Trade, Commerce, and the Economic Impact of War

Question 1

How much did WW1 cost Britain?

Answer 1

£35,000 million.

Question 2

How much did Britain borrow from the USA to fund WW1?

Answer 2

Over $4 billion.

Question 3

What is the gold standard?

Answer 3

When a country’s currency has a value directly linked to gold.

Question 4

Why was the gold standard abandoned in WW1?

Answer 4

Because gold reserves ran so low.

Question 5

What were the British casualties of WW1?

Answer 5

Almost 1 million British deaths.

Question 6

What were the casualties to the Empire of WW1?

Answer 6

Around 200,000 soldiers from across the Empire died in WW1.

Question 7

How did Britain’s export industries suffer due to WW1?

Answer 7

During the war, industries focused on war-time production. This meant that Britain’s competitors were able to take over markets previously dominated by British exports. For example, the Japanese textiles industry grew greatly in the war.

Question 8

How did Britain’s financial sector suffer due to WW1?

Answer 8

Much of Britain’s overseas capital investments had been wiped out by WW1, and profits generated by this greatly diminished. This resulted in Britain finding it harder to pay for the economic burden of the Empire.

Question 9

What were the economic impacts of the Great Depression on Britain (5)?

Answer 9

1) A collapse of international trade.
2) The loss of markets for British industrial exports.
3) The abandonment of the gold standard again in 1931.
4) A reduction in earnings from overseas investments.
5) A greater economic reliance on Empire.

Question 10

What were the economic impacts of WW1 on India (3)?

Answer 10

1) India contributed £146 million to the war effort, resulting in inflation and shortages.
2) Indian manufacturers were able to capture more of the domestic market due to the wartime disruption to trade.
3) The British put higher taxes on Indian imports (from 11% in 1917 to 25% in 1931) in order to bolster revenue and protect the Indian industry from competitors, resulting in industrial growth for India.

Question 11

What were the economic impacts of WW1 on Canada (2)?

Answer 11

1) Canada emerged from WW1 as an industrial power.
2) With Britain losing economic influence, Canada increasingly turned to the USA for investment and markets during the inter-war period.

Question 12

What was the economic impact of WW1 on Australia and New Zealand?

Answer 12

As exporters of food, they both relied heavily on British markets, and were hit hard by the trade disruption caused by WW1.

Question 13

What was the British policy towards imperial trade in the 1920s (3)?

Answer 13

1) Britain tried to continue with the system utilised prior to 1914, with the Empire having no special economic preference.
2) Britain returned to the gold standard in 1925 to stabilise international trade.
3) The Colonial Development Act of 1929 provided Treasury funds to support colonial development projects.

Question 14

What was the British policy towards imperial trade in the 1930s (2)?

Answer 14

1) In the aftermath of the Great Depression, the Empire became greatly important for British commerce.
2) The gold standard was abandoned in 1931, and trade with the Empire in sterling was greatly important.

Question 15

What was the Sterling Area?

Answer 15

Countries that tied their currencies to the pound sterling, or used the pound as their own currency. The arrangement was formalised under the Exchange Control Act in 1947.

Question 16

How did the Sterling Area benefit Britain during, and in the aftermath of, the Great Depression

Answer 16

At a time when most international opportunities were closed, countries in the Sterling Area had access to the British market, whilst the British ensured a profitable outlet for overseas investment.

Question 17

What was the total value of British exports to the world in 1913 compared to 1934?

Answer 17

1913: £525 million.
1934: £378 million.

Question 18

What was the total value of British exports to the Empire in 1913 compared to 1934?

Answer 18

1913: £195 million.
1934: £166 million.

Question 19

What were imperial exports as a percentage of total British exports in 1913 compared to 1934?

Answer 19

1913: 37%.
1934: 44%.

Question 20

What were 5 key exports to Empire from Britain 1913-34?

Answer 20

1) Cotton goods exports.
2) Locomotive exports.
3) Railway carriage exports.
4) Motor vehicle exports.
5) Electrical engineering exports.

Question 21

Why did imperialist begin arguing again for imperial preference in the 1930s?

Answer 21

British world trade was shrinking due to the impacts of WW1, and the growth of competition, such as from the USA.

Question 22

Why did Dominions oppose imperial preference?

Answer 22

They wanted to protect their own growing industries, rather than relying on Britain.

Question 23

What was agreed at the Ottawa Conference of 1932 (2)?

Answer 23

1) A 10% tax on all British imports was introduced, with Crown Colonies exempt.
2) Britain and the Dominions gave each other’s exports preferential treatment in their own markets.

Question 24

What was the total value of British imports from the world in 1913 compared to 1934?

Answer 24

1913: £769 million.
1934: £727 million.

Question 25

What was the total value of British imports from the Empire in 1913 compared to 1934?

Answer 25

1913: £191 million. 1934: £257 million.

Question 26

What were imperial imports as a percentage of total British imports in 1913 compared to 1934?

Answer 26

1913: 25%. 1934: 35%

Question 27

What percentage of British exports went to Empire (1925-29)?

Answer 27

37%

Question 28

What percentage of British exports went to Empire (1934-38)?

Answer 28

41%

Question 29

What percentage of British imports came from Empire (1925-29)?

Answer 29

33%

Question 30

What percentage of British imports came from Empire (1934-38)?

Answer 30

41%

Question 31

How did Australia and New Zealand suffer in the inter-war period?

Answer 31

The cost of their imports (largely manufactured) from Britain outweighed their income from their exports (mostly agricultural). This resulted in both countries running up debts with Britain.

Question 32

How did some Asian and African colonies suffer in the inter-war period?

Answer 32

Countries who's economies were reliant on exports were hit hard by the Great Depression, as prices fell. Incomes fell, bringing poverty, starvation, and dissatisfaction with colonial rule.

Question 33

What was the Land-Lease?

Answer 33

An arrangement during WW2, where the USA supplied Britain with weapons, food, and other necessities.

Question 34

What were the 6 key economic impacts of WW2 on Britain?

Answer 34

1) U-boat attacks resulted in Britain losing 12 million tons of shipping - 54% of Britain's merchant fleet strength at the beginning of WW2. 2) The loss of major colonies in Southeast Asia to Japan from 1942 disrupted trade and cut off supplies - e.g. loss of rubber from Malaya. 3) Exports suffered due to war-time production, resulting in a high deficit on the balance of payments. 4) A third of British overseas assets were sold to fund WW2, and Britain greatly borrowed from the USA through Land-Lease, leaving them in great debts at the end of WW2. 5) Britain increased dependence on Empire for imports, with considerable investment by colonial governments to increase the supply of foodstuff and raw materials. 6) Colonial reserves held in Britain were used to help pay for WW2.

Question 35

Who was John Maynard Keynes?

Answer 35

A British economist, who was a major economic advisor to the wartime coalition and the post-WW2 labour government.

Question 36

When and why did the USA end Land-Lease?

Answer 36

In late August 1945, the USA ended Land-Lease, mainly because they were not prepared to support a revived British Empire financially.

Question 37

What did Keynes negotiate with the USA in 1945?

Answer 37

A massive loan, worth around £900 million, with the USA. The main condition was that the pound had to be made freely convertible to dollars by spring 1947.

Question 38

What was the Sterling Crisis of spring 1947 (2)?

Answer 38

1) Free convertibility meant that the Bank of England would need to be able to exchange sterling for dollars at a fixed rate. The dollar loan was supposed to enable Britain to build up a sufficient reserve to do this by 1947. 2) However, due to imperial demands, Britain ran out of dollar reserves in 6 weeks, and had to suspend free convertibility.

Question 39

Why did Britain abandon imperial control over some colonies after WW2?

Answer 39

In some colonies, the cost of controlling the colony massively outstripped its actual or potential economic value. This caused Britain to abandon imperial control of some colonies.

Question 40

What was the new emphasis placed on economically beneficial colonies after WW2?

Answer 40

Britain placed an emphasis on colonial economic development in colonies of economic benefit to Britain.

Question 41

What were the 2 main features of the Colonial Development and Welfare Act of 1940?

Answer 41

1) Some colonial debts were written off. 2) Colonial grants/loans of up to £5 million a year were provided to colonies deemed economically beneficial to Britain.

Question 42

What were the 2 main features of the Colonial Development and Welfare Act of 1945?

Answer 42

1) The aid available to colonies was increased to £120 million over 10 years. 2) Colonies would need to produce a 10-year development plan outlining how such funds would be used.