The Economy Flashcards
What is the state of the economy in 1918?
The war meant Britain faced large debt to the US (£3.25 billion) and were in a negative ‘Balance of Payments’ (where imports are greater than exports).
- Around 40% of British shipping was sank by German U- Boats which meant exports only accounted for 1/5 of British wealth.
- Furthermore, ¾ million men died in the war, cutting industrial output.
What was known as The Jarrow Crusade?
Where Workers from Jarrow in the Northeast marched to London in 1936 to protest the poverty and deprivation suffered under the Depression.
These marches occurred all over Britain during the 1930s and were known as the “Hunger Marches” (people are starving).
Why does global trade contract by 66%?
The Stock Market Crash in October 1929 in the US begins an economic depression, which affects the entire world.
How did the USA’s 1929-1934 Great Depression damage Britain’s economy?
As the US was the largest importer of goods, it damaged Britain’s economy too – Britain’s exports declined by 50% (1/3 of its Gross National Product).
What is the definition of Gross National Product?
The balance (what’s left) of exports minus imports
What is the definition of Gross Domestic Product?
The productivity and profits from goods produced in that country.
What were Consequences of the depression?
1) The collapse in trade was catastrophic for industries in products like coal, dock work, cotton, iron & steel, and ship building.
2) People spent less so shops & markets were also seriously affected.
3) Unemployment went from 1 million in 1929 to 2.5 million in 1930- this meant more people were applying for financial assistance.
4) In 1931 the economy shrank by 5%.
What was the Government’s main priority during the Depression?
To keep the pound in the Gold Standard system.
Who was more responsible for alleviating the Depression – Labour or the National Government? Why?
The National Government seeing as it could tackle issues previously faced whilst the Labour party was running.
True or false: The Depression lasted longer in Britain compared to other countries like the US?
False
What did Britain exiting the Gold Standard (therefore devaluing the pound) in September 1931 cause?
1) A cut in interest rates from 6% to 2% allows more borrowing, thus increasing spending and employment.
2) Between 1935 and 1936, 279,000 new homes are built. A housing boom, with the value of mortgages increasing to £636 million by 1937.
3) Devaluation of the pound makes British exports cheaper and more competitive.
4) Banks become more willing to spend.
5) National Government also restructured British war debt, making it 25% of tax revenue rather than 40%
The 5 outcomes of leaving The Gold Standard between 1932 and 1937:
- Real incomes rise by __%
- Industrial production increases by __%
- GNP rises by __%
- Exports increase by __%
- Unemployment falls to .%
- 19%
- 46%
- 23%
- 28%
- 8.5%
What 2 main things caused the Post-War Boom 1918-20?
1) Limits on consumer spending during the war allowed people to save and these savings were spent in 1919.
2) There was a large speculative boom as businesses issued shares. The shares issued were £65 million in 1918, £384 million in 1920.
Name 4 reasons for why did the Post-War Boom end.
1) Investors make poor choices- they buy British shipyards, cotton mills, and coal mines.
2) British monopoly over these industries ended during the war.
3) There was little investment/ modernisation during the war (like America).
4) Industry was unable to maintain the new demand for luxury goods, causing the boom to end.
Recession during the 1920s:
Industrial areas like South Wales ____ mines become depressed. Unemployment levels increased to __% between 1920-21. By 1921, _ million are unemployed.
- 12
- 2
- coal
