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Economic Legacy of WW1 Loss of trade: Before 1914 Britain was world leader. Shipping was used to transport war supplies. USA and Japan filled the gap Debt: In the last 2 years of the war Britain had to borrow £850 million. Large government spending led to reduced confidence Inflation: (General rise in prices) Had increased to 25% by 1918
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What caused the boom and bust of post WW1
Britain?E/D
• Describe the nature of Britain’s economy
C/B• Explain the causes
A• Analyse links between
causes
Economic Legacy of WW1• Loss of trade: Before 1914 Britain was world
leader. Shipping was used to transport war supplies. USA and Japan filled the gap
• Debt: In the last 2 years of the war Britain had to borrow £850 million. Large government spending led to reduced confidence
• Inflation: (General rise in prices) Had increased to 25% by 1918
Economic Legacy of WW1• The value of the pound: Before the war it
was fixed to the price of gold. This meant stability as countries could not just print more money unless they had the gold to back it up. Britain was forced to abandon the gold standard and printed more paper money
• Technological advancement: accelerated by the war it needed an increase in skilled labour which encouraged employment
Task – pp.26-271. Why there was a post WW1 boom?
2. Why were there problems with a speculative post WW1 boom?
3. What were the main characteristics of the 1920-21 recession?
4. Make notes on the causes of the recession of 1920-21
E/D•Describe the nature of Britain’s economy
C/B•Explain the causes
A•Analyse links between causes
How did the government try to solve the economic problems?
E/D• Describe the nature of
Britain’s economy
C/B• Explain the causes
A• Analyse links between
causes
Solutions• Balancing the budget: – Tax rises (1914:£18 per person,
1919:£24 per person)– 1921 Lloyd-George appointed a
Commission on National Expenditure under Sir Eric Geddes
– The “Geddes Axe” led to more unemployment
– Add notes from p.27
E/D•Describe the nature of Britain’s economy
C/B•Explain the causes
A•Analyse links between causes
Solutions• Interest rates and the value of the pound:– 1919 £1 = $3.81– Goal: restore the pound to the pre-war value (£1
= $4.86)– The government set a high rate of interest which
increased the value of the pound against other currencies
– 1925 Churchill announced a return to the Gold Standard
– High interest rates = less investment and borrowing. People save rather than spend
– British exports became expensive – Make notes from the purple box on p.29
E/D•Describe the nature of Britain’s economy
C/B•Explain the causes
A•Analyse links between causes
Solutions• Protectionism: – 1921 duties (taxes) to protect certain industries– Industries had been hit by competition abroad– Baldwin’s plans of tariffs and protection were rejected– 1925 and 1932 British Empire Economic Conference
(Ottawa) tariffs were added. Industries were therefore reluctant to make their own changes
– Investment was not pumped into new industries such as chemicals and cars
– Other nations put up tariff walls which limited international trade
– Make notes on protectionism and free trade from p.27
E/D•Describe the nature of Britain’s economy
C/B•Explain the causes
A•Analyse links between causes
Tasks – p.29-301. Explain the impact of the Wall Street
Crash of 1929
2. Why did the Labour government resign in 1931?
3. How did the National Government (coalition of parties) respond to the crisis? E/D
•Describe the nature of Britain’s economy
C/B•Explain the causes
A•Analyse links between causes
Tasks1. Explain why the British economy
struggled to recover after WW1
2. How effective were solutions put forward by the government?
E/D•Describe the nature of Britain’s economy
C/B•Explain the causes
A•Analyse links between causes
