National Government

  • Created by: kirsty
  • Created on: 13-03-14 09:58

History revision notes

National Government 1931-1939

Prime Minister- MacDonald

President- Baldwin

Chancellor- Neville Chamberlain

Home Secretary- Simon

Foreign Secretary- Hoare/Eden

Chamberlain dominated domestic policy. He believed in balanced budgets, protection and Imperial preference. He wanted to ensure efficiency and improvement in social conditions. Most policies were the product of the six; MacDonald, Thomas, Simon, Runicman, Baldwin and Chamberlain.

Trade- Failed to increase in established goods despite tariffs

Passed; Abnormal importation Act Nov 1931

Tariffs of 100% could be put on goods entering GB in abnormal quantities, imposed up to 50% on a range of goods e.g. pottery, a board of trade committee set up to investigate tariff levels.

               Import duties Act 1932

Import duties advisory committee set up, under its advice the following were imposed; 25% Tariffs on luxury goods, 10% on all imports, non on food and Empire (Imperial Preference) – to be negotiated at theOttowa Conference.

The Ottowa Conference in August 1932 was to increase trade with the Commonwealth countries. However it FAILED to set up tariff free traded zones therefore all countries were trying to safe guard their own interests. GB increased preference to these countries but they didn’t do the same for GB, instead they put tariffs up for other countries. Ottowa further restricted world trade.

                        The major result was an increase in trade with the Empire and the Commonwealth at the expense of other countries.



1.      Tariffs and quotas failed to increase trade

2.     New tariffs now gave GB a bargaining tool in finding markets for trade

3.     Some industries benefited

4.     Industries that prospered during the 1930s didn’t need protecting

5.     Oct 1932- Samuel and Snowdon resigned because of free trade



1932 exchange equalisation fund- established to steady the £ against currency speculators now no longer tied to gold. It was still free to find its own level for trade.

Bank rate- the rate at which money is lent

This had in the past had to be kept high to discourage a run on the pound. A run on the pound refers to a situation where international investors become nervous over holding sterling and sterling assets, and so sell as quickly as possible.A run on the pound may occur when markets feel the Pound is overvalued and likely to fall quickly. If markets expect the pound to fall, they will sell quickly before making a loss. This was no longer needed. Therefore the bank rate fell because the demands for loans was low because of the depression. The rate was 2%. By accident the Government had arrived at a policy of cheap money.

Chamberlain also converted £2087m war loan at 5% into a new loan at only 3.5%- this saved £23m per annum

Failures of the Government

The National Government could have taken advantage of this and built roads and schools cheaply and reduced unemployment and revived the economy. MacDonald, Baldwin and Chamberlain waited, kept the budget balanced


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