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Britain 1929-51 - What is meant by 'an international financial crisis' in relation to the events of 1929-31?

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Introduction

Britain 1929-51 (a)What is meant by 'an international financial crisis' in relation to the events of 1929-31? (3) Throughout the 1920's in Britain there were economic problems. Unemployment was increasing; therefore there was low domestic demand and large amounts of poverty. Markets were also being lost abroad, leading to a decrease in trade. However in 1929-31 these problems reached crisis point, when in 1929 The Wall Street Crash called for an end of American Loans to Britain, and the re-call of all Britain's debt. This had impact worldwide, as prices for goods slumped due to lack of demand and business confidence disappeared. In Britain it became clear that the 'Laissez-faire' policy was not going to work, but there was a divide in thoughts over which policy to adopt to deal with the crisis. Pressure built in 1930 as government spending rose to an all time high due to high unemployment, and defeat at the next general election looked likely. ...read more.

Middle

This difference in opinion within the party led to its break up and the formation of a national government due largely to the proposals if the May Committee. (c) 'Ramsey MacDonald had no alternative but to form a National Government in 1931.' Do you agree or disagree with this statement? Explain your answer. (15) After the First World War, Britain was thrust into a depression. Unemployment rocketed and wages fell dramatically. The most significant cause of this was the Wall Street Crash in 1929, which caused America to call back all loans worldwide. This hit Britain hard, causing a slump in Trade which dramatically worsened unemployment and wage cuts. The Labour government was inexperienced, and at first hoped that the situation would cure itself, however as a result of Britain being on the gold standard to keep the value of the pound high, Britain's gold reserves were being used up at an alarming rate. The May Committee was set up in Febuary 1931, and consequently proposed 20% cuts to unemployment pay to solve the �120 million deficit. ...read more.

Conclusion

One of MacDonalds main aims as Prime Minister was to establish the Labour Party as a nationally recognise party rather than a one class party. There is evidence therefore that Macdonald had acknowledged the existence of classes other than the working class, and that despite having been corrupted somewhat by the establishment, he was trying to act in a manner that would benefit the country as a whole rather than simply the working class. There would have been pressure on him to act in this way due to Labour's lack of a majority, which forced them to follow some of the policies of the Conservatives and Liberals. There was also pressure on MacDonald from King George V, who was in favour of the formation of a National government. He had at first intended to resign and hand leadership to the Conservatives and Liberals to deal with the crisis however the King persuaded him to stay. There is no evidence that Macdonald had changed his views on the national government as a result of the establishment however, as theoretically he had backed the idea of a national government right from the start. ...read more.

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