How successful were the National Governments in dealing with the problems of the 1930s?

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Sophie Vineberg


How successful were the National Governments in dealing with the problems of the 1930s? (45 marks)

The 1930s were unusual as it saw widespread economic depression which promoted a growth in political extremist organisations that posed a real potential threat to the long-standing political institutions in Britain in 1934. The abdication crisis seen in Britain in 1936, if handled differently, could have weakened Britain’s strong position in terms of national unity for WW2. The first National Government arose from a difficult economic situation and was expected to effectively handle the challenges it faced.

The National Government under MacDonald faced an ‘economic blizzard’, stemming from the effect of the Wall Street Crash in October 1929, which only truly ended under the second National Government in 1937. The depression in Britain brought cyclical l unemployment on top of the pre-existing structural employment from the decline of Britain’s stable industries due to the UK’s weak competitive position. The problem of the ‘intractable million’ had existed throughout the 1920s where governments did very little to tackle the issue of unemployment as they could afford not to, this changed when unemployment peaked at 3 million after WW1 due to the disruption of trade patterns because of the war. MacDonald realised in 1931 that the weak position of the minority Labour government with little experience of power let alone dealing with an economic crisis unseen by a generation would not be capable or successful in dealing with rising unemployment. This lead to the dissolution of the Labour government and the formation of the first National Government in 1931 which was seen as a temporary measure at the time in order to get Britain back on its feet.

The National Government introduced 2 main economic policies that aided economic recovery which were the abandonment of The Gold Standard and the introduction of Tariff Reform. The devaluation of the pound (from $4.46 to $3.40 by the end of 1931) that followed the abandonment of The Gold Standard reflected the weaknesses of the British economy but also made British exports more appealing to the foreign policy, although there was little foreign demand for imports. There was no longer a need for high interest rates so rates dropped from 6% to 2% so an era of ‘cheap money’ began enabling a consumer boom. The Import Duties Act of 1932 and Imperial Preference set up under the Ottawa Agreement (1931) meant the introduction of protectionism in Britain, due to the government being dominated by Conservatives where protectionism had become official party policy in 1930. The idea of imposing a 10% tariff on goods from outside the British Empire was to bind Britain and its imperial subjects into a mutually beneficial economic relationship which appeased the business community and thus boosted business confidence.

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However, an economic recovery in Britain was not simply formed due to these 2 policies. The formation of the National Government alone boosted confidence into the British economy but also the government’s ability to manage the economy as the National Government and Parliament were working together to fix the economic problem. Public support for this unity and stability can be seen in the proportion of votes for a National Government in 1931 where they won with a 67% share of the total vote. The decisions to abandon The Gold Standard and issue the policy of rearmament were not through deliberate ...

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