The depression years in Wales and England, 1930-1939

Why did the Depression happen?

problems with traditional industry

• before WW1, Britain's prosperity had depended on the sale of heavy industrial goods such as coal and steel
• these older traditional industries entered a period of decline
• rising costs in production
• obsolete methods
• a failure to invest in new technology and machinery
• fall in demand for British goods
• increased competition from abroad
• more expensive British goods could not compete with cheaper imports
• Britain's traditional pre-war export markets were no longer prepared to buy British
• they bought US steel, German coal and Indian cotton instead
• brought an end to the golden age of welsh and british heavy industry
• when the worldwide economic depression arrived in the early 1930's, Britain's old industries could not cope

the wall street crash

• the principal cause of the Depression was the Wall Street Crash of 1929
• the collapse of the US stock market caused a financial crisis in which some major banks in the USA ceased trading and many businesses were plunged into bankruptcy
• led to rising unemployment
• added to the economic problems
• led to a reduction in spending
• as unemployment rose, sales declined further
• the way to end a depression is to get people to buy things
• the US government did not know how to do this
• the US president, Herbert Hoover became alarmed
• he called in America's huge loans to other countries
• put up customs barriers- imposed high tariffs to stop imports of foreign goods
• Hoover's policy spread the depression across the rest of the world
• 'when america sneezes, the rest of the world catches a cold'

impact on the British economy and employment

• Britain, Europe and many of the world's industrial powers had come to depend on US loans and trade
• when America's economu crashed, so did theirs
• the world slump in production and trade lasted longer and was deeper than many governments had imagined
• slump turned into a depression because it affected both employers and employees
• some businesses crashed while others struggled to survive
• production slumped because orders declined
• led to many companies laying off workers
• redundancies and dismissals contributed to the Depression
• as unemployment rose, the decline in orders fell even more sharply
• the crisis of 1929 had a significant impact on the British economy
• the collapse of the post war economic boom in 1921
• increased competition from abroad
• disaster of the general strike in 1926
• decline in the mining and steel industries
• all these crippled the British economy
• the crisis of 1929 made an already bad situation worse

impact on British politics

• many politicians were convinced that the economy would right itself
• felt that economic recovery was better left to businessmen rather than politicians
• all would be well was their response
• a minority of politicians did not know how best to solve the crisis
• Sir Oswald Mosley (labour) called for massive government spending to create jobs and for high tariffs on foreign imports to protect British industry
• economist Keynes and the leader of the opposition Liberals, David Lloyd George, tried to persuade…