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State Intervention and Government Policies, 1918-39 Flashcards

1
Q

What does sterling denominated mean?

A

Sterling denominated means that a financial instrument is accounted for in GBP

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2
Q

How much of GDP was sterling denominated government debt after WWI?

A

After WWI sterling denominated government debt was 120% of GDP

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3
Q

What happened immediately following the end of WWI?

A

Immediately following WWI there was a post-war boom and expansion of the shipping industry, but this was short lived

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4
Q

What was the impact of the short boom in shipping post-WWI?

A

Shipping lines had tried to take advantage of the boom, but it was so short lived that there was a severe slump in the industry because of oversupply- this was blamed on international competition

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5
Q

What exacerbated the shipping industry slump?

A

The shipping industry slump was exacerbated by the decline of traditional export industries, as there was less demand for shipping

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6
Q

By how much did coal exports decline between 1913 and 1921?

A

Coal exports declined from 21 million tonnes in 1913 to <11 million tonnes in 19121

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7
Q

What was the role of the government in worsening conditions of the shipping industry?

A

The shipping industry received little support in its slump because no subsidies were offered to liner trade OR tramp shipping trade

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8
Q

What is tramp shipping trade?

A

Tramp shipping trade is shipping without a schedule or fixed ports of call

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9
Q

What happened to employment in new industries in the period 1920-29?

A

In the period 1920-29, the share of unemployment in new industries rose from 11% to 15%- although this was likely impacted by geographical dispersion of unemployment

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10
Q

What happened to employment in basic industries in the period 1920-29?

A

In the period 1920-29, the share of unemployment in basic industries declined from 30% to 25%

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11
Q

What occurred in the early 1920s with reference to struggles between Labour and Conservatives?

A

In the early 1920s, the Labour Party pressured the Conservative govts of Law and later Baldwin to institute social programmes alleviating unemployment / poverty

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12
Q

What is an example of an early 1920s policy which was passed because of Labour pressure?

A

The 1920 Unemployment Insurance Act was passed under Liberal Chamberlain’s govt

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13
Q

Briefly outline the 1920 Unemployment Insurance Act:

A

The 1920 Unemployment Insurance Act provided 39 weeks of unemployment benefits (i.e. the dole)

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14
Q

What did the 1921 Unemployment Insurance Act do?

A

The 1921 Unemployment Insurance Act established that under-18s would receive less than adults, and women less than men

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15
Q

Where was there an expansion in employment in the 1920s?

A

Employment expanded in the 1920s in chemicals, electrical engineering, vehicles and electricity by a quarter

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16
Q

On the eve of WWI how much of the adult male working population had depended on shipbuilding?

A

On the eve of WWI, 14% of the adult male working population had depended on shipbuilding

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17
Q

When was the British Shipping Act passed?

A

The British Shipping Act was passed in 1935

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18
Q

Briefly outline the content of the British Shipping Act of 1935:

A

The British Shipping Act of 1935 subsidised tramp shipping with £10 mil, in order to alleviate pressures of the international depression and help modernise the industry

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19
Q

What was the amount of private sector holdings of national debt in the interwar era?

A

In the interwar era, the amount of private sector holdings of national debt was £6.6 billion

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20
Q

What was the average GDP in the interwar era?

A

The average GDP in the interwar era was £5.5 billion

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21
Q

What was the difference between GDP and national debt?

A

The difference between GDP and national debt was £1.1 billion

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22
Q

When was the discount rate of the Bank of England first raised in the interwar era? What was it?

A

The Bank of England’s discount rate was first raised in November 1919, from 5% to 6%

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23
Q

When was the discount rate of the Bank of England raised again later in the interwar era? What to?

A

The Bank of England’s discount rate was raised again to 7% in April 1920

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24
Q

What does discount rate mean?

A

Discount rate means the minimum interest rate set by a central bank

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25
What were political and financial institutions forced to do until the restoration of the gold standard in April 1925?
Until the restoration of the gold standard in April 1925, political and financial institutions were forced to pursue restrictive monetary and fiscal policies to push down British prices while pushing up the sterling to its prewar exchange rate
26
What was the prewar pound to dollar exchange rate being sought by the British government in the 1920s?
The prewar pound to dollar exchange rate was £1:$4.86
27
Why did the British government want to instigate the prewar pound to dollar exchange rate?
Having the prewar exchange rate of £1:$4.86 would cheapen paying back national debt from the war to NYC banks
28
What did maintaining / striving for the prewar exchange rate cause in consequence?
Keeping the exchange rate at its prewar levels necessitated high interest rates, which increased the burden on the public as high taxes were required- this repressed consumption and investment
29
Aside from the gold standard, what was the other main monetary policy of the interwar era?
The second significant monetary policy of the interwar era was the War Loan conversion of 1932- it was an attempt at debt management
30
Briefly outline the War Loan conversion of 1932:
Because of a reduction in short-term interest rates to 2%, the govt could reduce the cost of servicing the national debt- the WLC saved £30mil pa (0.7% GDP). It also lengthened the maturity of outstanding debt
31
What is a contradiction within the War Loan conversion propagated by Neville Chamberlain?
The War Loan conversion meant savings in debt, which was highly desirable, but the extension of maturity of the debt was the opposite of promoting economic recovery
32
Where was a lot of government spending in the interwar concentrated? What was the impact of this?
A lot of the interwar government spending was concentrated in rearmament, this mitigated the severity of the 1937-8 downturn so it was less impactful than 1920-1 and 1930-1.
33
What does Nicholas Horeswood's study highlight?
Nicholas Horsewood found that defence spending increased from 2% to 7.7% in 1939- likely in response to the changing international climate- which stimulated output and employment
34
What was the change in the employment budget between 1929 and 1932?
The employment budget of 1929 was 0.4% of GDP while the employment budget of 1932 was 3% of GDP
35
By 1935 what was the state of the job market in Britain?
By 1935 445,000 jobs had been created
36
By 1938 how effective had the expansion of the British job market proven?
By 1938, the expanded job market had absorbed 15% of the unemployed
37
What was adopted in 1932 and what use was it?
In 1932 the General Tariff was adopted, it applied a 10% tax on all imports bar raw materials, and established an advisory committee to consider higher rates
38
How was the imperial market protected when the 1932 General Tariff was adopted?
The imperial market was protected with the advent of the General Tariff because the government held the BEEC (Ottawa Conference) and extended 32 preferential treatments in return for similar concessions
39
What was the impact of the General Tariff on the British economy?
The General Tariff pushed prices up in a time where internationally they were collapsing, this stimulated aggregate supply and profit margin increases
40
Was the General Tariff a good policy?
Largely, yes. The General Tariff had arguable positive impact with regards to macroeconomics, especially when the imperial concessions are considered
41
How impactful was the General Tariff?
Although where it made impact it was helpful, the General Tariff likely had little impact. Unemployment was >20%, so an increase in relative prices of imported goods was not going to solve the underlying economic problems
42
What is an agreement within the historiography with regards to the international Great Depression (largely 1929-32)
Historians are largely in consensus that the Great Depression was caused by a failure to re-establish the 1913 world economic order after 1918
43
Between 1929-1933 how much did Britain's GDP fall?
Between 1929-1933 Britain's GDP fell 4.5%
44
Between 1929-1932, how much did British exports fall by?
Between 1929-1932, British exports fell by 50% in value
45
How many Britons were unemployed in 1929 versus 1932? When was recovery evident?
In 1929 1.5 million Britons were unemployed, in 1932 3.4 million Britons were unemployed- although there was recovery to 3.0 million in 1933
46
What is a source cited for unemployment rates in the Great Depression?
The British National Insurance statistics put unemployment at 10.5% in 1929 and 22% in 1932.
47
What was the primary goal of the new National Govt headed by Macdonald?
The primary goal of the National Government was to get off the Gold Standard
48
What was the main constraint on monetary policy throughout the period?
Consistently notable unemployment levels in excess of 1 million insured persons
49
Where was the brunt of struggle in the interwar concentrated?
The brunt of struggle in the interwar years- where policy was most necessary- was in 1920-25
50
Where was the brunt of struggle in the interwar concentrated?
The brunt of struggle in the interwar years- where policy was most necessary- was in 1920-25
51
How does S. Pollard characterise the nature of the pound in 1925?
S. Pollard claims the £ in 1925 to have been 'markedly overvalued'
52
What was the impact of returning to the gold standard and prewar exchange rate?
S. Pollard asserted that the fiscal and monetary policies and actions which achieved the 1:4.86 rate caused 'grave harm' economically
53
How does S. Pollard characterise the policy to return to the gold standard?
S. Pollard claims the return to the gold standard to have been essentially a bankers policy with no concern for industry
54
What occurred with British imports and exports during the 1920s?
As exports were declining because of tariffs and decline in demand, imports (particularly of raw materials) increased- meaning the balance of payments was off kilter
55
What can be said of world advancement in the latter half of the 1920s?
While the wider world saw advancement 1924-29, Britain had no to little progress
56
What did contemporary Paul Einzig have to say retrospectively of the gold standard?
In 1932 Paul Einzig conceded that the Gold Standard had been a 'unanimous mistake'
57
How does S. Pollard's interpretation of the interwar era fit into wider historiography?
S. Pollard suggests that although many historians have asserted the "failing" economy of depression to have been pretty affluent, there was 'at least a failure to do better'
58
What was R. Sayers interpretation of the Gold Standard?
R. Sayers claims that although the return to the Gold Standard ended badly, it was a justifiable goal at the time- especially considering its widespread support
59
Who was one prominent critic of the return to the gold standard?
J. M. Keynes vehemently opposed the return to the gold standard, but was seen to view things intellectually rather than practically
60
What is an issue with historians criticising contemporaries for striving for the exchange rate of £1:$4.86?
It seems unrealistic now, but there was no way for contemporaries to estimate the US-GB prices gap
61
What were the two extreme contemporary estimates of the US-GB price gap?
Keynes thought the price gap to have been 10%, thus 1:4.86 would have been a damning exchange rate, but the Chamberlain Bradbury Advisory Committee thought it to be 1.5%
62
What body oversaw the return to the Gold Standard?
The Chamberlain-Bradbury Advisory Committee oversaw the return to the Gold Standard
63
What are two reasons why a return to the Gold Standard is justifiable as an action taken by contemporaries?
Monetary factors had little impact on depression, and there was no way to gauge unforeseen circumstances such as the stagnation of US prices
64
Where were objections to the Gold Standard explicitly evident?
The Mond-Turner Talks of 1929-33 made critique of the old Standard a focal point
65
What does S. Pollard claim to have been the nature of contemporary opinion of the return to the gold standard in opposition to other historical interpretations?
S. Pollard claims a revision is necessary as Keynes was not the only objector, but it is evident that the City lacked his intellectual / theoretical approach and this needs further investigation
66
How can the extent of the City's serving of their own interests be exemplified?
Sir Robert Kindersley claimed 'we [the industry] have got to take our medicine' - although it should be remembered that they were just self serving, not purposefully throwing others under the bus
67
What does S. Pollard assert about the nature between banking and politics?
S. Pollard suggests that yes, banking did have more power / influence than politics, particularly because of the distrust of politicians. But banking was unequal too- the Board of Directors was dominated by bankers in international finance
68
What was the impact of the 1920s on London's position as the world's banker?
Arguably, the domination of international finance at the expense of everything else caused cyclical decay of economic practice and fiscal strength, London was weak and dependent. By 1928 no match for NYC.
69
What must be conceded with regard to the City's self interest in driving 1929-1931 policies?
The fiscal and monetary world and policies accompanying it had never warranted a consideration of industry or employment before, so there was no precedent for it- even if the changing world economy warranted it, it would have been uncharacteristic to do so.
70
What did WWI change?
The world had crossed from lassies-faire practices into a modern economy, but bankers had yet to notice this
71
Who claims that the politicisation of interwar unemployment was inevitable?
K. Hancock claims that the politicisation of interwar unemployment was inevitable
72
When was unemployment a crucial election point?
In the elections of 1922, 1923, 1924 and 1929, unemployment was a key talking point
73
Why was the government slow off the bat to handle unemployment?
Unemployment 1920-3 was attributed to short term international economic chaos following WWI (e.g. disruption of trade), but the 1924 coal crisis changed this. Long term solutions proved necessary.
74
What is a source for contemporary opinion of unemployment in the early 1920s?
The King in the 1922 opening of parliament said that "the only remedy [is the] appeasement of international rivalries'
75
What was the role of France's occupation of Ruhr in 1923 on political considerations of unemployment?
Originally considered damning to recovery, by the time of the coal crisis the occupation was seen to have benefitted Britain because it limited international competition
76
What was passed in 1926? What did it do?
In 1926, the Economy (miscellaneous provisions) Act was passed, this reduced Treasury contributions to health insurance and the Unemployment Insurance Fund
77
Why was the Economy (miscellaneous provisions) Act passed?
The Economy (miscellaneous provisions) Act was passed in order to bring down government expenditure in the interwar years because it exceeded revenue
78
What did the 1920 Joint Committee on the Cost of Living find necessary?
the 1920 Joint Committee on the Cost of Living found legislation to immediately regulate the circulation of currency until the end of depression necessary
79
How many jobs were sourced in 1921 to help the 1.4 million unemployed?
73,000 jobs in special work projects were found by the Ministry for Labour to help the 1.4 million unemployed
80
What were special work projects?
Special work projects were government and local authority sponsored ventures in road building, sewers, houses etc. In an effort to better the country and provide work simultaneously
81
What was the committee of special work projects and what was their impact?
St Davids committee approved all projects, roughly £115 million worth in the 1920s
82
What was the average employment level in special work projects 1920-1928?
The average employment level 1920-1928 in special work projects was 44,000, or 4% of total unemployed
83
What was an issue with special works projects?
An issue with special works projects is that they often failed as governments tried to reduce their contribution and raise local authority contribution, e.g. govt lost £3 million on a Liverpool-manchester road
84
How can the lack of funding received by local authorities be shown?
The Manchester council informed the PM in 1928 that they had spent £2.25 million and received only £0.5 million
85
When was the Industrial Transference Scheme started and what did it do?
The Industrial Transference Scheme was started in 1928, it moved the workers to the jobs rather than vice versa
86
What was a good thing about the Industrial Transference Scheme according to K. Hancock?
The Industrial Transference scheme was good in that it necessitated all special work projects having at least 50% transferees
87
What was a drawback of the Industrial Transference Scheme according to K. Hancock?
The Industrial Transference Scheme didn't recognise aggregate demand for labour in certain areas, so it created widespread disillusionment and hostility
88
What idea of Ralph Hawtrey's was commonplace in contemporary thought on unemployment?
Ralph Hawtrey's idea that relief works were only justifiable if those who gained employment were more deserving than those who lost it was prevalent in the Treasury
89
What was clear regarding dispersion of unemployment by 1927?
By 1927, it was clear that unemployment was concentrated in the coal industry, but there was also a significant amount attributed to shipbuilding
90
When was there an agreement to reduce the miner workforce?
On 1 August 1927 there was an agreement in government that the miner workforce needed slimming down- adult workers who joined after August 1926 were let go
91
Why were workers who joined the mining force after August 1926 let go?
Between August 1926 and August 1927, there had been an influx of 17,500 workers into mining, this was completely alleviated
92
How was the unemployment of youths- who were key economic assets to working class families- aided? Was the management effective?
In December 1927 Juvenile Unemployment Centres were set up in the most distressed areas, although less than 2000 boys were transferred by 1929
93
By the close of 1929, how many men had been transferred to find work?
By the end of 1929, the Industrial Transference Scheme had transferred 42,000 adult working men
94
What did a 1920s Ministry of Labour investigation reveal about Britain's workforce?
A 1920s Ministry of Labour study revealed that out of its sample of 40,000 adult male workers, only 7,500 were capable and available for industrial employment
95
What did contemporary Sidney Webb find in 1923?
Sidney Webb in 1923 found that relief works only helped 3% of the total population
96
What does K. Hancock assert about the use of government policies in alleviating unemployment?
K. Hancock claims that the Labour Party in the 1920s was of little use, if not actually damaging, to the unemployed in Britain

Economics (9 decks)

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