The Great Depression in Great Britain, also known as Great Slump, was a period of decline in the national economy in the 1930s, which began with the Great Depression globally. It was the largest and largest economic depression in Britain in the 20th century. The Great Depression originated in the United States in late 1929 and quickly spread to the world. Britain has never experienced an explosion that has characterized the US, Germany, Canada and Australia in the 1920s, so the effect appears less severe. World trade in the UK fell by half (1929-1933), heavy industrial output fell by a third, labor profits fell in almost all sectors. In the depth of summer 1932, registered unemployment amounted to 3.5 million, and many more only worked part-time.
The hardest hit by economic problems are industrial and mining areas in northern England, Scotland, Northern Ireland, and Wales. Unemployment reached 70% in some areas in the early 1930s (with over 3 million jobs not working nationally) and many families rely entirely on payments from local governments known as alms. Politically the Conservative Party dominated the era and Labor was severely injured.
Video Great Depression in the United Kingdom
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The Great Depression of 1929-32 broke out at a time when Britain was still far from recovering the effects of the First World War. Economist Lee Ohanian pointed out that the economic output fell 25% between 1918 and 1921 and did not recover until the end of the Great Depression, arguing that the United Kingdom underwent a massive twenty-year depression that began in 1918. Relatively worldwide, the economic output declined slightly in Britain between 1929 and 1934.
The heavy industries on which Britain's export trade exists (such as coal mining, shipbuilding and steel) are highly concentrated in certain areas of Britain, such as northern England, South Wales, Northern Ireland and central Scotland, while newer industries are highly concentrated in southern and central England. The output of British industry during the 1920s reached about 80-100%, and exported about 80% of their prewar level.
Maps Great Depression in the United Kingdom
Gold Standard
From about 1921, Britain began a slow economic recovery from war and subsequent decline. But in April 1925, Conservative Chancellor of the Minister of Finance Winston Churchill, on the advice of the Bank of England, returned the Pound Sterling to the gold standard with a prewar exchange rate of $ 4.86 to one pound. This makes the pound can be converted to its value in gold, but at a rate that makes UK exports more expensive in the world market. The price of gold is too estimated by 10-14% which leads to coal and steel as exports become less competitive. Economic recovery soon slowed. To offset the impact of high exchange rates, the export industry tries to cut costs by lowering the wages of workers.
Industrial areas spent the rest of the 1920s in recession, and these industries received little investment or modernization. Throughout the 1920s, unemployment stayed at a fixed million.
Economic crisis and minority government Labor
In May 1929, a minority Labor government led by Ramsay MacDonald came to the office with Liberal support. This was only the second time that the Labor government was in office (they took office in 1924), and some members of the government had an in-depth knowledge of the economy or the experience of running the economy. MacDonald's Labor Party is not radical in economic thinking, and is tied to classical economic orthodoxy with its emphasis on maintaining a balanced budget at any cost.
In October 1929, Stock Market Crash in New York touted the Great Depression around the world. John Maynard Keynes, who did not foresee the slump, said, "There will be no serious direct consequences in London - we find the foresight clearly encouraging."
Doomsayers on the left like Sidney and Beatrice Webb, J.A. Hobson, and G.D.H. Cole repeats the horrible warnings they have made over the years about the imminent death of capitalism, only now more and more people are paying attention. Beginning in 1935 the Left Book Club provides new warnings every month, and builds the credibility of Soviet-style socialism as an alternative.
The collapse of the American economy further shook the world: World trade contracted, prices fell and the government faced a financial crisis as American credit supply dried up. Many countries have adopted an emergency response to the crisis by building trade barriers and tariffs, exacerbating the crisis by further hampering global trade. The United Kingdom tries to survive along with lower tariffs among members while raising them against the US and others.
The effect on industrial estates in Britain was immediate and devastating, as the demand for British products collapsed. By the end of 1930, unemployment had more than doubled from 1 million to 2.5 million (20% of the workforce insured), and exports had fallen by 50%. Due to a 50% drop in the value of UK exports, unemployment in the UK rose to 20% (where previously high, but only reached 12%). During this time there was not the slightest unemployment benefit, so this mass unemployment caused many of the UK population to be poor. Government revenue is contracted as national income falls, while costs help unemployment rise. The industrial zone was hardest hit, along with the coal mining district. London and the south-east of England were hurt less. In 1933, 30% of the citizens of Glaslandia were unemployed due to heavy decline in heavy industry.
Under pressure from Liberal allies and the Conservative opposition, the Labor government appointed a committee to review the state of public finances. The May 1931 report urged cuts in public sector wages and large cuts in public spending (especially in the payment of benefits ("alms") to the unemployed) to avoid a budget deficit. The sense is that deficits are dangerous and should be reduced; the proposal was to meet  £ 24 million by raising taxes on the rich, and  £ 96 million by the economy, which  £ 64 million will come from unemployment assistance. This proposal proved very unpopular within the Labor Party and among its main supporters, the union, which together with some government ministers refused to support such measures. United Kingdom's Finance Minister Philip Snowden insisted that the Report's recommendations were adopted to avoid a budget deficit.
In a memorandum in January 1930, a junior government minister, Oswald Mosley, proposed that the government should control banks and exports, as well as increase pensions to increase purchasing power. When his ideas were rejected, he left the Labor Party to form a New Party, and then the British Fascist Union.
National Government
Disputes over wage spending and cuts divide the Labor government: apparently, beyond recovery. The resulting political deadlock caused investors to fear, and capital and gold escapes further stabilized the economy. In response, MacDonald, at the urging of King George V, decided to form a "National Government" with Conservatives and Liberals.
On August 24, MacDonald presented the resignation of ministers and led his senior colleagues in forming a new National Government. MacDonald and his supporters were expelled from the Labor Party and adopted the label "National Labor". The Labor Party and some Liberals, led by David Lloyd George, became opposition. The Labor Party denounced MacDonalds as "traitors" and "mice" for what they saw as his betrayal.
Soon after this, elections are called. The 1931 election resulted in a landslide victory in the conservative camp, with the now-leaderless Labor Party winning only 46 seats in Parliament. After the 1931 election, the national government became dominated by the Conservative Party, although MacDonald continued to be prime minister until 1935.
Emergency action
In an effort to balance the budget and restore pound confidence, on September 10, 1931 with Philip Snowden still as Chancellor, the new national government issued an emergency budget, which immediately instituted a round of cuts in public spending and wages. Public sector wages and unemployment wages are cut by 10%, and income taxes are raised from 4s 6d to 5s in pounds (from 22.5% to 25%). But pay cuts did not go down well, and resulted in a nonviolent "revolt" in the Royal Navy protesting against pay cuts.
These measures are deflation and only reduce purchasing power in the economy, exacerbate the situation, and by the end of 1931 unemployment has reached nearly 3 million. The measures were also unsuccessful in defending the gold standard, which the National Government seems to have been created to defend.
However, gold flights continued, and the Treasury was finally forced to abandon the gold standard in September 1931. Until now the government has religiously followed orthodox policies, which demand balanced budgets and gold standards. Instead of a predictable disaster, the slashing of gold proved to be a great advantage. Soon the pound exchange rate dropped 25%, from $ 4.86 â € <â € Also, in 1932 following the Ottawa Treaty, Neville Chamberlain, who had been Chancellor after the 1931 election, introduced tariffs on industrial and agricultural imports at a rate of 10% on all imports except those originating from the United Kingdom. The introduction of tariffs caused a split in the Liberal Party, some of which, along with Phillip Snowden, attracted support for the National Government.
During the recession
Although the overall picture for the British economy in the 1930s was dismal, the effects of depression were uneven. Some parts of the country, and some industries, fared better than others. Some parts of the country like the South Wales Valley are experiencing mass unemployment and poverty, while some areas in the Home Counties are not.
The brightest place is in the house building. From 1926 to 1939 more than 200,000 new homes were built each year, with peaks of 365,000 in 1936. Many of London's suburbs and other cities were built at the moment, and Brighton shows many signs of "tall".
South and Midlands
In London and south-east England unemployment initially as high as 13.5%, the 1930s was a prosperous time in these areas, as the suburban home development boom was triggered by low interest rates following the abolition of the gold standard. , and as London population growth bolstered the economy of County Counties.
The South is also home to emerging new industries such as the power industry, which prospered from the massive electrification of housing and industry. The mass production method brings new products such as electric stoves, washing machines and radios into the middle class reach, and the industry that produces these prosper. Almost half of all new factories opened in England between 1932 and 1937 were in Greater London.
Another prosperous industry during the 1930s was the British motor industry. For cities that have developed motor industries such as Birmingham, Coventry and Oxford, the 1930s was also a booming time. Producers like Austin, Morris and Ford dominated the motor industry during the 1930s, and the number of cars on UK roads has doubled in this decade. British agriculture also flourished in the 1930s.
In the North and industrial zones
The North English, however, is a very different matter. The northern part is home to most of Britain's traditional heavy industries, such as coal mining in Yorkshire and Nottinghamshire, shipbuilding at Tyneside and Wearside, steel in Sheffield and Lancashire's highly export-oriented textiles. The northern part bears the burden of depression, and the age of 30s is the most difficult time in supporting people in this area. The northern part was struck so hard in the Great Depression because of the structural setbacks in the UK industry. The basic industries such as coal, steel and shipbuilding are smaller, less modern and efficient as well as staff advantages compared to continental rivals.
In the northeast (including Sunderland, Middlesbrough, and Newcastle-upon-Tyne), this is especially the case. Northeast is a major center of the shipping industry. Depression led to a fall in demand for ships. Between 1929 and 1932 ship production decreased by 90%, and this in turn affected all supply industries such as steel and coal. In some cities and towns to the northeast, the unemployment rate reaches as high as 70%. Among the worst affected cities is Jarrow, where unemployment leads to the famous Jarrow March, where unemployed workers march 300 miles (480 km) to London to protest unemployment.
The northwest, the center of the textile industry, was also hit hard, with places like Manchester and Lancashire going down. The South Wales Valley, a coal mining and steel industry center, is also devastated by a depression where cities like Merthyr Tydfil and Swansea have unemployment rates above 25% at certain times. The central industrial belt of Scotland, also a major shipbuilding center in Glasgow, was also hit hard by the slump.
In these areas, millions of unemployed and their families become poor, and lining up in the soup kitchen becomes a way of life. A government report in the mid-1930s estimated that about 25% of the UK population was on a subsistence diet, often with signs of childhood malnutrition such as scurvy, rickets and tuberculosis. In his book The Road to Wigan Pier, George Orwell described life for the unemployed in northern England during the depression: "Several hundred men risked their lives and several hundred women wrestled in the mud for hours... looking for small chips of coal in slagheaps so they can heat their own homes, for them this much-needed 'free' coal is more important than food. "
Welfare state during the 1930s
In the 1920s and 1930s, Britain had a relatively advanced welfare system compared to many industrialized nations. In 1911, the national unemployment and health insurance schemes were required to be enacted by the Liberal administration of Herbert Henry Asquith (see Liberal reform). The scheme is funded through contributions from governments, employers and workers. Initially, the scheme was only applied to certain trades but, in 1920, it expanded to cover most of the manual workers.
However, the scheme is paid only in accordance with the level of contribution made rather than as needed, and is only paid for 15 weeks. Anyone who is unemployed for longer than that must rely on bad legal aid paid by their local authorities. As a result, millions of workers who are paid too low to contribute, or who have been unemployed in the long run, are left poor by the scheme. With mass unemployment in the 1930s, contributions to insurance schemes dried up, resulting in a funding crisis.
In August 1931, the 1911 scheme was replaced by a fully-funded unemployment benefit system. This system, for the first time, is paid as needed rather than the level of contribution. This unemployment benefit is subject to rigorous facilities tests, and anyone applying for unemployment benefits should be examined by government officials to ensure that they have no hidden income or savings, sources of income or other undisclosed devices. For many poor people, this is an embarrassing and deeply hated experience.
Slow recovery
After the UK withdrawal from the gold standard and the devaluation of the pound, interest rates are reduced from 6% to 2%. As a result, UK exports become more competitive in the world market compared to countries that still use the gold standard. This led to a modest economic recovery, and a decline in unemployment from 1933 onwards. Although exports are still a small part of their pre-depressive level, they are slightly recovered.
Unemployment began to fall in 1934 and falls farther in 1935 and 1936, but employment increases mostly occur in the south, where lower interest rates have spurred housing booms, which in turn led to a recovery in the domestic industry. North and Wales remained very depressed for almost a decade. In a very depressed state, the government imposed a number of policies to stimulate growth and reduce unemployment, including road construction, lending to shipyards, and tariffs on steel imports. These policies help but not, on a scale large enough to make a huge impact on the unemployment rate.
Rearmament and recovery
Since Britain's debt is 180% of the national GDP, it is difficult to recover. The United Kingdom can recover faster than other equally developing countries, as their economic growth has been stagnant for some time. This means that they do not have exponential growth, as the United States did, leaving them with little room to fall. Due to the abandonment of the gold standard in 1931, Britain was able to cut interest rates that led to a decline in real interest rates. This rate cut led to an explosion in development in the south of England; stimulate some new economic growth. Also, the government is beginning to spend money on goods and services in England that are helped on the foundations of financial recovery. From 1936 onwards, the National Government followed a policy of mass weaponry in the face of the rise of Nazi Germany. By 1937 unemployment had fallen to 1.5 million, but rising again to 1,810,000 in January 1938 indicating that the recovery should be short-lived.
Consequences of the Great Depression
After the end of the Second World War, the majority of the British people, and in particular the working class and the returning soldiers and women, did not want to return to the prewar Conservative economic policies, which they blamed on the difficulty of the 1930s, and there was a mood for widespread social change. In the 1945 elections, which surprised many observers, Winston Churchill was defeated by the Labor Party led by Clement Attlee.
The Labor Government builds on what pre-war foundation is a comprehensive 'cradle-to-grave' welfare state, and sets up a tax-financed National Health Service, which provides maintenance as needed rather than the paying ability of the previous tax-funded system. The Labor Government also imposed Keynesian economic policy, to create artificial economic demand leading to full employment. These policies are known as "postwar consensus", and are accepted by all major political parties at different times.
There are disagreements about the state's involvement with the steel industry. With one government, it belongs to the state, to then be sold with the following conservative government only to then be nationalized by the following labor government. For the most part, the postwar consensus lasted until the late 1970s. Throughout the 1970s, it became clear from all sides that radical change was needed as a result of the economic crisis such as the 1973 oil shock, high inflation, industry turmoil and sterling devaluation. However, in the 1970s, the government lacked the political will, leadership, and majority of the House of Representatives to change the system until the Conservatives led by Margaret Thatcher won the 1979 general election.
Historical Evaluation
The events of the 1930s, and the responses of the Labor Party and the National government to the depression, have generated much historical controversy.
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