british history chapter 15

• Britain faced a contracting economy after the First World War and intensified by the Great Depression
• Due to the policies, the economy began to recover in the late 1930s, unemployment fell, new industries, threat of war boosted production
• 1925 decision to return Britain to the Gold Standard, made British goods expensive to buy, crippled the export market and slowed down post-war recovery in trade
• 1929 Wall Street Crash, foreign investors withdrew gold from Britain, threatening a collapse of the British banking system
• Between 1929 and 1931, unemployment which was already 1m reached 2.5m
• Depression that followed intensified the existing economic problems
• By 1932, 40% of coal miners out of work, 47% steel workers and 63% shipbuilders unemployed
• The amount of income Britain was making didn't match government spending
• Government policies


  1. Made 10% cut in unemployment benefit

  2. Introduced means test for families for gov assistance

  3. Implemented cuts in wages of public employees

  4. Came off Gold Standard

  5. Intervening in currency markets kept pound stable
• Came off Gold Standard

  Allowed pound to fall in value, eased impact of the Depression
• Between 1933-1939 unemployment fell by a half
• Rising consumer demand led to expansion in home marker, helped offset cuts in government spending
• After war's government inflationary policies, the value of British overseas trade declined
• Safeguarding of Industries Act 1921 designed to allow the imposition of duties on imported goods that threatened key industries
• Pound overvalued after coming back onto Gold Standard, slowed down post-war recovery in trade
• Depression: from 1930 world trade shrank and with it the demand for British exports, which fell by a third in volume and by a half in value
• Total output was already falling by 1930; by 1932 it was less than half the 1913 figure
• Government trade policies


  1. Set up the 'sterling area'

  2. Passed the Import Duties Act 1932, ending free trade, and imposing tariffs to protect home industries and agriculture

  3. Made quota agreements with other countries
• Many countries introduced protective tariffs, which seriously hampered export trade
• Britain's exports to its empire increased, but did not make up the shortfall
• The Depression that followed the Crash intensified the existing economic problems carried over from the 1920s; especially the decline of staple industries
• Coal output fell from 238m to 208m tonnes
• The tonnage of new ships launched fell from an average of one million a year in the 1920s to 133,000 tonnes in 1933
• Old staple industries were situated in the north of England, South Wales, central Scotland and Belfast
• In 1934, in Merthyr Tydfil, 1850 had one of the most successful ironworks, 62% of the male population were unemployed
• Government policies for declining industries

  1. Granted aid to the 'depressed areas' through the Special Arears Act of 1934

  2. British Shipping Assistance Act 1935 provided government with loans to build new ships

  3. Set up market boards for milk, bacon and potatoes, providing guaranteed prices for farmers and providing subsidies for livestock farmers and sugar beet producers
• The Special Arears Act only provided aid to the most depressed areas and despite high unemployment, many old industrial areas didn't qualify
• New industries such as motor vehicles, chemicals and aircraft enjoyed healthy growth
• Coal production was 227,000 tonnes in 1938, almost what it had been in 1928
• By 1938, production in the steel industry had risen above what it was in 1928
• Numbers employed in the new industries rose, not enough to absorb all the workers shed by the declining staples
• Structural problems in coal industry, demand had fallen because of intense foreign competition and growing use of oil substitute
• British coal mines were inefficient, old and short of investment
• Coal mines had been handed back to the owners in April 1921 after being under gov control
• Owners cut wages, miners believed they were being exploited
• 1925 returned to Gold Standard, making exports more expensive
• Owners threatened a lock out
• Government response to coal strike

  1. Baldwin's gov offered financial support to subsidise both miner's wages and owner's profits for nine months

  2. Samuel Commission argued wage cuts were essential to save jobs, working hours should not be longer

  3. Baldwin set up the Organisation for Maintenance of Supplies and volunteers assisted army in keeping country moving
• Miner's leaders refusal to compromise turned public opinion against them and upset the TUC, called off the General Strike
• Weaknesses in the TUC leadership and organisation exposed