The Inter-War Years

1. The Inter-War Years Problems in Britain

2. The Effect of WW1 • Britain over the course of the War spent 7,852 Million. • Economic Output fell between 1918 and 1921 by 25% and did not recover till the end of the Depression • Economic Output is the total value of all of the goods and services produced in a countries economy.

3. A major cause of financial instability, which preceded and accompanied the Great Depression, was the debt that many European countries had accumulated to pay for their involvement in the Great War. This debt destabilised many European economies as they tried to rebuild during the 1920s. • The war had permanently eroded Britain's trading position in world markets through disruptions to trade and losses of shipping

4. The resulting loss of foreign exchange earnings left the British economy more dependent upon exports, and more vulnerable to any downturn in world markets • Overseas customers for British produce had been lost, especially for traditional exports such as textiles, steel and coal.

5. Gold Standard • But in April 1925 the Conservative Chancellor, Winston Churchill, on advice from the Bank of England, restored the Pound Sterling to the gold standard at its pre-war exchange rate of 4.86 US dollars. This made the pound convertible to its value in gold, but at a level that made British exports more expensive on world markets • The economic recovery was immediately slowed • The industrial areas of Britain spent the rest of the 1920s in recession, and these industries received little investment or modernisation. Throughout the 1920s unemployment stayed at a steady one million.

6. Wall Street Crash 1929 • In October 1929 the Stock Market Crash in New York heralded the Great Depression. The ensuing American economic collapse shook the world: World trade contracted, prices fell and governments faced financial crisis as the supply of American credit dried up

7. Effect of Depression in Britain • The effects on the industrial areas of Britain were immediate and devastating, as demand for British products collapsed. • By the end of 1930 unemployment had more than doubled from 1 million to 2.5 million (20% of the insured workforce), and exports had fallen in value by 50%. • The industrial areas were hardest hit, along with the coal mining districts. London and the south-east of England were hurt less. In 1933, 30% of Glaswegians were unemployed due to the severe decline in heavy industry.

8. Although the overall picture for the British economy in the 1930s was bleak, the effects of the depression were uneven. Some parts of the country, and some industries, fared better than others. Some parts of the country such as the South Wales Valleys, experienced mass unemployment and poverty, while some areas in the Home Counties did not.

9. Between 1929 and 1932 ship production declined by 90% • In turn affected all the supply industries such as steel and coal • In some towns and cities in the north east, unemployment reached as high as 70%. Among the worst affected towns was Jarrow, where unemployment led to the famous Jarrow March, in which unemployed workers marched 300 miles to London to protest against unemployment.

10. In these areas millions of unemployed and their families were left destitute, and queuing at soup kitchens became a way of life

11. With the mass unemployment of the 1930s, contributions to the insurance scheme dried up, resulting in a funding crisis. • In August 1931, the 1911 scheme was replaced by a fully government-funded unemployment benefit system. This system, for the first time, paid out according to need rather than the level of contributions. This unemployment benefit was subject to a strict means test, and anyone applying for unemployment pay had to have an inspection by a government official to make sure that they had no hidden earnings or savings, undisclosed source(s) of income or other means of support. For many poor people this was a humiliating experience and was much resented .