The Changing Economic Landscape 1918-1945 Flashcards
Why was there a boom post WW1?
•people spent their savings on things that had been rationed during the war e.g coffee, soap, clothes and cigarettes
• investors invested in old British industries like cotton mills and coal mines
What were the effects of WW1 on British economy?
•debt - all cash and gold reserves were spent so the government had to loan 850 million
• Britain were forced to leave the gold standard during the war and printed more money, leading to 25% inflation and the value of the pound fell
• there was a loss of international trade as 20% of merchant ships had been sunk during the war
What government policy was introduced in 1922 to help the British economy recover?
• In an unsuccessful attempt to pay off war debt and reduced inflation, the Geddes Axe 1922 reduced government spending on education, health, housing and unemployment benefits and raised taxes
• however this caused increased unemployment and resentment towards Lloyd George
Why did the return to the Gold Standard in 1925 cause the British economy to take longer to recover?
• interest rates were increased by 7% to reduce inflation - however this led to businesses borrowing less money
• high interest rates increase the value of the pound to make British economy look stronger, however this reduced international trade as exchange rates were high
How did the the introduction of protectionism cause the British economy to take longer to recover after the war?
• tariffs made foreign goods more expensive - however this resulted in other countries introducing tariffs, making it more difficult for Britain to sell their goods abroad
•was introduced to try and protect old struggling British industries - however in the long term they no longer were competitive
• therefore as Britain hadn’t invested in newer industries and technologies like chemicals and car manufacturing, Japan and Germany overtook Britain
how did unemployment cause the British economy to take longer to recover after the war?
•older heavy industries like coal mining and shipbuilding were shutting down
• this affected industrial cities in the North like Tyneside and South Wales
• unemployment could be as high as 60% - this led to increased government spending on unemployment benefits
what were the factors leading to the 1920-21 recession?
• 25% inflation - interest rates increased by 7%
• loss of export trade - Britain no longer main market leader, overtaken by Japan and Germany
• underinvestment in new industries
• industrial relations - Lloyd George reduced working hours and increased pay for workers after strikes by no increased productivity - lost profit
How was Britain’s economy affected by the Wall Street Crash?
• led to the collapse of banks and international trade
• European nations like Germany couldn’t pay back war debt to Britain - bankers began to panic
• therefore banks wouldn’t loan the government money - government forced to cut spending
• Invergorden protest about pay cuts forced government to change their approach and once again leave the Gold Standard
What were the problems of the Great Depression?
• from 1929 - 1934 global trade contracted by 66%
• Britain’s exports declined by 50%
•collapse in trade was catastrophic especially for Britain’s struggling old industries - therefore unemployment rose from 1m in 1929 to 2.5m in 1930
How and why did the economy begin to recover after the wall street crash?
• Britain left the gold standard therefore the value of the pound fell - price of British exports decreased by 25%, encouraging foreign trade
• interest rates cut from 6% to 2% - led to increased government spending, more business investments aswell as a housing boom which created jobs
• 1935 - rearmament for ww2 created jobs in the steel, shipbuilding and iron industries
How and why did the government’s role in the economy change during ww2?
• total war economy- all efforts focused on the war
• rationing and conscription reintroduced - 5 million into the armed forces
• 8.5 million essential work orders issued, forcing workers to do required jobs
• due to the war and economist John Maynard Keynes, government more willing to help manage the economy in order to keep unemployment low
why did the miners want coal mines to be nationalised?
the miners had received better pay and wages during the war.
What was the Sankey Comission?
It was set up to represent the miners and owners equally. It recommended nationalisation to Lloyd George, but he rejected this.
When did the coal mines return to private ownership and what did this mean for the miners?
•1921
• The coal industry was already struggling post war, therefore miners wages were cut and their working hours were extended to 8 hours so that the miners could still make profit
What did the miners propose to the government instead of wage cuts from the owners and what was it?
• proposed a national pool
• fixed a levy on every ton of coal to raise funds to support the poorest colleries
• was rejected by Lloyd George
who was meant to strike on Friday 13th April 1921 and why did it fail?
• the triple alliance of miners, shipbuilders and railway men were going to strike in sympathy for the miners and to stop wage cuts
• however the strike failed as it was considered unfair to the railway men and shipbuilders workers to be striking in a period of unemployment
• therefore the miners’ appeal failed and they received further wage reductions, government stopped their appeal by giving subsidies to mine owners
Why did the government know to prepare for the general strike in 1926?
they had provided mine owners with subsidies to maintain miners pay until 1925. After 1925 they knew that the wages would have to be cut, leading to a strike.
How did the government prepare for the General Strike?
• published their own propganda paper the British Gazetteand used BBC to broadcast propaganda messages
• The Labour Party distanced themselves from the strikers - didn’t want to lose electoral support by being viewed as radical
• Organisation for the Maintenance of Supplies set up - middle class people did strikers jobs
• stockpiled coal
• put Britain into a state of emergency - the strike was deemed a political threat
• army leave cancelled