the national government Flashcards
the national government
the national government was born out of the depression and faced huge challenges of dealing with the great depression
why was the import duties act introduced
as it felt necessary to support british industry at a time when lots of countries across the world were suffering. this was done by introducing the import duties act in 1932 which put a 10% tariff on most imports. The circumstances, however, limited the extent to which this could be achieved as many countries within the empire depended on strong networks with countries outside the empire.
unemployment act
conservative spending measures were adopted with some success. this helped lower government spending and stimulate recovery in some areas of the country. for example, the government introduced the means test in 1934 where most benefits only lasted 15 weeks per year.
why was the means test economically necessary
this could be viewed as necessary because without these cuts, the may report predicted that the spending deficit could be as high as £120m in 1932.
disadvantages of the means test(dispropportianate impact)
the means test effectively worked to make the poor poorer as those who needed assistance lost the support they needed to get by. furthermore, the means test also had a disproportionate impact on heavy industrial regions such as south wales and Tyneside where poverty and unemployment was severe
what t=did the means test lead to
the visible impact of the means test was that it led to hunger marches, such as the jarrow crusade. the governments response was limited and too late such as too few employment opportunities. therefor the government had no proper policy to solve the issue of unemployment, particularly in industrial ares.
what did economic recovery look like by 1937
however the depression did not last long in Britain. by 1937, real incomes, industrial recovery and exports all increased and unemployment fell to 8.5%
recovery due to government- cutting interest rates
interest rates on bank loans were slashed from 6% to 2% to encourage borrowing. as a result this enabled people to spend more and the creation of jobs. moreover, when interest rates are lowered, it becomes less attractive to save money and so people instead invest in properties.
what did cutting interest rates lead to
IMPACT
in turn a huge housing boom follows in the south east and the value of mortgages taken out in 1937 is double the value in 1930. therefore some people were able to take advantage of more affordable mortgages
recovery due to government- breaking with the gold standard
breaking with the gold standard was probably one of the most crucial things that the national government did to deal with economic threats faced during the great depression. contextually, this factor is important because in 1924 aligning with the gold standard led to the value of the pound being raised too high which reduced trade and exports.
recovery due to government- impact of breaking with the gold standard
the government could now allow for a degree of inflation rather than trying to prevent it which meant that spending could be stimulated to in turn boost recovery. therefore the effect of this was that it allowed British exports to become cheaper and more competitive as a result and thus the economy was able to effectively recover.
