Slides in this set
Why was unemployment so high in certain areas?
· The country was too dependent on the USA. The USA couldn't afford to lend out money and
wanted it's previous loans back which Europe were unable to pay easily.
· Everybody in the world stopped spending; so demand for exports decreased
· By 1932, 3 million people were out of work
· British industry: the "Old" Industries suffered the worst, they mainly produced raw materials
or heavy goods. They relied mostly of exports. The worst areas were Wales & North England.
Britain followed "Free Trade" which allowed free goods however England had to pay import.
1. Coal: produced cheaper (65p a tonne to £1.56 in Britain) harder to mine, less modern mines
2. Textiles: rayon invented (cheaper, better) Japan and USA by 1939, reduced by 40% in size
3. Ships: Disarmament so less war ships, fell to 133,000tonne by 1933. Japan and USA cheaper
4. Iron & Steel: Less demand for ships, USA and Japan were cheaper & more efficient plants…read more
What measures were brought in by Government?
· In 1931 a national government was set up to reduce unemployment led by MacDonald
· Traditional view balance the budget, cut spending and do little to help, revive itself
· New view "Spend!" Kick start the economy. Provide jobs, increase spending, like
· Short term measures
1. Public Spending cuts by 10% (teachers, police, army)
2. OFF Gold Standard to help value of pound high to keep imports expensive to buy home
3. The means test test the amount of assistance and benefits needed
4. Income tax increased
· Long term measures
1. Import Duties Act: 10-20% duty on imports to buy home goods (helped new industries)
2. Signed the Ottawa agreement to allow common wealth countries to trade cheaper
3. The Exchange Equalisation Account: to not run out of foreign currency like in 1931…read more
What else did the government do?
· Helping the older industries tried to encourage small companies to adopt
"rationalisation". Amalgamation would lead to large companies increasing profit. Small ones
would close down to reduce competition. However this increased unemployment!!
· Special areas Act North East/West England, Wales and North Ireland. Passed in 1932
offering £2 million grants to big companies to move to these areas. Biggest one was the
Team Valley Trading Estate in 1938. by 1938, £8,400,000 had been spent but only 121 new
firms set up so only 14,900 jobs.
· How effective were these policies
· Many governmental people believed the government would revive itself.
· The national government wasn't prepared to provide large grants
· Hard to see how bad it is when South East (car + electricity) are doing well
· By 1939 unemployment was at 1 million
· There was revival in world trade
· Rearmament in 1935 gave a huge boost to heavy industries.…read more
Why was the means test so unpopular
This was set up in 1931 to tackle the high costs of unemployed. After 6 months of
unemployment benefits, they went on the Dole, before this, they had to have their houses
inspected and they could be forced to sell possessions, told their savings or deductions.
· The average maximum for a family of 5 was £1.56.
· This was raised to £1.80 in 1936 but below the minimum wage of £3
· It was unpopular because...
1. Cared more about saving money than helping people
2. People hated having an inspector telling them what possessions they had to sell
3. People had to make relatives go live somewhere else if they wanted a higher payment
4. It was humiliating to reveal their earnings, savings and value of objects
5. If officials thought there was enough, the inspector would stop the payments
6. Some places did it harshly, others refused to even carry it on
7. It was a great strain on families: such as if an older child had to work
Marches began in 1931 they weren't peaceful. The National Unemployment Workers' movement
(NUWM) was set up to put pressure on the government to give a petition to stop the test.…read more