• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

How successful was the National Government in tackling the economic problems faced from 1931-39?

Extracts from this document...

Introduction

How successful was the National Government in tackling the economic problems faced from 1931-39? In order to evaluate the success of the National Government in tackling the economic problems from 1931-39, one must split these economic problems into categories, and then look at the successes and failures of the government. The categories to look at are the balancing of the budget, the gold standard, unemployment (and assistance), cheap money and regional policies. Firstly the failures of the National Government will be looked at. With the Budget, there was the almost immediate incorrect prediction that the budget was heading for a large deficit. This was an immediate failure because it was completely wrong, and because of this incorrect prediction, there was the speculative selling of the Sterling and the decrease in expenditure and 10% reduction in unemployment benefit. Spending continued to rise as unemployment continued to rise up to a peak of 2.8 million in 1932. The key point is that the government could not possibly conceivably tackle the economic problems unless they knew the correct situation; and with the predicted budget deficit of �120m, it is clear just how wrong they were when one looks at the figures, and sees that only once was the budget in deficit (1933) between 1927 and 1939, and this was a mere �6m. ...read more.

Middle

Secondly, the successes of the National Government must be looked at. The Budget was considered a failure, especially with the incorrect prediction, however the figures demonstrate that the government achieved its aim - the books had been balanced and the government was only in deficit once. Leaving the gold standard was seen as a great failure in theory for the government, however, ironically, it proved to be one of the government's greatest contributions to economic recovery. This was because a lower value for the sterling meant that exports increased and imports decreased, and so more production occurred and so unemployed decreased. Also it now became possible for Bank of England to reduce interest rates which in turn stimulated business investment. The government tried to run a budget surplus, as according to conventional economic opinion, this would supposedly have the effect of reassuring business confidence, encourage investment and recovery. This was in practise the wrong thing, but it was a success for the government as they achieved their aim and the budget was in surplus or equilibrium every year but one. Furthermore it used the policy of cheap money to keep interest rates low in order to encourage investment in new factories. This was relatively successful as it helped the recovery process and it contributed to the housing boom. ...read more.

Conclusion

Furthermore regional unemployment remained in some areas. However in order to address the question, one must look at the role of the National Government in tackling the economic problems and thus the recovery. In general, the given view is that the government did not play a big role in the recovery. L.J. Williams, in Britain and the World Economy 1919-70, said, 'The general verdict must be that conscious government policy contributed little to recovery'. Some of the policies undertaken by the government were successful, such as the leaving of the gold standard, introduction of protection, cheap money, regional policy, and budgetary policy. However the consequences of leaving the gold standard were not what they had aimed to do, protection had a rather minimal effect on the recovery, cheap money did help however the links between interest rates and investment are weak, regional policy again had a minor effect and with the budgetary policy - this made the depression worse. Therefore while these policies may have helped overall, they are not enough to account for the economic recovery. A more important reason was the rise in real wages of those in work, meaning people had a higher amount of money to spend. This in turn stimulated the multiplier effect meaning aggregate demand shifted outwards, thus increasing employment. However this was only a short-term process and the underlying economic problems, such as unemployment, remained. 10/05/2007 History (ISJ) Aman Janmohamed (NPS) Page 1 of 3 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Macroeconomics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Macroeconomics essays

  1. Comparing the effects of immigration on GDP in Malaysia, Japan and South Africa.

    Furthermore, foreign workers do not ask for many things but just a pay and a place to shed themselves. Hence, it is easier for employers to hire them. Besides, foreign workers are more obedient than local workers and this also explains why employers prefer foreign workers rather than the local ones.

  2. Pakistan is in the grip of a serious energy crisis that is affecting all ...

    employment sector but energy deficit pushed this large sector to the wall. exporters are unable to meet their export orders, textile export orders worth $5 billion were lost at Heimtextil Fair Germany this year while sixty thousand jobs are in danger as a result of the downfall in industrial production

  1. Budget 2004-05 and Economic Analysis of Pakistan

    and 2004-05(budget) is given in Table below: (Rs.in Million) 2003-2004 2004-2005 Classification Budget Revised Budget * INTERNAL (I+II+III) 608169 638536 686265 * Revenue Receipts (Net) 513536 549572 557165 * Capital Receipts (Net) 36677 39789 64439 Total (a + b) 550212 589361 621604 Self-financing of PSDP by Provinces 29990 34845 33110

  2. Critically examine the hypothesis that economic recovery in the 1930s was based upon the ...

    In fact, by 1934, the nominal effective sterling rate had risen significantly relative to the exchange rates of Britain's European competitors. Some argue that it was not the depreciation of sterling, however, but British trade policy, that was responsible for the trade-driven recovery.

  1. To what extent does the government budget/statement reflect current government priorities?

    who' s second or other language is English), or helping to get people who have been out of work for a long time back into work. Education; With the UK economy becoming ever more revolving around qualifications, the need to have a well-trained and educated workforce becomes vital.

  2. To what extent does the government budget/statement reflect current government priorities?

    Also known as Keynesian economics, this theory basically states that governments can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending. This influence, in turn, curbs inflation (generally considered to be healthy when at a level between 2-3%), increases employment and maintains a healthy value of money.

  1. What steps were taken to tackle Germany's economic problems between the Nazi takeover in ...

    The confidence of big business had been lost. Hitler was therefore upcoming with a vision of a stronger Germany, which inspired confidence in big businesses who saw this as an opportunity to prosper again. This coincided with the danger of inflations, as there was increased demand and money supply.

  2. Discuss the measures taken by the current Labour government to enhance the independence of ...

    addition the minutes of each monthly meeting are available 6 weeks after. The Bank will also continue to be accountable to Court for its operations and finances. The Court comprises of people to represent the whole UK and are appointed for their expertise in their relative areas.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work