1918 brought the end of the 1st world war. It also brought the worldwide realisation for what had just happened. Many countries were now suffering financially, and had lost a lot of people and land. The mood was generally chaotic.
By the 1920s however, most of the world’s economies were stable again, and people began to spend more money, business improved, and life got better for a lot of people, in America in particular.
The twenties are often remembered for shows, glamour, and the ‘high life’. More and more money was being spent. This continued for a while until 1929, when it is said that America had ‘Overspent’. The stock market began to fall, and then it came to a halt on the 24th of October – over 13million shares were sold on New York’s Wall Street in one day, and their values plummeted. The Wall Street Crash brought an abrupt halt to the ‘High Life’, and a worldwide depression followed.
After the crash, America asked for all of the foreign debts to be paid off, which made these countries suffer hard. Also, currency values against the Dollar fell immensely, and imports became too expensive for many countries.
With the fall in world trade, and the price-war with Japan over goods, Britain’s industries suffered. The supply and demand rule means that industries supply goods to who wants them – as not as many people wanted the British coal, ships, steal and cotton, and because of this, they needed far fewer people to make the goods.
This lead to severe unemployment problems in Britain. Between 1929 and 1933, unemployment levels rose from 1.4 million to 3.2million people. This was a rise of nearly 2 million unemployed in less than 4 years.
The unemployment was, however, not spread evenly over the country. Wales, Scotland and the North were hit terribly, whilst the Midlands, London and the South remained virtually unaffected.
The main reason behind this uneven distribution was the location of most of Britain’s factories. The coal fields and mines were all in the north, and the factories needed the coal fields for power. The shipbuilding industries had to be near ports, a lot of which are in the north, and the steel and cotton needed to be near iron ore and cotton fields as well as coal fields.
There were new industries forming around that time, as technology moved forward. These included the motor car and electrical goods – which could be made anywhere, as they were powered by electricity. Most of these new factories were, for some reason, built in the south east and the midlands, even though it was not this area that was in need of jobs.
When the northern industries closed, people not only lost their jobs, but many lost their whole livelihoods as well. Previously, many companies supplied whole working communities with housing, electricity, food and little cash payment. As the industries became less successful, they charged more for their goods. When the companies closed down, some people were left homeless, while others were left with extortionate rent prices.
There were unemployment benefits for those who were newly unemployed, but after 26 weeks, it was cut and they were put on the dole. The government introduced Means Testing, in order to reduce dole payments. This meant that inspectors would come to people’s houses and asses whether they were really worthy of dole payments. Anything of value had to be sold, for example a spare cup, or a spare bed sheet. Any income at all in the family would mean the father got no dole, even if it was his 12 year-old son working a few hours a week. Money was given to people to live at just over subsistence level, meaning that they get enough money to stay alive, and that was it.
The unemployment affected the general mood in communities. The houses became run down, and dirty. Diseases spread easily, the atmosphere was sombre and people hung around on the streets because they had nothing to do. Having a job kept most men’s pride, and when it was gone for so long, they often felt that there was not much to live for. The suicide rate of adult males rose by 6% in 1933-34.
While the problems continued in the North, London and the south were prospering. Low prices on goods, and new products like motor cars and electrical appliances meant that life had never been better. Sales of the Morris Minor car almost doubled from 180,000 to 340,000 between 1929-1938. Music was becoming available to play in the home, on the wireless and the gramophone, and the cinema was a major social activity.
The men had jobs here, and the women could afford to feed their families. People became more aware of home and social life, and lived happily with healthy incomes.
People were still starving in the north though. Some workers in a town called Jarrow, near Newcastle, decided to go on a Hunger March, to protest against the conditions. They marched all the way from Newcastle to London in 1936, it got quite a bit of media coverage, but it was not widely known because of government censorship. All that the people of Jarrow got for their efforts was a cut in their dole payments.
The USA had a similar problem to Britain. President Roosevelt set up a public works programme, which set people up building and working on projects all over the country. Thousands of houses, parks, roads and other facilities were built, giving thousands of people jobs. Men were provided with work cards, and would get allocated work to do, depending on their skills. This programme cost millions, but helped stabilise the economy a great deal.
The British government did very little about the problems in their country. In 1936, the National Government was set up, which was a coalition of the three main political parties so that they would work together. This lasted 8 years. The prime minister was a Labour MP, Ramsay McDonald, but the Conservatives had the overall majority. Means testing and dole cuts turned many labour supporters against the National Government, as the Labour party was know then as the ‘Worker’s Party’. The government spent only ï¿½2m on the unemployment problem in this period. They did not set up any public work programmes, as they did not want to get in debt, knowing that they were in the middle of an economic depression.
By 1939, the unemployment rate had dropped back down to 2.1million, but was still very high – The depression had not recovered properly.
When war was declared, it was awful in most people’s eyes, but the war did bring many countries out of economic depression. Whilst many men went out and fought, others got jobs in factories making weapons such as tanks, guns, ships, airplanes and supplies for the soldiers. The steel industry had been making only 5million tonnes per annum in 1930, and made over 13million tonnes in 1940.
Rationing and the war effort during this time also helped stabilise the economy, as the more wealthy people in the south could not spent as much money, as there were so little goods available.
It was not really until after the Second World War that Britain fully recovered from the depression, when it was helped out by America’s Marshall Plan, which was to pay countries in the hope to steer them away from communism.