Britain_Post_WWI_Flashcards
(20 cards)
What was Britain’s global economic position in 1914?
- Britain was the world’s leading trading and lending nation
- trade one-third larger than Germany’s and the USA’s;
- international trade was conducted in sterling
- the City of London was the world’s top financial center.
- Overseas investments stood at £4bn.
Why was Britain’s economy shaken by WWI?
Britain depended heavily on international trade, which was disrupted during the war. Foreign competitors like the US and Japan filled the gaps Britain left, causing a ‘beachhead effect’ in previously British-dominated markets.
What was the ‘beachhead effect’ in British trade during WWI?
It refers to how competitors like the US and Japan took over British markets during the war, establishing a strong presence and making it hard for Britain to regain dominance afterward.
What happened to British foreign assets during WWI?
They were requisitioned by the government; up to 10% were sold to finance trade, causing a 10% decline in invisible profits and worsening the balance of trade.
How did wartime control affect British imports and food?
The War Office controlled 90% of imports and 80% of food; these were returned to private control by 1922 through decontrol.
What protectionist measures were introduced during and after WWI?
McKenna Duties (1915) introduced temporary protectionism (e.g., on cars); the Key Industries Duties Act (1921) continued it. Food import protection was ended post-war.
What production and labor changes occurred during WWI?
American management techniques and tools were introduced; there was ‘dilution’ of skilled labor and growth of trade unions (from 4m in 1913 to 8m+ in 1919).
What were the impacts of trade union growth during WWI?
One-third to half of workers had collective bargaining; unions became stronger, more organized, and assertive, demanding postwar improvements like ‘a home fit for heroes’.
What was the state of Britain’s public debt by the end of WWI?
National debt rose twelvefold to £7bn, with £300m annually needed to service it (40% of the budget).
What was the Geddes Axe?
A 1920–21 program of severe spending cuts (initially £75m, then an additional £52m recommended by the Geddes Committee) that cut 25% of public expenditure, especially in armed forces, civil service, and education.
What effect did the Geddes Axe have on government spending?
It restrained spending growth, halted educational reforms, and caused government expenditure not to recover until 1931.
What caused the short post-war economic boom to fail?
Investors wrongly assumed trade would return to prewar levels, leading to overproduction (e.g., shipping increased 40%) and overcapacity, which triggered layoffs by 1920.
How did strong trade unions affect productivity in the 1920s?
Some historians argue reduced working hours cut productivity, but union strength couldn’t stop rising unemployment, which hit 2m+ by 1921.
Why did Britain’s economy lag behind others in the 1920s?
Despite global recovery, Britain’s GNP rose 22% less than expected due to the damaging return to the gold standard and reduced industrial competitiveness.
What was the impact of returning to the gold standard in 1925?
It made British exports expensive, hurt industrial productivity, raised unemployment, and required high interest rates that discouraged investment.
What did deflation policies entail after WWI?
To return to gold parity, the government pursued deflation: cutting wages and prices, increasing unemployment, and raising interest rates to pre-war levels.
Why did high interest rates hurt Britain’s recovery?
They made industrial investment unaffordable, worsened unemployment, and increased the burden of public debt.
What alternatives did the government have to deflation and gold parity?
An inflationary policy like in Europe could have reduced war debt but was avoided to protect bond-holders and the middle class’s wealth.
What was Keynes’s criticism of British economic policy in the 1920s?
He argued it favored finance over industry and that harsh deflation and the return to gold damaged exports and employment.
How did Labour leaders MacDonald and Snowden respond to the gold standard return?
Despite socialist rhetoric, they supported it, earning criticism for adhering to outdated economic policies (‘Gladstonian relics’).
