A further policy put in place by the National Government was leaving the Gold Standard. The Government had originally gone back to the Gold Standard in 1925 after the First World War, as it had been used during a period of prosperity in Britain so it was seen as a successful method to relieve economic problems within Britain. The National Government cut its ties with the Gold Standard in September 1931, this allowed the pound to depreciate in value. As a result British exports were made cheaper and more goods were sold internationally. Nevertheless, its effectiveness was limited because other currencies also lefty the Gold Standard and they also depreciated in value too. This resulted in a wide range of foreign competition and also was one of the key reasons why many countries introduced protective tariffs, which made exporting goods to other countries far more difficult. As a result Britain sold more exports to the empire within an area classified as the “sterling area”, but this was only part of the reason for decline in demand from America and Germany. So where as the Government’s actions were helpful in stimulating higher levels of exports, it wasn’t successful in eliminating foreign competition and as a result exports from Britain were never as high as they had been.
Due to a combination of the lowered interest rates and leaving the Gold Standard, more people were taking out private loans and mortgages to buy new houses. This resulted in a private house building boom with roughly 2 million houses built during the 1930’s. Not only did the house building create large amounts of employment across the UK it also created a demand for furniture and other goods. However, the majority of these houses were built for the middle and upper classes who were more likely to have stable jobs and could easily take advantage of the cheap mortgages and low prices. However, this increase in consumerism wasn’t directly due to the policies put in place by the National Government. There was a far more casual link between the increase of housing and policies put in place. The money made from the jobs provided by housing was circumstantial. The National Government should have put more public work schemes in place to create housing across Britain and provide people with jobs. This would have helped to stimulate the economy further.
Not all policies put in place by the National Government were successful in bringing around recovery, some infact were at a detriment to the economy. As mentioned above not enough public work schemes were put in place across the UK to keep unemployment at a minimum. Foreign countries such as America and Germany used public work schemes as a way of tackling unemployment and dealing with the economic crisis. By investing more money, people were given jobs which meant that there was a rise in consumerism, increasing the economy. However Britain went for a more traditional method of tackling the economic crisis by “balancing the budget” by cutting the government’s spending. This was done in a series of ways, one of the most unpopular and most unsuccessful methods of cutting government spending was by making a 10% cut in unemployment benefit and introducing means testing. Means testing made it very difficult for many people to claim the benefit that they depended upon. This lead to a larger percentage of people suffering from poverty in Britain during the period of the economic depression.
A further example of where the National Government failed to provide adequate levels of support is within the depressed areas within Britain. Many areas that had relied on the staple industries as the main benefactor to the town’s employment suffered gravely. The Special Areas Act provided only £2 million of aid, and only to the most depressed areas such as West Cumberland. Whilst many old industrial towns had extreme levels of employment they didn’t qualify for aid from the government. There was not enough aid given to meet the demands of the people. Hunger marches and the Jarrow Crusade are iconic images of the woeful levels of aid given by the Government to those who needed it the most.
Factors outside the Governments control affected the speed of recovery within Britain, one of the main factors that helped recovery in Britain was the process of rearmament. Spending on rearmament was increased from 1935 onwards and shot up dramatically in 1938 due to imminent threat of war. Despite that it was forced upon by the National Government , rearmament did what previous policies had failed to do. It directly stimulated both old staple industries and new industries. Rearmament was a breath of fresh air to many of the depressed towns within the UK, new demand for goods gave new jobs and revitalised the economy in a way that hadn’t been done before. A good example of how successful rearmament was is in the case Jarrow roughly ¾ of the unemployed had found new work by 1939, either in the new steelworks in the shipyards. Although rearmament was a process carried out by the National Government it wasn’t set up as a method to aid Britain’s recovery. This yet again shows that more needed to be done in Britain such as public work schemes instead of the traditional method of “balancing the books.”
Furthermore, there was a general world recovery from 1935 onwards, newer industries began to appear across the world. Industries such as motor cars, aviation, chemical goods and new electronics. These new industries enjoyed a large growth across the world. The production of cars in Britain doubled between 1929 and 1939 making Britain the second largest car producer in the world. Even some staple industries began to recover in 1938 coal production reached 227 million tonnes almost what it had been in 1928.
Overall, whilst the government did have some successful policies in dealing with the economic crisis and bringing around economy recovery, they still had some major floors. Whilst some policies such as leaving the Gold Standard and lowering interest rates were particularly success some such as the Specials Areas Act were dismal. Not nearly enough aid was provided to support those who needed help. The National Government needed to take some advice from foreign countries such as America and Germany, and invest more money into public work schemes to increase economic growth and decrease unemployment. It was the gradual world recovery and the threat of war which forced rearmament which helped to cure the worst of Britain’s economic problems.