State Intervention and Government Policies, 1918-39

Question 1

What does sterling denominated mean?

Answer 1

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

Question 2

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

Answer 2

After WWI sterling denominated government debt was 120% of GDP

Question 3

What happened immediately following the end of WWI?

Answer 3

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

Question 4

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

Answer 4

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

Question 5

What exacerbated the shipping industry slump?

Answer 5

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

Question 6

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

Answer 6

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

Question 7

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

Answer 7

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

Question 8

What is tramp shipping trade?

Answer 8

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

Question 9

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

Answer 9

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

Question 10

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

Answer 10

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

Question 11

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

Answer 11

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

Question 12

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

Answer 12

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

Question 13

Briefly outline the 1920 Unemployment Insurance Act:

Answer 13

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

Question 14

What did the 1921 Unemployment Insurance Act do?

Answer 14

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

Question 15

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

Answer 15

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

Question 16

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

Answer 16

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

Question 17

When was the British Shipping Act passed?

Answer 17

The British Shipping Act was passed in 1935

Question 18

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

Answer 18

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

Question 19

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

Answer 19

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

Question 20

What was the average GDP in the interwar era?

Answer 20

The average GDP in the interwar era was £5.5 billion

Question 21

What was the difference between GDP and national debt?

Answer 21

The difference between GDP and national debt was £1.1 billion

Question 22

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

Answer 22

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

Question 23

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

Answer 23

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

Question 24

What does discount rate mean?

Answer 24

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

Question 25

What were political and financial institutions forced to do until the restoration of the gold standard in April 1925?

Answer 25

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

Question 26

What was the prewar pound to dollar exchange rate being sought by the British government in the 1920s?

Answer 26

The prewar pound to dollar exchange rate was £1:$4.86

Question 27

Why did the British government want to instigate the prewar pound to dollar exchange rate?

Answer 27

Having the prewar exchange rate of £1:$4.86 would cheapen paying back national debt from the war to NYC banks

Question 28

What did maintaining / striving for the prewar exchange rate cause in consequence?

Answer 28

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

Question 29

Aside from the gold standard, what was the other main monetary policy of the interwar era?

Answer 29

The second significant monetary policy of the interwar era was the War Loan conversion of 1932- it was an attempt at debt management

Question 30

Briefly outline the War Loan conversion of 1932:

Answer 30

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

Question 31

What is a contradiction within the War Loan conversion propagated by Neville Chamberlain?

Answer 31

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

Question 32

Where was a lot of government spending in the interwar concentrated? What was the impact of this?

Answer 32

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.

Question 33

What does Nicholas Horeswood’s study highlight?

Answer 33

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

Question 34

What was the change in the employment budget between 1929 and 1932?

Answer 34

The employment budget of 1929 was 0.4% of GDP while the employment budget of 1932 was 3% of GDP

Question 35

By 1935 what was the state of the job market in Britain?

Answer 35

By 1935 445,000 jobs had been created

Question 36

By 1938 how effective had the expansion of the British job market proven?

Answer 36

By 1938, the expanded job market had absorbed 15% of the unemployed

Question 37

What was adopted in 1932 and what use was it?

Answer 37

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

Question 38

How was the imperial market protected when the 1932 General Tariff was adopted?

Answer 38

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

Question 39

What was the impact of the General Tariff on the British economy?

Answer 39

The General Tariff pushed prices up in a time where internationally they were collapsing, this stimulated aggregate supply and profit margin increases

Question 40

Was the General Tariff a good policy?

Answer 40

Largely, yes. The General Tariff had arguable positive impact with regards to macroeconomics, especially when the imperial concessions are considered

Question 41

How impactful was the General Tariff?

Answer 41

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

Question 42

What is an agreement within the historiography with regards to the international Great Depression (largely 1929-32)

Answer 42

Historians are largely in consensus that the Great Depression was caused by a failure to re-establish the 1913 world economic order after 1918

Question 43

Between 1929-1933 how much did Britain’s GDP fall?

Answer 43

Between 1929-1933 Britain’s GDP fell 4.5%

Question 44

Between 1929-1932, how much did British exports fall by?

Answer 44

Between 1929-1932, British exports fell by 50% in value

Question 45

How many Britons were unemployed in 1929 versus 1932? When was recovery evident?

Answer 45

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

Question 46

What is a source cited for unemployment rates in the Great Depression?

Answer 46

The British National Insurance statistics put unemployment at 10.5% in 1929 and 22% in 1932.

Question 47

What was the primary goal of the new National Govt headed by Macdonald?

Answer 47

The primary goal of the National Government was to get off the Gold Standard

Question 48

What was the main constraint on monetary policy throughout the period?

Answer 48

Consistently notable unemployment levels in excess of 1 million insured persons

Question 49

Where was the brunt of struggle in the interwar concentrated?

Answer 49

The brunt of struggle in the interwar years- where policy was most necessary- was in 1920-25

Question 50

Where was the brunt of struggle in the interwar concentrated?

Answer 50

The brunt of struggle in the interwar years- where policy was most necessary- was in 1920-25

Question 51

How does S. Pollard characterise the nature of the pound in 1925?

Answer 51

S. Pollard claims the £ in 1925 to have been ‘markedly overvalued’

Question 52

What was the impact of returning to the gold standard and prewar exchange rate?

Answer 52

S. Pollard asserted that the fiscal and monetary policies and actions which achieved the 1:4.86 rate caused ‘grave harm’ economically

Question 53

How does S. Pollard characterise the policy to return to the gold standard?

Answer 53

S. Pollard claims the return to the gold standard to have been essentially a bankers policy with no concern for industry

Question 54

What occurred with British imports and exports during the 1920s?

Answer 54

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

Question 55

What can be said of world advancement in the latter half of the 1920s?

Answer 55

While the wider world saw advancement 1924-29, Britain had no to little progress

Question 56

What did contemporary Paul Einzig have to say retrospectively of the gold standard?

Answer 56

In 1932 Paul Einzig conceded that the Gold Standard had been a ‘unanimous mistake’

Question 57

How does S. Pollard’s interpretation of the interwar era fit into wider historiography?

Answer 57

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’

Question 58

What was R. Sayers interpretation of the Gold Standard?

Answer 58

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

Question 59

Who was one prominent critic of the return to the gold standard?

Answer 59

J. M. Keynes vehemently opposed the return to the gold standard, but was seen to view things intellectually rather than practically

Question 60

What is an issue with historians criticising contemporaries for striving for the exchange rate of £1:$4.86?

Answer 60

It seems unrealistic now, but there was no way for contemporaries to estimate the US-GB prices gap

Question 61

What were the two extreme contemporary estimates of the US-GB price gap?

Answer 61

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%

Question 62

What body oversaw the return to the Gold Standard?

Answer 62

The Chamberlain-Bradbury Advisory Committee oversaw the return to the Gold Standard

Question 63

What are two reasons why a return to the Gold Standard is justifiable as an action taken by contemporaries?

Answer 63

Monetary factors had little impact on depression, and there was no way to gauge unforeseen circumstances such as the stagnation of US prices

Question 64

Where were objections to the Gold Standard explicitly evident?

Answer 64

The Mond-Turner Talks of 1929-33 made critique of the old Standard a focal point

Question 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?

Answer 65

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

Question 66

How can the extent of the City’s serving of their own interests be exemplified?

Answer 66

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

Question 67

What does S. Pollard assert about the nature between banking and politics?

Answer 67

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

Question 68

What was the impact of the 1920s on London’s position as the world’s banker?

Answer 68

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.

Question 69

What must be conceded with regard to the City’s self interest in driving 1929-1931 policies?

Answer 69

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.

Question 70

What did WWI change?

Answer 70

The world had crossed from lassies-faire practices into a modern economy, but bankers had yet to notice this

Question 71

Who claims that the politicisation of interwar unemployment was inevitable?

Answer 71

K. Hancock claims that the politicisation of interwar unemployment was inevitable

Question 72

When was unemployment a crucial election point?

Answer 72

In the elections of 1922, 1923, 1924 and 1929, unemployment was a key talking point

Question 73

Why was the government slow off the bat to handle unemployment?

Answer 73

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.

Question 74

What is a source for contemporary opinion of unemployment in the early 1920s?

Answer 74

The King in the 1922 opening of parliament said that “the only remedy [is the] appeasement of international rivalries’

Question 75

What was the role of France’s occupation of Ruhr in 1923 on political considerations of unemployment?

Answer 75

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

Question 76

What was passed in 1926? What did it do?

Answer 76

In 1926, the Economy (miscellaneous provisions) Act was passed, this reduced Treasury contributions to health insurance and the Unemployment Insurance Fund

Question 77

Why was the Economy (miscellaneous provisions) Act passed?

Answer 77

The Economy (miscellaneous provisions) Act was passed in order to bring down government expenditure in the interwar years because it exceeded revenue

Question 78

What did the 1920 Joint Committee on the Cost of Living find necessary?

Answer 78

the 1920 Joint Committee on the Cost of Living found legislation to immediately regulate the circulation of currency until the end of depression necessary

Question 79

How many jobs were sourced in 1921 to help the 1.4 million unemployed?

Answer 79

73,000 jobs in special work projects were found by the Ministry for Labour to help the 1.4 million unemployed

Question 80

What were special work projects?

Answer 80

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

Question 81

What was the committee of special work projects and what was their impact?

Answer 81

St Davids committee approved all projects, roughly £115 million worth in the 1920s

Question 82

What was the average employment level in special work projects 1920-1928?

Answer 82

The average employment level 1920-1928 in special work projects was 44,000, or 4% of total unemployed

Question 83

What was an issue with special works projects?

Answer 83

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

Question 84

How can the lack of funding received by local authorities be shown?

Answer 84

The Manchester council informed the PM in 1928 that they had spent £2.25 million and received only £0.5 million

Question 85

When was the Industrial Transference Scheme started and what did it do?

Answer 85

The Industrial Transference Scheme was started in 1928, it moved the workers to the jobs rather than vice versa

Question 86

What was a good thing about the Industrial Transference Scheme according to K. Hancock?

Answer 86

The Industrial Transference scheme was good in that it necessitated all special work projects having at least 50% transferees

Question 87

What was a drawback of the Industrial Transference Scheme according to K. Hancock?

Answer 87

The Industrial Transference Scheme didn’t recognise aggregate demand for labour in certain areas, so it created widespread disillusionment and hostility

Question 88

What idea of Ralph Hawtrey’s was commonplace in contemporary thought on unemployment?

Answer 88

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

Question 89

What was clear regarding dispersion of unemployment by 1927?

Answer 89

By 1927, it was clear that unemployment was concentrated in the coal industry, but there was also a significant amount attributed to shipbuilding

Question 90

When was there an agreement to reduce the miner workforce?

Answer 90

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

Question 91

Why were workers who joined the mining force after August 1926 let go?

Answer 91

Between August 1926 and August 1927, there had been an influx of 17,500 workers into mining, this was completely alleviated

Question 92

How was the unemployment of youths- who were key economic assets to working class families- aided? Was the management effective?

Answer 92

In December 1927 Juvenile Unemployment Centres were set up in the most distressed areas, although less than 2000 boys were transferred by 1929

Question 93

By the close of 1929, how many men had been transferred to find work?

Answer 93

By the end of 1929, the Industrial Transference Scheme had transferred 42,000 adult working men

Question 94

What did a 1920s Ministry of Labour investigation reveal about Britain’s workforce?

Answer 94

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

Question 95

What did contemporary Sidney Webb find in 1923?

Answer 95

Sidney Webb in 1923 found that relief works only helped 3% of the total population

Question 96

What does K. Hancock assert about the use of government policies in alleviating unemployment?

Answer 96

K. Hancock claims that the Labour Party in the 1920s was of little use, if not actually damaging, to the unemployed in Britain