
Success of dealing w/ problems - economic shock of Depression
What policy split the Labour government?
What about it specifically?
Cutting spending and maintaining high-interest rates.
10% spending cut.
