Economic Developments; (complete) Flashcards
What was one of the key roles of Churchills coalition government (1940-45)?
to organise the economy to take account of the enormous pressures faced by a country at war
What did Britain do after the fall of France in 1940 and why?
-France= Britain’s ally
-Britain faced Hitler alone until Churchill formed a new alliance with the United States and Russia.
-USA had wealth, the USSR weight of numbers & willingness to sacrifice them.
What was Britain’s greatest economic asset in 1940?
-its people
-GB’s adult population in 1940= approx 33m
-at height of wartime mobilisation (1943) 2/3 of adult population (i.e. 22 million)= engaged in war-related activities (armed forces, civil defence,essential industry)
What did the Emergency Powers Act of 1939 do and why was this ineffective?
-gave gov unlimited control of economy
-in first months of the war, there was little effort made to implement emergency powers w/ sense of urgency, weapons production was slow & still 1m unemployed.
-after Hitler’s rapid conquest of much of W Europe in April, May and June 1940= GB economy under severe threat
What did the Second Emergency Powers Defence Act of 1940 do and its outcomes?
-introduced more effective wartime finance and the direction of labour.
-outcome= greater centralisation of government.
-ministries set up; Food, Aircraft Production, Information & Economic Warfare.
-cabinet committees coordinated work of the separate ministries, w/ Ministry of Production coordinating supply side & Treasury being responsible for finance.
-conscription mandatory for all men 18 to 41, later extended to 51.
Who ran the Ministry of Food and Rationing and what measures did it introduce?
-run from 1940 by Lord Woolton (successful Manchester businessman), gained respect for his management of the system of rationing.
-loss of merchant shipping via U-boat attacks= reduction in food imports; necessitated rationing of food, clothing & fuel.
-food rationing introduced Jan 1940; almost all consumer goods either rationed/ in short supply by 1942.
-strong views for & against rationing; some thought it demoralising, others believed it would stop profiteering & hoarding; often called the black market
-Woolton devised a fair rationing policy, advised public how to make best of it. -disappointment that rationing continued for many years post-war, ending June 1954.
What was The Ministry of Information responsible for and how did it do this?
-was responsible for regulating publicity and propaganda.
-The General Production Division created range of war propaganda posters; many encouraging workers to be as productive as possible, suggesting it would help to defeat Hitler.
Who was the Ministry of Aircraft Production ran by and were they effective?
-ran by Lord Beaverbrook, Canadian-born proprietor of the Daily Express.
-Beaverbrook was outspoken and ruthless, but he was imaginative & got things done
-raised production level of fighter aircraft, essential for RAF in the Battle of Britain
Why was Ernest Bevin the ideal choice for Minister of Labour?
-had to oversee allocation of labour; he had a long career in Trade Union affairs before war + connection w/ ‘the shop floor’ made him the ideal choice
What were Bevin’s tasks in the Ministry of Labour and organisation of work, was this successful?
-still over 1m+ unemployed in 1940, Bevin not only had to get them back to work, but had to mobilise workforce efficiently for total war.
-Bevin given enormous powers over GB’s workforce; had to oversee allocation of workers among competing demands of armed forces, industry, agriculture, war work, civil defence & everyday civilian services.
-military conscription already introduced, industrial conscription added in the first instance for men only, later for women too. -young men, so-called ‘Bevin Boys’ conscripted for work in coal mines, women encouraged to work in munitions, engineering & shipbuilding.
-demands of war production mopped up unemployment.
-4.5m entered the armed forces, total workforce rose by 2m
-‘essential work orders’ used to force factories to improve conditions
-wages improved, Bevin paid close attention to maintaining workers’ morale; toured factories, delivered speeches to workers & managers, even encouraged lunchtime entertainment.
What was Bevin’s contribution to the war effort successful in doing?
changing public perceptions + convinced people that Labour politicians could be trusted w/ power
What was the coal industry like during the war?
-coal industry (still main source of GB’s fuel & power) = total output & productivity remained low.
-many miners attracted into other wartime jobs/joined forces as many coal mines were old, lacked modern machinery, were dangerous and inefficient.
What was the result of the coal mine industry being weak during the war?
GB had to rely heavily on oil imports, making economy vulnerable to effects of U-boat attacks on shipping
What measures were talking to maximise war production?
-priority had to be given to imports of essential raw materials & machinery
-Royal Ordnance Factories employed 300,000 workers; another 265 factories did work for the Admiralty & Ministry of Aircraft Production.
-non-essential industries run down so their machinery & labour could be diverted to war work.
-new production methods devised to raise output & save labour.
-gov encouraged greater use of science, for improving efficiency of economy & developing the techniques of warfare.
What measures did farmers take to increase home food production?
-millions of acres ploughed; production shifted from meat to cereals & greater use made of tractors to raise production.
-major Dig for Victory’ campaign, organised by Ministry of Food—> huge rise in home-grown vegetables in back gardens, allotments & sports fields
What was the impact of the Blitz?
-resources mobilised to deal w/ the impact of Blitz
-people used London Underground/Anderson shelters in back gardens for protection during air raids
-many city children & young mothers evacuated to countryside.
-gov made school meals & cheap milk available for displaced children & vitamins for pregnant women
-use of radar (invented by British physicists) played vital role in defeat of German bombers.
-the Blitz secured a sense of national unity & shared will to demonstrate collective resilience.
What were the problems with shipping during the war and how was this fixed?
-tremendous shipping losses for duration of war
-GB shipping constantly exposed to enemy attack, esp German U-boats, while crossing Atlantic to bring in food & raw materials, transporting troops + supplies to war zones & taking essential supplies to Russia. -situation eventually improved in 1944 w/ use of variety of defensive techniques.
What were the economic problems like before the post war boom of 1951?
-between 1945 and 1950, Attlee’s Labour gov faced serious econ problems; in reconstruction after bombing damage, restarting industry & restoring and sorting out how GB would meet war costs
-pre war, GB’s gold reserves= close to £1b, by 1941= fallen £3m
-Lend-Lease Act passed by US Congress, 1941 allowed GB to borrow essential supplies from USA. When this ended w
/out warning (1945) GB had huge debts, largely to USA, & unable to export sufficient goods to meet debts.
-economic problems brought a period of austerity for the ordinary British citizen.
Why was there an economic boom from 1952 onwards?
-economic circumstances of those times were largely outside political party control; Conservatives were lucky
-next decade and beyond; GB enjoyed period of prosperity & corresponding rise in living standards.
-1952+ most economic indicators pointed upwards
What were some advantages experienced due to the economic boom?
-men’s weekly wages rising; £8.30 in 1951, £15.35 in 1961
-average wages rose by 72% betw 1951-63, prices rose by 45%
-length of working week reduced from 48h-42h
-home ownership increased, helped by easy access to cheap mortgages
-new towns planned by Labour in 1940s, eg Stevenage, Crawley, Cwmbran in S Wales & Corby—> rapidly expanding
-effect of developments= overall improvement in living standards.
How did Conservatives improve housing?
-Macmillan as Housing Minister fulfilled election pledge of getting construction of 300,000 + new homes per year, by abolishing Labour’s land tax on development & promoted construction by private companies, rather than local authority contracts.
What were examples of the surge in ownership of consumer goods in the 1950s?
-televisions, washing machines, refrigerators & new furniture increase
-rise in # of televisions= colossal, from 340,000 (1951) - 13m (1963)
-massive increases in private savings
-boom in car ownership, w/ # of cars increasing from 3m (1951)- 7m (1963)
-visible symbol of economic prosperity & affluence= expansion of advertising industry esp after ITV launched age of commercial broadcasting (1955),
people became accustomed to glossy adverts during popular programmes
What happened in the run up to the 1955 election?
The chancellor Rab Butler was able to produce a ‘give-away’ budget that provided the middle classes with £1.34 million in tax cuts.
Why did farmers do so well economically?
they were encouraged by the continuation of generous state subsidies.
Why did farmers do so well economically?
they were encouraged by the continuation of generous state subsidies.
Why did Britain have an issue with its balance of payments and what did this result in?
-1945; high demand worldwide for food, raw materials & machinery, but supplies= scarce due to devastation of war.
-meant import prices= high, led to problem w/ balance of payments.
-19th cent; GB earned enough to pay for its imports, had strong enough economy to lend money to overseas borrowers.
-interest on these loans continued to pay for GB imports into 20th cent
-1945; as volume & value of exports fell, w/ dislocation caused by war & imports rising in price, balance of visible trade= unfavourable.
-In past—> any deficit in visible trade easily covered by invisible trade, but GB had had to obtain loan from US to pay for essential imports.
-so, GB overseas war debts increased its
‘invisible imports’, Britain’s ‘invisible exports’ fallen as result of huge shipping losses & forced sale of overseas investments
What was the Labour government’s economic policy at the time and what did this involve?
Austerity= involved continuing rationing, restrictions on post war reconstruction programmes & holding back wage increases, in order to cut imports.
How did the government try to overcome the balance of payments and was this effective?
-could be overcome by increasing exports
-Living standards held down, so production could go into exports to earn much-needed $
-Exports to US could earn $ to buy imports of food & raw material.
-‘dollar gap’ had to be bridged by expanding export market & obtaining loans + limiting imports.
-Strict exchange controls put in place to stop foreigners withdrawing money from GB + limit anyone wishing to spend $ abroad.
-1947; exports were on increase as reconstructed factories started production
What was Marshall aid and why did it benefit Britain?
-Americans realised GB & W Europe needed financial help if to recover
-US Secretary of State (George Marshall) hinted help might be available & Bevin, (now Labour’s Foreign Secretary) seized opportunity & organised European response.
-Bevin succeeded in getting GB the largest share of Marshall Aid, began to come through in 1948; played crucial part in GB and European econ recovery by 1950.
Why was there economic setback in 1949 and why was it short-lived?
-recession in US reduced demand for British exports, produced another balance of payments crisis.
-pound—> devalued to stimulate export market
-rations reduced= anger + frustration among public
-wage increases held back all of reduced home demand for goods, allowed more goods to be exported at cheaper prices.
-Gov’s drive for exports proved a great success, esp once GB industry readjusted to peacetime production.
-exports increased by nearly 80% betw 1946-50
-motor car industry= esp successful, almost x2 pre-war peak of production w/ most cars going for export.
-1950= volume of exports rising steadily, x2 1938 figures
Why was there a constant threat of inflation in the 2 decades post-war?
-due to continuing high demand for goods, rising prices & wages.
-was made more crucial due to GB’s balance of payments position.
-in war, gov checked inflation through, eg. rationing & high taxation
-end of the war= many people had savings, as there’d been limited opportunities to spend, and people were eager to buy commodities like clothes, cars, holidays, household goods & new houses.
-post-war there was virtually full employment
-1945-64= unemployment averaged about 1.6%, contrast w/high unemployment in 1920s/30s.
-full employment= key part of gov’s econ strategy post-war, more jobs available than workers—> tendency to offer higher wages to fill vacancies.
-higher wages increased demand for goods —> pushed up prices.
-inflation occurred when there was upward spiralling of wages & prices.
What were the results of the financial crisis of summer 1957 and what were the propositions to fix this?
-inflation rising due to wages running far ahead of productivity
-also a run on £, w/ danger that £ would have to be devalued against $
-Macmillan’s chancellor (Peter Thorneycroft) believed in something now called ‘monetarism’; wanted to limit wage increases, cut money supply
-other cabinet ministers (led by lain Macleod) strongly opposed policy as it would lead to increased unemployment & cutbacks in housing
How was the crisis and divison tackled in 1957, was this effective?
-1957; Macmillan sides w/ those who wanted to continue expansionist economic policy
-When Thorneycroft proposed drastic spending cuts (1958) Macmillan overruled him
-Thorneycroft resigned together w/ junior ministers; another eg of postwar consensus politics. Macmillan referred to it as ‘a little local difficulty’
-£ regained value against $
-economy expanded so much that budget of April 1959 provided tax cuts of £370m, even more than Butler’s give-away budget of 1955.
What did worry about the economy overheating force the government to do in 1961 and was this effective?
-introduce pay pause to hold down wage inflation & ask for loan from International Monetary Fund (IMF).
-economic problems= still balance of payments & economics of stop-go
Who was the new chancellor and what did he attempt to do and how?
-1962—> Macmillan replaced chancellor Selwyn Lloyd w/ Reginald Maudling, rising star in Cons Party. He attempted to avoid new threat of rising unemployment w/ tax concessions & policy of expansion w/out inflation
-result= balance of payments continued to deteriorate, w/ imports running ahead of exports & rising inflation
-deficit stood at £400m; worst since war; created difficulties for Wilson’s Labour gov in 1964.
Why and when was a programme of nationalisation done by Attlee’s government, what was the result?
-1946-51
-state had virtually nationalised key parts of industry during war—>concept familiar
-many in business & politics believed some nationalisation was desirable, was little opposition.
-gov succeeded in taking into public ownership almost 20% of econ enterprises employing 10%+ of workforce.
-result= state ownership & control of most of fuel & power production, transport, the steel industry & Bank of England
What was the impact of nationalisation?
-brought improvements in some industries
-supply of gas and electricity—> expanded
-growth in civil aviation & cable + wireless communications
-electricity supplies carried to more remote parts of country
-programme was costly; compensation of £2,700m paid to private owners- was a view that some of this money could’ve been better spent in reinvestment
-some industries like coal mining & railways= unprofitable, required constant gov subsidies, at huge cost to taxpayer
-not all industries benefited state control
-administrative system adopted by Labour didn’t involve workers/consumers in decision-making & running of industries, pay + conditions of workers didn’t improve much
-some industries in competition w/ each other, like gas & electricity
-Cons reversed nationalisation of road transport & steel in 1951
Why was the revival of traditional heavy industries short-lived?
-revival of coal, shipbuilding & textiles was short-lived + disguised long-term trend of decline
-shipbuilding soon facing fierce competition from Far East, 1956–> only 14% of world total
-early 1960s= several shipyards facing bankruptcy & closure
-coal output fell by 1/4 during war and although in demand betw 1945-52, continued to fall thereafter, as coal gradually replaced as main source of energy by oil.
-National Coal Board sanctioned pit closures throughout 1950s/60s in attempt to streamline industry, make it more efficient
What kind of industries thrived and how?
-production levels in steel industry= healthy, stimulated in part by GB’s flourishing motor car industry
-paper, printing & publishing—> all thriving
-rise in # of oil refineries, GB increased capacity to refine oil
-first licences for drilling for oil & gas in North Sea issued in 1964
-subsequent development of offshore oil & gas fields brought significant changes to GB economy
-developments in uses of nuclear fuel went ahead, w/ plans to build dozen nuclear power stations
In which industries was Britain overtaken in and how?
-GB took early lead in computer industry, but by 1964 failed to maintain it
-GB overtaken by US in aeronautics when failed to instil confidence in new Comet 1 airliner in 1950s.
How and why was Britain behind other countries in industry?
-GB’s rate of industrial growth= good, output= high—> raised living standards, but it was lagging behind competitors not just in trad industries but in new ones
-When comparisons are made betw GB & other major European countries regarding annual average rate of growth of industrial output betw 1948-63, it came lower down
-There are several possible causes for this:
• GB’s immediate post-war focus= providing social services & producing consumer goods for home market, thus neglecting long-term investment in new machinery & plant particularly in heavy industries.
• war-damaged nations invested heavily & quickly built new, modern factories, w/ faster production capacity
• much unenlightened management based on army command rather than adopting new-style techniques
• lack of quality control
• Reinforcement of restrictive practices by TU slowed production, led to overpriced goods coupled w/ lack of innovation
• banking system not well-equipped, reluctant to issue loans
What did the government do to improve industry against competitors?
set up the Industrial Commercial Finance Corporation (ICFC) that loaned money purely to industry, to finance modernisation plans.
Why did Britain apply for the European Economic Community (EEC) and what was the impact of their rejection?
-1959; GB took lead in forming European Free Trade Area (EFTA), but new organisation wasn’t able to match economic growth of European Economic Community (EEC)
-1961;Macmillan gov submitted GB’s application to join EEC, in hope of boosting production for large-scale export market, of increasing industrial efficiency by competition & hope that econ growth would be stimulated by rapid econ expansion already racing ahead in the BEC.
-rejection of GB’s application (Jan 1963)= serious setback for Macmillan’s econ policies, although reinforced GB’s trading links w/ Commonwealth
What are examples of the new technologies that developed during 1939-64?
-remarkable progress in electronics
-nation’s morale held together by radio broadcasts, esp by Churchill during dark days of early 1940s
-1948; battery-operated transistor radio invented, made radios portable & able to be played anywhere
-TV, first developed in late 1930s as experiment by BBC + halted during war, made great comeback in 1950s w/ arrival of Independent Television Authority
-tech advances produced colour screens in 1967, television began to threaten position of radio
-Lyons Electronic Office (LEO) = first computer used for commercial business applications; originally set up for Lyons catering company & operated from 1951-65
-huge changes in sources & use of power
-1950s brought tech change to railways
-trains changed from steam power to electricity/diesel
-central heating installed in new houses,replaced old-fashioned labour- intensive coal fires
-development of nuclear power to create electricity; domestic & industrial use as clean alternative to fossil fuels
-jet engine, developed by Frank Whittle in 1930s= advanced to commercial use in late 1940s when Vickers Viscount turbo-prop made first flight, 1948
-motor car design advanced significantly, manufacturing accelerated
-increasing numbers of motor vehicles called for road improvements—> development of new road building machinery like earth movers.
-first stretch of motorway; 1958
-invention of rayon in 1930s, easier and quicker to launder than natural fabric
