Changes in the Role of the People Flashcards
(84 cards)
What kind of wars were the First World War and what was this?
- Total war
- Involves the whole population in war effort
What was the Bank of England responsible for and how was this advantageous when compared to other countries?
- Issuing government bonds
- They could pay with a promissory note when they commissioned work whereas other governments had to pay for everything in cash
What is a promissory note?
- A piece of paper promising that debt will be settled on demand
Why were government bonds a good way to make money, despite the fact that it was not quick?
- The government was rarely short of willing investors in a new bond issue
What other things were issued in addition to standard bonds and how did they differ from normal bonds?
- Consols
- They did not have a fixed period in which they had to be repaid
State 2 wars where consols were issued when they were in desperate need for money.
- The Crimean War
- 1920s after WW1
What were 2 benefits of consuls for investors?
- Every quarter they would receive an interest payment
- Consols become highly tradable on stock market when rate of inflation was very low
When were the first consols issued and at what interest rate?
- 1750s
- 3.5%
In general, did consols form a large part of government debt?
- No
What were 5 other ways that the French Wars were financed, alongside the methods mentioned before?
- Indirect tax reforms
- New tax on inheritance
- Suspension of gold payments by Bank of England
- Reduction in import duties
- Introduction of income tax (Income Tax Act)
Between 1783 and 1792, how much had gov revenue been increased by, as a result of the indirect tax reforms?
- £12.7 million to £18.6 million
When was income tax introduced and what was the rate?
- 1798
- 2 old pence on incomes above £60 per year and 2 shillings on incomes above £200 per year
Who did the tax affect and how much money did the tax bring about in the first year?
- Wealthy businessmen and landowners
- An extra 6 million
When was income tax suspended, why, and when was it reinstated?
- 1802, as peace was signed
- 1803, as war broke out again
From 1815 to 1914, what were 2 ways that Britain’s small wars were paid for?
- Taxation
- Small increases in the national debt
What were 3 reasons why colonial wars throughout the 19th century did not need much finance?
- The enemy was often small in number, so a large number of British troops were not needed
- The enemy was often poorly equipped
- The British were able to conscript local troops to fight for them
Which 2 wars required heavy government borrowing?
- The Crimean War
- The Second Boer War
What 8 sources were used to finance the First World War?
- Government bonds
- Direct loans
- War bonds offered to public
- War Savings Certificate Accounts
- Increased tax revenue
- The Bank of England kept gold as emergency reserve
- The Bank of England issued more banknotes
Give a stat to show the heavy amount of government borrowing during WW1.
- Between 1914 and 1918, the national debt increased from £625 million to £7,800 million
Where was money borrowed from through the form of government bonds and direct loans?
- Government bonds: British and international institutions (many from the USA)
- Direct loans: other governments (notably the US)
What are war bonds?
- Investment bonds bought by individuals on the understanding that after the war, the government would pay them back plus interest
How much interest was the first issue of war bonds and how did this change?
- 5%
- 3.5%
Were war bonds expensive? Why?
- They could be priced as low as £5 so that ordinary people could afford to invest
What were War Savings Accounts?
- People bought stamps for 15 shillings and sixpence on the understanding that they would receive £1 back in 5 yrs