Depression, War and Recovery

• The Wall Street Crash in 1929 plunged the USA into economic depression and led to the Great Depression of the 1930s
• Causes of the Depression

  Main trigger was the Wall Street Crash, but other factors also helped to create the Depression
• The Wall Street Crash was a catalyst that speeded up the impact of the other causes and speeded up the economic downturn
• The Depression led to companies collapsing, especially as the heavy industries in particular had been struggling since 1918
• Companies closing or reducing their workforce led to severe unemployment
• In the 19th century, Britain led the world in industrialisation
• Towards the end of the 19th century Germany, France, Japan and the USA had all caught up, and by the beginning of the 20th century were beginning to overtake and challenge Britain's industrial dominance
• They used new methods of production and competed for international markets
• British coal, iron, steel, shipbuilding and textiles industries relied heavily on selling to worldwide markets
• The increased competition from the other countries meant that the 1920s were not comfortable times for British heavy industry
• American economic policies resulted in numerous other countries, including Britain and Germany, sliding into an economic slump
• Loans were recalled and trade with the USA slumped, leading to a world slump
• President Hoover used high tariffs to try to stop American consumers buying goods from other nations, which made these non-US goods more expensive and led to a decline in demand and profits
• The phrase "When America sneezes, the rest of the world catches cold" appears to be an accurate one
• The Depression was a traumatic period for many British families. However, some areas surprisingly prospered during the 1930s.
• Unemployment rose to 2.5 million in 1933, which was 25 per cent of the workforce.
• Areas of heavy industry in Northern Ireland, Scotland, Wales and the north of England were worst hit, including the coal, iron, steel and shipbuilding industries.
• When the Palmers Shipbuilding and Iron Company closed down in Jarrow in the north-east of England, the town's unemployment rate rose to 68 percent, and it was said the town of Jarrow effectively 'died'.
• The Rhondda Valleys also suffered from a dramatic rise in unemployment, with an unemployment rate that was higher than 40 per cent.
• The 2.5 million who were unemployed had no wages and could not buy things.


  This had an impact on the demand for goods produced in Britain, and more businesses went bankrupt which then led to more unemployment.
• Unemployment benefit, the dole, was not enough to cover basic costs such as food and clothing.
• Adolf Hitler became Chancellor of Germany in January 1933
• Following the rise to power of the Nazi party, German foreign policy changed dramatically
• Germany was now seen as a threat to world peace
• Hitler had promised to reverse the terms of the Treaty of Versailles
• Hitler wished to build up the strength of the German forces, as the Treaty of Versailles had only allowed 100,000 German soldiers
• He also wanted to return any German land that had been lost
• Appeasement


  Neville Chamberlain's policy of negotiation, agreements and diplomacy to avoid war, usually by giving in to Hitler's territorial demands
• Chamberlain was keen to avoid war and believed appeasement could achieve this
• Examples of appeasement


  • Britain not 'getting tough' on Germany when it rearmed and invaded the Rhineland
  • Britain not 'getting tough' on Germany's invasion of Czechoslovakia
  • Chamberlain signing the Munich agreement which resulted in Germany taking the Sudetenland from Czechoslovakia
• Chamberlain hoped the Munich agreement would be the end of Hitler's demands, although other politicians such as Churchill warned otherwise
• Appeasement was initially popular because people wished to avoid conflict, Britain was struggling with the impact of the Depression, and many felt the Treaty of Versailles had been too strict
• War breaks out as Germany invades Poland


  September 1939
• Britain had earlier given assurances to Poland and so sent an ultimatum to Germany to withdraw from Poland
• As Germany did not reply, on 3 September 1939 Chamberlain declared that Britain was at war with Germany
• Many families found themselves living in poverty during the Great Depression.
• Means testing meant that those who received benefits had to prove that they needed them, and this often resulted in embarrassing interviews at the local authority offices.
• In 1931, the government introduced means testing, where people applying for benefits would have their income assessed by local authorities to determine if they qualified for assistance.
• Before the outbreak of war, the Government had put plans into place in recognition of the dangers that lay ahead
• How the Government prepared for war

  1. Started a programme to build new warships

  2. Spent money informing people about rationing, blackouts and gasmasks

  3. Organised a Ministry of Supply to ensure overseas supplies continued

  4. Met with trade unions to ensure they agreed on wartime working regulations and wages