Britain - Great Depression, Economic Issues, National Gvnt + The 1930s

British History - 1929, The Great Depression, following through the 1930s with the formation and actions of the National Government and the economic issues they faced.

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  • Created by: Samantha
  • Created on: 11-01-13 15:11

Questions to Answer about 1930s Topics

1. What were the economic problems that Britain had to face in the 1930s?

2. What were the ways in which the National Government managed to tackle those problems? (From 1931 onwards).

3. Describe the emergence of political extremism in the later 1930s.

4. Discuss the limitations of political extremism through the policies of the National Government and other factors.                                                                                              a. List policies                                                                                                                  b. Other factors

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Life in Britain During Great Depression:

Life dependent on social factors: Where did people live? Which class? Employment?

People lived where there was a concentration of staple industries (mining etc.) - These were hit hard by the Depression

This led to... 

  • 1/2 population put out of work for years.
  • Local economy collapsed as people depended on these staple industries.
  • - Veiw of National government - seen as standing idly by + letting misery continue.


  • New industries growing = Life improving = National Gvnt veiwed more +ly - Ensuring economical recovery + maintaining social + political stability.
  • Very different and + time for middle class. Seen as time of affluence, new houses, goods + oppurtunities for entertainment + leisure.

= Britain was split into Two Nations.

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The Economic Crisis 1929-32:

October 1929 - Wall Street Crash hit American Stock Markets = 1931 Great Depression... But Britain soon felt effects in reduction of European trade - other nations suffered

  • 1930 - British exports fell by 1/2
  • Staple industries greatly affected, especially coal + shipbuilding
  • Unemployment almost 3 million by end of crisis, 1932

MacDonald had no idea how to tackle this + set up council where economists could give advice. BUT remained wary of new ideas.

Fundamental principles: Balancing budget + Maintaining Gold Standard... But this would mean public spending cuts = reducing expenditure on welfare. Labour could not agree of size of cuts needed - Were meant to be working mens' party.

  • Issues = More unemployment = more benefits = Drain on gvnt.
  • Labour party + economists divided on how to deal with crisis.
  • Mosley thought working men should come first - gvnt taking loans for social reforms etc = Ideas ignored, despite also being ideas of Keynes. Was afraid that radical ideas would reduce faith in Britain overseas + create even more unemployment.
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Economic Issues in the 1930s:

  • Issues already existed in 1920s but were exasabated - Economic Depression
  • Chamberlain popular but Churchill low voice in period (In comparison to 1940s)
  • Massive decline of stable industries + World Trade
  • Lead to...
  • Unemployment rising + remained high until 1941 - When finally fell below 1 million
  • Areas of Britain dependent on these industries suffered - Jarrow March

((Jarrow March = 200 unemployed men march 200 miles from Jarrow-London with petition to stop local shipyard from closing. Became symbol of struggling workers.))

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The National Government - 1931-40:

National Gvnt - Gvnt run by all main parties

Britain governed by National Gvnt from 1931-40. (Although not actually national).

  • Prime-minister = Ex-Labour leader Ramsay McDonald
  • Gvnt was not true coalition of all parties
  • Majority (of what was left) of Labour party bitterly opposed concept + veiwed it as a huge betrayal + a turn to capitalism. (Only 3 members followed McDonald into Nat. Gvnt)
  • Liberals only make token contribution
  • Power base of gvnt was massive majority of Conservatives held in parliament - National Gvnt depended on their support

When McDonald resigned in 1935 Stanley Baldwin became prime-minister Conservative rule became even more obvious.

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The National Government's Economic Policies:

From 1931 the National gvnt introduced financial, trade + industry policies to deal with the crisis it had inherited. Some were traditional + some were not...

Financial: Stopped banking crisis + maintained international confidence BUT lowered total demand for goods = unemployment rose, + Gold Standard abandoned = + thing but - veiws.

  • Limit gvnt spending to match income
  • 10% unemployment benefit + introduced means test
  • Wage cuts for public employees

Trade: Many countries introduced tariffs, made exporting outside sterling area difficult.

  • Form of imperial tariff system introduced 1932
  • Import Duties Act 1932 - Tariff reform

Industry: Special Areas ineffective + only worked in v specific areas.

  • 1934 Special Areas Act
  • 1935 Shipping Act 
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Economic Recovery:

Despite limitations of gvnt's schemes, economy did recover from worst of Depression, but Recovery was limited + more obvious in Midlands where new growth industries were.

  • Between 1933 + 1940 unemployment fell by 1/2 + average economic growth rates were higher than in 1920s.
  • New industries were growing and provided more jobs, people had more money to spend + stretched further + were also having smaller families = Demand rose at home...

...Unemployment was high but there were always more people in than out of work + with this + cheaper borrowing + lower prices = Rising consumer demand = Expansion in Home Market = More jobs.... This helped offset cuts in gvnt spending = Stopped Depression from getting worse + helped recovery.

  • New methods of production, (also now cheap production) were less affected by Depression + continued to grow throughout 1930s. Eg. Motor cars, electrical goods, chemicals + aircraft. Life was brilliant for Middle Class because of this.

These industries didn't expand fast enough to **** in all jobless men but many men found work in production for war. Eg. Jarrow men found work in shipyards for Royal Navy.

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The Collapse of the Labour Government 1931

  • Labour started out well in 1929 + prospects seemed favourable BUT in 2 years would be destroyed, economic crisis exposed heavy divisions already present in party...
  • ...
  • 1929 Wall Street Crash = Great Depression1931 Major European Crisis = People withdrawing their money = Bank reserves threatened.

Liberals wanted a committee to consider how gvnt could reduce expenditure + give out confidence = May committee.

  • May committee revealed huge deficit + made recommendations to cut public spending + increase taxation.

(2 members of Labour party disagreed + produced own paper but were ignored.)

  • Bank of England needed loans desperately. New York agreed but only if more cuts in unemployment benefits were made Conservatives + Liberals were fine with this but Labour were split.
  • Due to splits in Labour party McDonald went to resign... King George V persuaded him to instead create National Gvnt...
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1931 Crisis + Impact on Labour Party:

MacDonald's new cabinet - 4 Conservatives                                                                                                                 2 Liberals                                                                                                                       3 Labour - Had support of 12 backbenches but rejected by rest.  MacDonald was later expelled from Labour party.

British currency not saved by Snowdon's efforts - Recieving loans + permission from Conservatives... Sept - Gold Standard abandoned.

MacDonald called for General election to restore confidence + appeal to public for a Doctor's mandate (Severe cuts in unemployment benefit + public employees' pay) = Was disaster for Labour + Made MacDonald even more unpopular. 

Socialist George Lansbury became leader of Labour party 1932-5. Popular but criticised for pacifist veiws as aims of Facist Italy + Nazi Germany became clear.

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Labour Party's Recovery:

1931-5 Won most by-elections

Also won London County Council 1934

1935-40 Won another 13 by-elections

Due to WW2 no election for another 10 years, (but was believed they'd have done well if so)

Overall - Improved greatly.

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Why did Labour Recover? - Circumstances:


  • No serious alternative to Labour as main opposition party...
  • Liberals split over formation of National Gvnt in 1931 + again in 1932 when Gvnt moved away from Free Trade.
  • 1935 election disaster for Liberals as were minor party.
  • Communist Party - 1 seat. Facist Party - 0. Did badly.

This led Labour leaders to stop all links with Communists as a 'Popular Front' against Facism = Position as main party never successfully challenged.

Under Nat.Gvnt people endured unemployment benefit cuts, means test + 'hunger marches' = Working class loyalty to Labour.

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Why did Labour Recover? - Own + Steps:

+ Steps:

  • Reforms in party organisation = moderate trade union leaders had more influence.       Eg. Ernest Bevin.
  • Changes in leadership helped.
  • Seniority + moral standing of Arthur Henderson + George Lansbury = helpful in stabilising party immediately in 1931... (Lansbury replaced by Clement Atlee in 1935).
  • Membership increased.
  • 1935: Began to move away from pacifism; by... Showing favour of armed support for League of Nations* + by 1931: full resistance to Nazi Germany.

As a result...

  • Labour's support from press increased. Eg. Daily Herald almost as popular as Conservative Daily Express. Daily Mirror became pro-Labour in 1938.

Thinking Question: What did this show about people's opinions/veiws about the Labour party?

((*Set up after WW1 as international organisation to settle disputes through negotiation.))

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Why did Labour Recover? - Change to Moderation:

Key Factor in Labour party in 1930s was a firm committment to moderate + 'respectable' policies.

After 1931 split a more radical party was expected to emerge but instead vast majority of of Labour movement were committed to moderation + parliamentary democracy. Atlee's leadership + Trade Unions influenced this switch.

  • Ironically, the few moderates of the party that followed MacDonald to Nat.Gvnt were minority of party at time. Before change: Elements of party were more Communist + supported what Stalin was doing in Russia. 
  • 'Socialist League' led by Sir Stafford Cripps, seen as champion of 'left'. This league dissolved in 1937 + Cripps expelled from party after trying to organise broad alliance (with Socialists, Communists, Conservatives + Liberals) in opposition to Chamberlain's Appeasement policies.
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Why did Labour Recover? - Conclusion:

From then on... Mainstream Labour refused to deal with Communists + avoided any form of radicalism. 

  • 1937: Immediate Programme set out plan for nationalisation of British industries. Despite this improvement, Labour stayed out of gvnt in 1930s. 
  • Support for Labour strengthened in London + areas of N.Scotland + England where only a small amount of recovery was evident after the Great Depression.

Thinking Question: Why did people from these areas support Labour?

In comparison to this, Labour did not do well in more prosperous areas + amongst middle class.

Therefore Labour's recovery was limited.

By 1940 Labour was ready for gvnt but had to wait for experience of WW2 to hit people before they turned to electing them.

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Political Extremism in Late 1930's: Communism

1930s saw triumph of political extremism + dictatorship. Eg. Germany.

Severe economic crisis can lead to political extremism + this was a problem for most countries in the 1930s, however although they developed they never came close to power or disrupting life in Britain...

The Communist Party of Great Britain:

  • Founded 1920, small in number with large influence, members attracted to it in 1930s because it promoted idea of equal society. 

Conservative party exaggerated threat to break support for Labour. Eg. Zinoviev letter. 

The British Union of Facists:

  • Formed + led by Sir Oswald Mosley - Credible political figure, ideas for reducing mass unemployment - attracted various working class men from London. For brief spell seemed as if it could challenge political stability in Britain but in the end never did.
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Early 1940s

1945 - Labour stunning victory despite feelings from 1930s

Chamberlain was now associated with appeasement but Churchill was popular. The people demanded him to return to the government.


1930s:            Chamberlain                                  


1940s:                                                                                    Churchill


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