Impact of the Depression on the British economy (3.7)


The decline of heavy industry

  • WW1 - new tech and changed markets, hevay industry failed to adapt, labourers suffered
  • brief boom in shipbuilding after the war 
  • collapse in world trade meant no demand for new ships and in 1933 they only produced 7% of their pre-war output 
  • coal - exports fell from an immediate post-war output of 100 million tonnes per year to around 50 million tonnes by 1930
  • cheap iron and steel flooded in from Europe in the 1920s, causing the demand for British iron and steel to fall 
  • prodcution of steel fell by 45%
  • after the war, cheaper cotton goods from the USA and the Far East flooded the market and undercut the British cotton industry 
  • many were thrust iinto long-term poverty because there was simply no other jobs 
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The decline of heavy industry.2

  • Motor vehicles and light industry flourished 
  • Mckenna duties - intended to be temporary, put a 33.3% tariff on the importing of commerical vehicles, remained until 1956
  • safeguarding of insutries act of 1921 - to protect industries against foreign competition and introduced a 33.3% tariff on foreign imports
  • the steel industry suffered from the practice of differential pricing - producers could sell the same product to diffferent customers at different prices
  • the consumer decided to buy cheap, and that wasn't British 
  • cotton, iron and steel, and shipbuilding were heavily overcapitalised in a markert where few wanted what these industries produced 
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Changing patterns of trade and finance

  • British exporters lost markets abroad because their industries were geared up to war production 
  • Japan benefited from Britain's temporary withdrawl from world trade and began flooding the developing world with Japanese products 
  • Countries such as India developed their own iron, steel and textile industries - 1919 they introduced tariffs against British goods even though they were still part of the British Empire 
  • Challenged by the USA
  • Gold standard collapsed
  • After 1918, the world's financial markets struggled to get back to normal - some had to go back on the gold standard 
  • April 1925 - Britain went back on the gold standard
  • the price of gold was high and this amde British exports expensive 
  • The US government erected high tariff barriers iin order to protect home consumptioon, and recalled the loans ti had made to foreign governments
  • world trade collapsed and unemployment rose in all European countries
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Changing patterns of trade and finance.2

Britain was one of the first countries to be affected by the USA's collapse:

  • The USA was Britain's biggets trading partner. There were very limited markets where British manufacturers could sell their goods
  • The income from trade with the USA was the main way in which Britain raised money to repay debts incurred as a result of WW1, the government could not meet its debt repayments 
  • Britain was owed money by most of the WW1 allies (Russia, Italy and France) but they were in a similar situation and could not afford to make repayments 
  • The situation was exacerbated by Britain's return to the gold standard 
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Prosperity for some

  • Heavy industry concentrated inn the north and north-east, so affected badly 
  • The Midlands and south-east were relatively proseperous 
  • The skills of the workforce were readily adapted to the new, light industries that were being developed after WW1
  • these led to investment in these industries, that led to growth and fuller employment 
  • the shipyards, for example, employed people with very specific and mainly non-transferable skills - when these industries collapsed there was nowhere for the workforce to go
  • new, light industries able to meet the post-war demands 
  • growth of the building industries, electrical engineering, chemical and printing trades
  • the housing industry revived and in the early 1930s was responsible for the most rapid rate of house buildiing in British history 
  • Between 1924 and 1935, over one million houses were built for local authorities to rent out to council house tenants, and double that number for built for private purchase 
  • All these houses needed furnishing and equipping with consumer durables, which in turn stimulated demand in those industries 
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