The 1931 Crisis

Question 1

Why did the Government lack money by mid-1931?

Answer 1

• Used it to give people benefits (lots of people unemployed
• Couldn’t borrow money because of Wall Street Crash
• 1921 Unemployment Insurance Act made it easier to claim benefits

Question 2

What solutions were made in August 1931?

Answer 2

• Cut benefit rates by 15%
• Introduce means test, a test to see if someone is eligible for benefits (officials entered households to see what people could sell)

Question 3

What did Labour Ministers think about the solutions?

Answer 3

Many rejected the solutions as they thought they would cause too much hardship for the workers / unemployed (why not tax the rich?)

Question 4

How did Ramsay MacDonald stay in power?

Answer 4

He set up a National Government of moderate Labour, Liberal and Conservative MPs

Question 5

What happened in October 1931?

Answer 5

The NG won the election, cutting benefit rates by 10% + introduced means test, out of a possible 615 the NG won 554

Question 6

Effects of National Government policies?

Answer 6

• Government claimed back money from less people claiming benefits
• Many unemployed people lost money from the benefit rate cuts + around 271,000 people, in first 10 weeks, failed the means test = couldn’t claim any benefits
• Broke up families + criminalised people