1b: Creating a managed economy, 1945-1951

Question 1

What demonstrates an improvement in economic fortunes?

Answer 1

Exports grew 80% (not difficult to grow when starting from lower).
Economic growth was 4% a year after 1948.

Question 2

What major change occurred during the war?

Answer 2

The government took control of war production - the state became more involved in the economy.

Question 3

What did the govt set up to control the economy?

Answer 3

Specific ministries with legal powers to intervene and take over the running of essential industries.
Ministry of Food, Ministry of Supply, Ministry of Labour and National Service.

Question 4

What was different between how the economy was run in peacetime compared to wartime?

Answer 4

Peacetime: Production determined by prices and profits.
Wartime: Production levels decided by the govt.

Question 5

Was this state involvement abandoned after the war?

Answer 5

NO!!!!!!!

Labour continued the state-run economy, nationalising key industries.

Question 6

What occurred due to Britain losing the war in 1940?

Answer 6

1940: The state intervened greatly in war production, increasing its expenditure and production due to deficiencies from 1930s rearmament.
Aircraft production rose from 15,000 in 1940 to 47,000 in 1944.

Question 7

What was military expenditure as a percentage of national income?

Answer 7

1939: 15%
1944: 53%
MAJOR INCREASE IN STATE SPENDING.

Question 8

Who provided economic aid for the first few years of the war?

Answer 8

The USA.

Question 9

What were American Liberty Ships and why were they needed?

Answer 9

Large cargo vessels containing coal, oil, timber and foodstuffs, as well as essential raw materials.
They were needed as U boats had sunk many merchant ships.

Question 10

What did the American Neutrality Act of 1939 mean for Britain?

Answer 10

It meant Britain could only pay in cash.

However, cash and gold reserves had all been used up by December 1940.

Question 11

What did Churchill negotiate after the gold reserves had been used up?

Answer 11

A Lend-Lease Agreement:

A credit agreement where Britain would pay the bill after the war - led to £4 bn worth of debt.

Question 12

When did the Lend-Lease finish and what did this mean?

Answer 12

Britain’s economic lifeline was gone and their debt totalled £70 million per day.

Question 13

What had the war done to the British economy?

Answer 13

It had contracted by 1/4 and trade had declined by 2/3.

Question 14

Why had trade and exports fallen?

Answer 14

U boats had sunk merchant ships.
European and Asian trading partners were too poor to trade due to the war. This meant America dominated post-war markets.

Question 15

What did Maynard Keynes do in August 1945?

Answer 15

He went to DC to arrange for an emergency loan - he believed it should be a gift for Britain’s war efforts; Congress disagreed.
America loaned $3.75bn and Canada $1.2bn.

Question 16

What does the Historian Sked say about Keynes’ emergency loan?

Answer 16

“America did not seem to realise that Britain was bankrupt.”

Question 17

How did the Arctic Winter of 1947 compound Britain’s problems?

Answer 17

1. Food shortages - 1/4 of sheep lost and root veg stuck in the ground.
2. Coal shortages meant leccy supply was cut to 19hrs a day for homes and industry - this meant factory closures and unemployment.

Question 18

What demonstrates the dire situation Britain was in, in 1947?

Answer 18

Canadian and Australian citizens donated food parcels to Britain.

Question 19

What did Labour continue, despite its unpopularity?

Answer 19

Rationing.

• Introduced Bread rationing from 1946-1948
• Clothing was rationed until 1949.

Question 20

What further loan was sent to Britain, as a lifeline?

Answer 20

Marshall Money - £2.7bn.

This was a further loan to prevent Britain from turning communist.

Question 21

Was Marshall Money spent well?

Answer 21

NO.
It was used to pay for general expenses rather than being invested in industry. This meant British industry lagged behind further.
Investment in infrastructure, 1950: UK = 9% of GDP; Germany = 20%.

Question 22

What did Attlee’s labour nationalise?

Answer 22

State control of coal, power, railways, shipbuilding, healthcare, and banking.

Question 23

What was the aim of nationalisation?

Answer 23

Create full employment - unemployment was reduced to just under 300,000.
State industries would not shed jobs during economic downturn - nobody wanted to return to the 1930s.

Question 24

When were key industries nationalised?

Answer 24

Coal - 1946
Bank of England - 1946
Transport - 1947
Electricity - 1947
Gas - 1948
Iron and Steel - 1949.

Question 25

How much did nationalisation cost, and what did this mean?

Answer 25

It cost the govt £2bn.

This meant little money for funding and modernisation, storing up problems for the future.