How The Government Dealt With The Depression

Question 1

Public Spending Cuts:

Answer 1

-People who worked for the government had their pay cut by 10% ; including teachers, police and the armed forces

Question 2

Leaving the gold standard:

Answer 2

• The value of the pound was high because it was valued against gold
• Stopping this meant exports became cheaper and imports more expensive
• Making people buy within Britain and other countries import goods/resources from Britain

Question 3

Income tax increased:

Answer 3

• This meant people took home less money from their wages

- It helped repay US loans and cover benefit costs

Question 4

The means test:

Answer 4

• To tackle the high costs of unemployment benefits, a means test was introduced
• Unemployment benefit would only be paid for the first 6 months
• After this people could claim the dole if they qualified for it
• This was decided by a means test
• The amount paid would be based on the whole family
• There was household inspection and people would often sell things to claim more
• The maximum given in 1936 was about £1.60 per week whereas the average wage had been £3.00

Question 5

Import Duties Act:

Answer 5

• To try and prevent another crisis in the future, a 10-20% tariff was put on all imports, encouraging people to buy British
• Hopefully, leading businesses to grow and unemployment to fall
• Unfortunately, this did not benefit the older industries and the areas of high unemployment
• Other countries retaliated by putting high taxes on British goods, so exports suffered

Question 6

The Ottawa Agreements:

Answer 6

• Commonwealth Countries traded with each other on preferential terms
• This made it cheaper to buy goods from countries like Canada and revived the market

Question 7

Amalgamation:

Answer 7

• To try and help the older industries and make them more competitive, small firms were encouraged to amalgamate (join together)
• When this happened, small firms were closed and workers sacked
• Production moved to larger firms but often more people needed up being sacked

Question 8

The Special Areas Act:

Answer 8

Places worst hit by unemployment were known as ‘Special Areas’

• In 1934 the Special Areas Act offered grants of £2 million to firms willing to move there
• By 1938, £8,400,000 had been spent but only 121 fir set with 14,900 jobs
• None of them could compete with the coal or shipbuilding old industries