Was decline or growth more significant as a feature of Britain's inter-war economy?
Michael Jeapes
Was decline or growth more significant as a feature of Britain's inter-war economy?
During the inter-war period Britain’s economy was not performing well. As the First World War had cost Britain millions of pounds, not to mention millions of lives, the potential debt was crippling. Yet did this hinder Britain’s economic growth so that it could not return to its pre-war level? You could argue that Britain's economy was. However, masked behind a series of setbacks outside the government’s control, the statistics told a story of decline.
1918 saw the defeat of the Kaiser’s Germany and the Austro-Hungarian Empire. However, it also saw Britain facing bills of millions of pounds. The reparations awarded to Britain payable by Germany helped ease the pressure on British accountants but restoring the economy to its pre-war state looked impossible. Adding to the government’s misery was the dilemma of what to do with the returning soldiers, with mass unemployment already, and women less than willing to give up their jobs. The government needed to find them jobs to get the country moving otherwise their benefits would be a drain on an already fragile economy.
After winning his first election in 1918, David Lloyd George did not need to do much to endear himself to the voting public, yet he embarked on a series of social reforms which would eventually lay the foundations for the welfare state. This included his ‘homes fit for heroes’ pledge, which would ensure comfortable housing for the returning war heroes and their families. Following the famous economist Keynes’ guidelines of deficit spending, Lloyd George implemented his ideas in hope of kick-starting the economy.
The state of the government’s inter-war finances tells a story of decline. For the country was in the middle of what came to be known as the ‘great depression’ after events that had preceded the era. However it was unemployment mentioned previously that was the government’s biggest worry. During the First World War Britain had had to sacrifice many of its key industries to focus on the war effort. Many of the suppliers either turned to competitor’s brands or developed their own industries, so when the war had finished many of the industries – particularly the labour intensive industries in the north – found themselves with no buyers and had to lay off many workers just to balance their books. Most of these industries had the opportunity to modernise before the war, but decided not to as labour was cheaper than machines. Added to this the return to the Gold Standard (which raised the price of British exports), and in some areas as many as 70% of men were unemployed. In the winter of 1921-22 two million men were unemployed, and throughout the period there was never less than 10% of the working population (one million) unemployed. The mass unemployment meant that without jobs these men could not re-start the ailing economy, but instead ate away at the governments funds in the form of unemployment benefits. Many local businesses such as pubs or local shops were forced to close which gave the area a run down appearance which discouraged investment. This meant more jobs were laid off and a brief vicious cycle ensued. Those in work were less than satisfied. Faced with the prospect of the government selling the loss-making coal mines back to their previous owners, the miners decided to take action. Selling the mines back to the mine owners would have meant lower wages and longer days for the miners, and with no other jobs available they had no say in the matter. The answer for most was strike action. Across the country during this period millions of days were lost to strike action due to disgruntled workers demanding improvements. Of course the mine owners knew the miners couldn’t leave their jobs as they were one of the few who had work, so they did nothing and waited for the miners to return to work. Some brought in blackleg labour to ease the situation. There were no winners from the strike action, only losers as many of the mines lost customers. All the while the economy was suffering. Millions of pounds was lost as a result of the strike action throughout the 1920’s which culminated in the General Strike.
