ECONOMIC ISSUES 1918-39

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  • Created by: tadiwa
  • Created on: 27-05-17 16:06

KEY EFFECTS OF WAR

POSITIVE

  • SHORT TERM
  • Staple industries boomed, trend favoured more diversified economy.
  • Heavy spending on rearmament (1938-1939) adds jobs and helps economy
  • Share of wages and income boomed during war
  • Production and exports rose
  • Direct help for depressed areas and no rejection of reform
  • LONG TERM
  • Trade benefitted from loss of rivals like Germany
  • Inexcessive taxation
  • Nationalised industries
  • Demobilised forces integrated into workforce
  • Exports and re-exports were at 1585 million by 1920
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KEY EFFECTS OF THE WAR

NEGATIVE

  • SHORT TERM
  • falling demand for Britain's traditioonal industry exports
  • High unemployment especially in regional areas
  • New competition like Japan and India
  • LONG TERM
  • Fall in world prices for priamry products
  • Shareholders invested in unprofitable concerns
  • Wartime engineering, shipbuillding demands didn't match in peacetime
  • Less money for farmers worldwide
  • High end markets didn't compensate for falling orders
  • Gov't responded with protection for some industries -but only 3% affected
  • High levels of wartime debt
  • 5m soldiers reintegrated in need of jobs
  • Pound value decreased
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CONDITIONS IN 1918

  • Dramatic effects from war such as
  • level of unemployment    
  • Low unemployment to create a strong workforce means nearly full employment which begins to rise after war due to returning soldiers and overproduction and agriculture
  • balance between types of work 
  • level of wages and prices
  • Wages oncrease slowly while food prices rise a little due to gov't subsidisation. no consumer goods
  • gov't debts and taxes
  • Debt increase massively due to war. Taxes don't increase much. REAL WAGE- buying power of goods INFLATION- inccrease in price of goods over time

GEDDES AXE 1921

cuts to welfare by DLG 

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STAPLE INDUSTRIES PROBLEMS

TEXTILES

  • Entirely due to a fall in demand and exports as domestic sales rose
  • British markets taken over by new competitors like India and Japan came about.
  • America offered cheaper labour, and synthetic fibres popular
  • Britian had antiquated machinery  Millowners unwilling to support new ideas
  • 1929 amalgamated Lancashire Cotton Corp. took steps to eliminate surplus by scrapping old machinery
  • 1910- 800million square yards 1930- 370million   Decline not arrested before WWII start

COAL

  • Boom period during and after the war- helped by French Ruhr invasion 1923. 
  • Upto 1924, unemployment below nt'l average.  Replaced by OIL and HEP
  • Technologically behind, as coleries were outdated and industry was badly organised making it hard to be efficient
  • Miners wages increased, Lowered to 7 hour day welfare funds created by 1920 Coal Act 
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STAPLE INDUSTRIES PROBLEMS

SHIPBUILDING

  • Lost 8m tonnes of shipping with 14% fleet in 1919 
  • Worlds share was only slightly greater in 1913
  • Britian's fleet decreased from 39% to 33%
  • Delcine seen mid 1930s
  • Mid recovery by demand of the motor ship and demand for motor propelled ship, but Britain lagged behind competitors
  • Depressed by shippiung industries as owners had ample
  • gov't did little to aid the slow recovery and gave few subsidies

IRON AND STEEL

  • Overall production and demand declined 10m in 1913 to 6m in 1929 
  • greatest declining industry
  • Tariffs introduced in 1932
  • Suffered with unemployment and foreign competitors introduced
  • Little recovery, but not complete
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GENERAL STRIKE MAY 4-13 1926

  • causes of the General Strike in 1926?
  • Communism 
  • Little contribution to activities of the General Strike,   1923 first interest in trade union activity , Support in General Strike incidental, not central to events. 
  • External
  • Wages forced down in other industries 1921-1926  1924 GB coal boom from overseas drop in production
  • Mine Owners
  • Abolish national minimum wage to cut wages by 13-48% announced 30th June 1925 (3/4 of production costs were from Labour)
  • Maintain standard profits no matter how low wages fell and poor conditions 3,600 dead
  • Refused to accept Samuel Report (only temporary 10% wage cut, amalgamation of pit management, 7-hour day, develop mines)
  • Lock out miners 30th April for refusal to accept wage reduction.
  • Industrial Militancy build up 
  • Industrial militancy shown from 1910
  • Associated with Tom Mana and syndicalism 
  • Number of strikers and days lost to strke decreased 1921-26
  • 1921 86 million days lost
  •  1922 20 million days lost 
  • 1925 8 million days lost
  • Government 
  • Coal exports more expensive than French coal from Churchill's overvaluation of the £ by 10% (J.M Keynes), reduction in costs needed. 
  • Baldwins wary of intervention 
  • Spent subsidy period preparing for industrial action (country divided between lieutenants, local authorities briefed, preservation of public order Act, propaganda)
  • Amalgamation of small mines from Samuel commission rejected.
  • Followed Samuel Commission's report of temporary wages reductions until reorganisation 
  • Leaves 2 day negotiations with unions after Daily Mail walk out
  • Trade Unions 
  • General Council of TUC acquires right to call for joint industrial action. 
  • Sympathy from TUC in 1926 to make up to call sympathetic strike. 
  • Unemployment made it difficult to fight reductions. 
  • Miners refuse to accept wage changes. 
  • Attitude over 9 month subsidy; increasingly confident of halt to wage reductions ''the main battle has still to be fought and won'' (Smith), ''we must prepare for the struggle'' (Communist Party).
  • Failed to prepare for fight before the end of the subsidy.
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GENERAL STRIKE MAY 1926

  • Miners Federation
  • Many influenced by syndicalism before the war
  • Poor negotiations with Baldwin and mine owners. 
  • Stubbron and intransigent
  • A.J Cook 'Not a penny off the pay, not a minute of the day'- would refuse wage cuts and would not work for longer hours 
  • Did not participate in the MacMillan inquiry after DLG ignored the Sankey commissions, miners did not think the MacMillan inquiry would help them. 
  • 'Red Friday' -seen as a victory, the government provided a 9 month subsidy of 13% so wages and profits were maintained.

Stanley Baldwin, Prime Minister. Instead of trying to resolve the issue when the TUC returned to Downing Street, Baldwin went to bed. The strike started the next morning. 

Herbert Smith, President of the Miners' Federation of GB- wouldn't compromise.

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FAILURE OF GENERAL STRIKE

  • Caused by deteriorating conditions in coal mining industry led to miner's strike
  • miners recieved support from other trade unions
  • baldwin didn't see himself as responsible to intefere with indursty

WEAK TUC AND LABOUR

  • hindered by a lack of effective prep  and  strike committes set up in local areas
  • bevin caused a loss of coherence in their organisation and fear of surveillance
  • not complete strike as health/sanitary workers excluded

PUBLIC OPINION AND VOLUNTEER ROLES

  • public were used as a volunteer force to continue working and created sympathy for bad conditions

STRENGTHS OF GOV'T AND SUPPORTERS 

  • well planned and prepared for strike unlike unions blinded by Red Friday success *use threat of military action against strikers
  • used volunteer force and trrops to protect food and arrest strikers
  • effective communication and use of mass media (Gazette, and BBC)
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TRADES DISPUTES ACT 1927

Consequence of General Strike

  • sympathetic strikes were made illegal
  • trade unionists cting as political proxy had to agree in writing to pay it, reversing 1913 Act. 
  • this was to avoid divisiveness as indended by Baldwin
  • reduced Labour Party income by 1/4
  • civil servants trade unions forbidden to affiliate with TUC
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UNEMPLOYMENTAFTER 1929

1930-1935- never falls below 2m

  • highest point- 1932 2,750m 21%
  • 1936-1940- averages 1.5m but figures were artifically low due to war and rearmament.
  • WSC exacerbates decline of old staple industries
  • Rise of new mechansied industry
  • the peak was reched in Jan 1933. therefore, the decline was slow, but total never fell below the average fom the 1920s until after the war

UNEMPLOYMENT VARIETIES

  • PERSONAL- marginal labour force members due to physical or mental handicaps
  • FRICTIONAL- workers changing jobs or on causal basis ususally short term
  • SEASONAL- activitiy in trades such as agriculture and building, in season ususally short term
  • CYCLICAL- unemployment varied on economic cycle boom, late 1920s mid 1930s
  • STRUCTURAL- industries in permanent decline, shipbuilidng, coal, cotton, iron and steel
  • outdated industries that declined and employed many in specfifc areas
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WHAT CAUSED UNEMPLOYMENT IN THE 1930S

WHAT CAUSED UNEMPLOYMENT

  • Wages dont fall in line with prices due to
  • owners stubbornness and gov't uninvolvement
  • Analysis indicates fall in demand and staple industries to blame
  • heavy concentration of unemployment in areas dependent n staple industry
  • Lack of mobility and flexibility in traditionsal workforce that stayed in a certain area
  • New industry employ less people as they are mechanised
  • Ovepriced British goods
  • Structural Unemployment AND Lack of infrastructure
  • New industries dont fill in gaps and unemploymnt of old ones, and dont expand enough due to limited export market availabiltiy 
  • Too many brands that dissect profit and workers, instead of US assembly line method
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HOW BAD WAS UNEMPLOYMENT IN THE 1930s

  • What are problems with assessing how widespread and serious the problem of unemploymnt were?
  • it was difficult to assess this as the Ministry of Statistics only reported those insured and claiming benefits, and there were problems like REGIONAL DIFF, DIFF TYPES OF UNEMPLOYED and his meant only 1/6 of the real figures are given. Didn't include families of workers as this'd increase figure to 6m
  • Which groups were hit hardest by unemployment?
  • the groups hardest hit were, OLDER WORKERS, MALE WORKERS, UNSKILLED WORKERS, 
  • Which areas of the country were hit the hardest by ynemploymnt?
  • Areas where staple industries had previously boomed and were left desolate. 60% unemployment in Jarrow, S. Wales, Durham, Yokshire etc.
  • Which industries were particulalry hard hit?
  • Old staple industries
  • What was the jarrow Crusade and what did it demonstrate?
  • 1930, 200 workers made unemployed by shipyard shutdown marched from Jarrow to London with 12k petitioning to the gov't
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THE GREAT DEPRESSION AND BRITAIN

Collapse of US market leads to worldwide perios of economic downtrun

  • decline in world trade and increased protective tariffs (others retaliated)
  • rising unemployment in developed countries=lower prices and poverty for primary produces
  • Negative
  • increased divide between rich and poor, especially geographicall
  • heavily reliant on exports, but markets contract and exports are halved
  • fuelled growths of extremism and divided opinions
  • 6m dependent o employment benefits
  • unemployment increased to 2 million
  • Not so bad
  • deflation period- rise in imports, especially from empire and continued fall in prices. workers saw cost of lviivng decrease and cheaper food
  • internal developmens provided work and imporved living standards
  • expansion of house building and ribbon development cities and suburbs low interest rates equal cheap buidling= 1m jobs
  • newer industries provde work, imporved quality of life greater transportation and greater entertainment
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THE GREAT DEPRESSION AND BRITAIN

DIFFERENT EXPERIENCES 1930S   --->CREATION OF NTL GRID, HOLIDAY PAY, MIDWIVES, NATIONALISATION OF ELECTRICITY, 

+

  • Many exchanged slums for housing (3m), boom in architechture and construction especailly in private housing.
  • Rising living standards and leisure activities changes in overall society
  • Booming economy by 1934, lower cost of lving and high consumerism
  • Transport links created, especially in london allw greater integration and movement greater access to ntl events 
  • Assembly line method adoption creates mass production of consumer goods

-

  • Reduced public spending and cut beneftis by gov't
  • Wide disparity created pockets of poverty geographically
  • Unease over the state of the world and future situation
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UNEMPLOYMENT RELIEF

Insured Workers 

Uninsured Workers 

Most workers: 15.4M in 1938 

Most workers: 15.4M in 1938 

Agricultural labourersdometic servants, self-employed 

120-140k 

First 26 weeks of unemployment 

Transitional payments over 27 weeks 

RELIEF RECIEVED 

Unemployment benefit 

Treasury  

Poor releif 

FUNDED BY 

Unemployment fund built up from contributions 

Local Employment Exchange, but the local PAC had to determine amount received following demeaning MEANS TEST 

Partly from rate, partly from the treasury 

ADMINISTERED BY 

Local employment exchange 

Public Assistance Committee of the local authority 

RATES 

17s for man 

9s for woman 

3s for kids under 14(15- adulthood) 

At discretion of PAC 

At discretion of PAC 

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UNEMPLOYMENT RELIEF AND 1934 UNEMPLOYMENT ACT

  • DESIGNED TO

keep costs low by paying less assistance to the people with some means of support like forms of household assests (pensions, savings, household value). The PAC would then assess transitional benefit of 15s.

 MEANS TEST was widely hated and recieved massive backlash. Many saw benefits as their right. PACS associated with Poor Law and had the same members in it. 50% of applicants recieved less than full amount. 1931-32, 180k removed from reieving anything.  test saved about £24M in 1932-33.

  • UNEMPLOYMENT ACT 1934

gave benefit system a more logical footing. Unemployment Assistant Board had offices nationwide and took respoinsibiltiy for those who'd exhausted entitlement to benefits. Gave less PAC authority and more standardised and centrally funded benefits. UAB scales lower than PAC and there was public outcry. ***Didnt tackle underlying problems of unemployment and poverty, but gave dole payment alternatives. ALLEVIATION NOT CONSTRUCTION. 

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UNEMPLOYMENT REVIEW

1) UNEMPLOYMENT WAS SERIOUS AND BLIGHTED BRITAIN IN 1930S

  • 15.4m of insured wrkers on unemployment benefits, 2,745m unemployed in1932
  • WSC causes depression in 1929
  • Collapse of old staple industries (coal, iron and steel, cotton)
  • Issue cuases second LAB gov't collapse
  • Dependent on Empire for goods to trade with
  • Jarrow Crusade 60% unemplyment and march for gov't help
  • Means Test, and structural unemployment major problem

2) UNEMPLOYMENT WAS NOT AS WIDESPREAD AS IT SEEMED IN 1930S

  • domestic economy boom seen in 1934
  • rise in new mechanised industries
  • 3m homes bought 
  • cheap goods ad high consumerism
  • workers cost of living lowers and recieve disposable income
  • leisurely life becomes popular
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GOV'T RESPONSE

PROTECTION 

  • Abnormal Importations Act 1931 imposed 50% tariff on pottery, cutlery wool etc.  
  • Import Duties Act 1932 imposed a tariff of 10% n all foreign goods 
  • Sterling Area- exchange rates held to the same standard as the pound    
  • Made economists say it was a failure as exchange rates fluctuating meant profit was lost or wasted 
  • Success as it stopped fluctuation and aided economic recovery, later extended to France and USA  

DIRECT HELP TO DEPRESSED AREAS 

  • Special Areas Act allocated public money specifically to aid areas hardest hit by depression. £2m for S Wales, Tyneside etc 
  • National Shipping Act 1930s 
  • British Airways 1935 
  • Acknowledged state responsibility  
  • Failure due to meagre amount for investment in depressed areas.  
  • Subsidies on milk and transport create jobs and improve country 
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NATIONAL GOV'T RESPONSE

SPECIAL AREAS ACT 19344

  • Limited gov't suuprt for deprssed areas (Tyneside, S. Wales, Cumbria, S Scotland) and appointed 2 unpaid commissions to spend £2M on developments. Act extended in 1937. By 1938, 8.5M had been spent but created under 50K jobs. 

MAIN RESPONSE

  • to impose protective controls on economy, like Ottawa Agreement 1932 and  import Duties Act 
  • reduce interest rates to 2% and later cut taxes to encourage spending
  • reorganised inudtsries like SHIPPING, STEEL, COAL to eliminate unprofitable complanies ad set up Agricultural Marketing Board
  • In the late 1930s, Rearmament Programme 1936-, and consession such as statutory paid hols 1938 helped boost economy by mocing money and emplyoment.
  • CONCLUSION
  • undeniable improvements but not widespread and massively impactful. benefits only gave £1.25 for a man. average wage £4. shorter 48 hour week
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GENERAL STRIKE MAY 1926

  • Industrial Militancy build up 
  • Industrial militancy shown from 1910, Associated with Tom Mana and syndicalism 
  • Number of strikers and days lost to strke decreased 1921-26
  • 1921 86 million days lost  1922 20 million days lost  1925 8 million days lost
  • Government 
  • Coal exports more expensive than French coal from Churchill's overvaluation of the £ by 10% (J.M Keynes), reduction in costs needed. 
  • Baldwins wary of intervention 
  • Spent subsidy period preparing for industrial action (country divided between lieutenants, local authorities briefed, preservation of public order Act, propaganda)
  • Amalgamation of small mines from Samuel commission rejected.
  • Followed Samuel Commission's report of temporary wages reductions until reorganisation 
  • Leaves 2 day negotiations with unions after Daily Mail walk out
  • Trade Unions 
  • General Council of TUC acquires right to call for joint industrial action. 
  • Sympathy from TUC in 1926 to make up to call sympathetic strike. 
  • Unemployment made it difficult to fight reductions. 
  • Miners refuse to accept wage changes. 
  • Attitude over 9 month subsidy; increasingly confident of halt to wage reductions ''the main battle has still to be fought and won'' (Smith), ''we must prepare for the struggle'' (Communist Party).
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GOV'T RESPONSE

MANAGING PRODUCTION 

  • Encouraged managed controlled liberal capitalism with low bank rates to encourage nationalization 
  • Mines amalgamated in 1938 and produce  greater amounts 
  • 207m-241 by 1937 
  • Success as it turned money into economy and aided recovery 

IMPACT OF REARMAMENT 

  • 10 year no arms rule abandoned in favour of defence 
  • Greatest contribution, but not economically motivated.  
  • Air defences strengthened 
  • Greater amounts focused on defence and arms  
  • 137m in 1935-36 to 273m in 1939-40 
  • £1m spent on radar stations proved invaluable at war in1940. 
  • Creates further jobs 
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