Economics 3 Flashcards
Liberals: How was the laissez faire ideology undermined by WW1?
Liberals had to be involved in the war -
The government extended their controls over the economy and took over industries like mines, munitions and railways. Food rationing and alcohol + tobacco were heavily taxed
Liberals: How was Free Trade undermined by WW1?
The government extended their control over the economy. Trade with other nations had to be carefully restricted and regulated.
War exposed how vulnerable Britain’s economy was because of the reliance on foreign trade
Liberals: How was Internationalism undermined by WW1?
Liberals had previously been against foreign intervention, but due to the nature of WW1, they had to go to war against other nations.
They had to stoke nationalism and patriotism to gain support for the war
Liberals: How was Internationalism undermined by WW1?
Liberals had previously been against foreign intervention, but due to the nature of WW1, they had to go to war against other nations.
They had to stoke nationalism and patriotism to gain support for the war
Liberals: How was Balanced Budgets undermined by WW1?
Britain was in huge debts, which meant they had to adapt the budget to remove some.
National debt had increased by 1200% and was over £7 billion by 1918
Liberals: How was Limited State Intervention undermined by WW1?
• had to introduce DORA in 1915, increasing taxation and introducing censorship for soldiers newspapers
•had to introduce conscription in 1916
This meant that the liberals were having to become very involved
Liberals: How was Freedom of the Individual undermined by WW1?
• introduction of censorship 1915
• introduction of conscription 1916
• strikes were banned
What powers did DORA ( Defense of the Realm Act 1915) give the government?
• far reaching powers to suppress anti-war dissent (made publishing anything that might indirectly/directly aid the enemy a criminal offence. Wording had to be very ambiguous as almost anything could be banned including army reports or anti war literature)
• War Office Press Bureau - reports from the army were censored
• powers to requisition any land or property deemed necessary for the war effort
• binoculars usage and kite flying banned
• alcohol purchase was heavily limited ( no drunk or hungover workers in munitions factories)
• 1915 amendment - beer/alcohol was diluted and pub hours were restricted to 12-3pm and 6:30-9:30pm
What powers did DORA ( Defense of the Realm Act 1915) give the government?
• far reaching powers to suppress anti-war dissent (made publishing anything that might indirectly/directly aid the enemy a criminal offence. Wording had to be very ambiguous as almost anything could be banned including army reports or anti war literature)
• War Office Press Bureau - reports from the army were censored
• powers to requisition any land or property deemed necessary for the war effort
• binoculars usage and kite flying banned
• alcohol purchase was heavily limited ( no drunk or hungover workers in munitions factories)
• 1915 amendment - beer/alcohol was diluted and pub hours were restricted to 12-3pm and 6:30-9:30pm
By how much did government spending increase between 1913 and 1917?
From £200 million to £2700 million
Around 1200%
What affect did WW1 have on exports?
Exports remained mostly the same, fluctuating around £600 million per year
Whereas imports were increasing steadily, demonstrating that key British industries remained stable
What effect did WW1 have on the state control of the economy?
WW1 meant the government had to increase their control over the key British industries
What were the new government departments set up to manage the economic war effort?
- 1916 Ministry of Food - introduced voluntary rationing in 1917, and the compulsory 1918-1920
- 1916 Ministry of Shipping - there was a crisis in 1917, when German U-Boats were sinking supplies, nearly sending Britain towards starvation
- 1915 Ministry of Munitions - formed after the Shell Crisis and became a massive success
What industries were nationalised?
- coal (supplies not mines)
- munitions (and munitions pubs)
How were peoples’ day to day lives impacted by the governments new economic changes during WW1?
- couldn’t go to the pub as often due to the specific open times
- widened womens’ role in society, increasing the amount of women in the workforce
- rationing of flour, butter, margarine, sugar, jam, meat
- created lots of extra jobs
- started the process of improving workplace conditions
Were there any positive aspects of the increased government control over the economy in WW1?
- mass production techniques had improved
- changed the structure of major industries
- improving some working conditions
What economic problems did the government face at the end of WW1?
- shipping industry never recovered fully
- had to pay back £millions in debt
- increased unemployment: war industries declined after the end of WW1
- increase in strikes
- increased competition from abroad
- increased public hardship
How was peoples expectations of government changed after WW1? (economy)
people would expect the government to remain more involved in cutting unemployment and industries, and when the government became less invested, people would get upset
1920s: How serious were the problems in the coal industry?
- lots of strikes decreased the rate of production
- other countries (Poland and Spain) were starting to mine their own coal
- mines were poorly equipped
1920s: How serious were the problems in the shipbuilding industry?
- used to be 45% of world shipping tonnage, and were only 30% in the 1920s
- naval orders fell after the war
- British designs were outdated compared to their competition
POSITIVES
- demand rose again in the build up to WW2
1920s: How serious were problems in the iron and steel industry?
- after 1920, demand fell significantly
- export markets were lost during and after the war
POSITIVES
- demand rose again in the 1930s after the depression, and in the build up to WW2 as demand for ships increased
1920s: How serious were the problems in the invisible industries?
- returns from invisibles were now reduced
- WW1 forced Britain off the Gold Standard - weakening the pound
1920s: How serious were the problems in demand side factors?
- foreign competition increased so Britain was getting less trade
- oil was increasingly replacing coal - in excess for the 1920s
- trade restrictions (e.g. in the USA) reduced overseas demand
1920s: How serious were the problems in supply side factors?
- age and backwardness of staple industries increased prices
- outdated machinery
- bad industrial relations (e.g. strikes increasing in coal) hit the staples hard
- trade cycle produced slumps
1920s: How serious were the problems in unemployment?
- decreased demand contributed to unemployment
- decline of staple industries led to structural unemployment
- changing locations of industry meant increased unemployment in abandoned areas
- increased to 11% in 1920 after WW1 ended
1920s: which staple industry had the most significant problems?
Demand side factors had the most significant problems in the 1920s, because with a decrease in demand contributed to a decline in: coal; iron and steel; and shipbuilding. The decline in the staple industries also led to an increase in unemployment. Therefore, the demand side factors had the most significant problems as they led to many issues, contributing to the worsening economy.
Why was there a post war boom?
- wartime restrictions: individuals and businesses were unable to spend, so had accumulated spendings
- individuals bought luxury items that had been rations during the war such as cigarettes, soap, clothes and coffee
- speculative boom: businesses issued shares for investors, money was poured into the London stock exchange. The value of new shares was dramatically increased from £65 million to £348 million
Why did the economy in the 1920s turn into a recession?
deflation government cut spending by 75% and interest rates rose - increased cost of borrowing and reduced investment in business
- loss of export trade (foreign rivals such as the USA took advantage of disruption to trade during the war)
- underinvestment in staple industries (on average coal mines were 50 years old)
- poor industrial relations (led to 13% decrease in working hours, and many many working days were lost in the strikes)
What were the effects of the recession?
- one of the most severe economic slumps experienced in Britain
- 2 million people were unemployed in 1921
- crisis in the coal industry led to a wave of strikes including the General Strike (sympathy strike)
- cost of living was increased by 25% between 1918-1920 and increased union strikes to ensure higher living standards for their workers
What did Lloyd George’s government try to do to solve the economic problems?
- laissez faire approach: believed that the government had to wait for the economy to improve on its own
- advocated for retrenchment (government cuts to public spending on services and welfare)
- wanted to avoid middle class criticism e.g. Anti Waste League, Times and Daily Mail saw spending as “socialist”
- in 1921 DLG appointed Sir Eric Geddes to implement spending cuts (Geddes Axe)
- Geddes recommended:
~£130 million in cuts
~ health, welfare, and housing spending reduced from £205m in 1920-21, to £182m in 1922-23
~affected the standard of living of the poorer people in society
1920s: What were the positive developments in the economy?
- new industries of the ‘Second Industrial Revolution’ (chemicals, motor vehicles, canned food, electrical goods) were growing at a fast pace
- motor car production was 3x what it had been in 1913 by the mid 1920s
- 1926 - Central Electricity Generating Board set up
- the National Grid was developed and helped supply both homes and businesses with electricity
- productivity measured as output per worker increased, BUT issues remained compared to other countries
- in 1923-29, overall economic growth was faster than pre 1914
- service industry grew, spread of retailing, road transport, mass entertainment, administration
- living standards generally rising
- 1 million jobs created in the service sector in 1920s
How were the British industries before WW1?
- cotton exported worldwide by Britain in 1913
- coal employing 1.1m miners (29 tonnes per year)
- 50% of all worlds shipping done by Britain in 1913
- 6.5 million tonnes of steel in 1910
- underinvestment in new processes for a while before the war
- competiton from the USA and Germany as they were quickerr to develop the new industries like chemicals and energy
