Post-War Economic Crisis in the UK - Assignment Example

EVALUATE THE RESPONSE OF THE LLOYD GEORGE GOVERNMENT TO THE POST-WAR ECONOMIC CRISIS IN BRITAIN Started in August 1914 in a sonorous way in central Europe, the World War I enfolded the whole world in it embrace displaying horrifying losses for four years. It ended in 1918 at last leaving the world into adverse state of destruction, disappointment, dejection, despair and turmoil. The war had inflicted indelible impact on social, cultural and economic spheres all over the globe. Especially economies of the warring countries almost collapsed during the four year long continuous war period. Being the vital part of the Allied forces, England was one of the major victims of war, which had to undergo serious set backs both in men and material. Its economy observed grave recession for the future years to come. The great Depression of 1929-1933 was also the outcome of the World War I and international economic crisis. David Lloyd George of Liberal Party was the Prime Minister of England during and after the WW-I. Personally, George possessed the instinct of a statesman. First nominated in December, 1916, he was re-elected in December 1918 elections with an overwhelming majority, and it was the hour of trial for the post war government to build the confidence of the masses at the eve where everything was to reconstruct from the zero hour with great patience, endurance and foresight. The beginning of twentieth century witnessed the fastest economic growth in world history. Trade and commerce were at their climax, and England, Germany, France, Belgium and the USA were among the pioneers in respect of rapid economic developments. The escalating British Industry had been depending on its trade and export, which significantly suffered during war due to German blockade everywhere in the Mediterranean. Forty percent of British merchant fleets had been destroyed by German submarines in the war, making it difficult to export goods. Other countries imposed high tariffs on imports to protect their own industries, but this hurt Britains economy. Britains old and outdated factories, machines, and mines also hurt its industries. (Shammons: quoted in http://www.angelfire.com/ca2/shammons/aftermath.html). British economy began to decline right from 1914 partly due to the allocation of resources and concentration at war, and the decline of trade activities as well. The year 1919 brought the happy news of financial reconciliation in England, but it was mere bubble of water, and the recession continued till the world observed the worst form of economic depression in 1921. The Britain foreign investment got a net loss of 300 million GBP, and the country’s two fifth merchant ships were destroyed during the course of war. The prices rose very high and inflation looked uncontrollable in England. The unemployment reached at a souring point and there was disappointment, uncertainty and tension all around. During the thirty years from 1883 to 1913, only one man in twenty had been unemployed in England; during the post war years of 1921-1938, unemployment was the fate of one man in seven. (Arnstein, 1988: 274). The European countries, before the WWI, had captured nearly one fifth of the global land that enhanced the volume of their trade significantly. After the Great War, new boundary lines were determined and colonization got severe discouragement; it also affected the trade, which could not return to the previous position. All that led to reduction in manufacturing of goods and the manufacturers started downsizing of the labour. The post World War I economies of Europe had fewer consumers and available labour than in the pre-war. The existing economic, political and financial resources were used up to the fullest by the war and were, therefore, not available when peace was restored. The financial structure of the pre-war had been destroyed and there was nothing to take its place! Humongous economic and financial mistakes in policy and in practice were made by France, Germany, the UK, the U.S.A, and Italy etc. (Parida: 2005). Further, a significant proportion of young individuals, including soldiers, farmers and others, had either died or wounded as well as had become disable in the war, which added fuel to fire to the prevailing socioeconomic instability in the country. On the one hand, England had lost its labour force in war, and its industries were targeted and destroyed on the other. There was uneven situation for the government and an analytical and comprehensive response was expected from the person at the helm. A new stratum of society consisted of former soldiers had been created in the aftermath of war. Discontentment was evident and trade union movements rose to the occasion for the rights of the labour classes. The post-World War I cauldron of class struggle gave birth to the Communist Party of Great Britain. October 1917 proved that there was an alternative to capitalism and the murderous barbarism it had unleashed. The party of Lenin, Trotsky and Zinoviev showed what had to be done. (Weekly Worker, 2006:2). It has been well said that even the darkest of the clouds contains silver linings in it. The same was the case with the British economic situation. Though the war destroyed a significant part of the industry, it brought new prosperity and respectability for the agricultural labourers. The government under the leadership of Lloyd George set up an Agricultural Wages Board in 1917, which guaranteed a national minimum wages as well as fixed working week. (Arnstein, 1988: 258). It helped in satisfying the displeasure, discomfort and despair of the farmers at large. The prime minister appointed a minister for socioeconomic reconstruction, in the same year, in order to concentrate on planning of rebuilding all the departments including public health, housing, transportation, communication and industries. In the same way, Lloyd George included Labour party members too in the government in war cabinet and administrative posts. The reconstruction of the government and the appointment of so many Labour men did not prevent the recurrence of industrial unrest, although it helped to keep it in bounds. (Pelling, 1969: 155). One of the important tasks before the post war ministry was to unite the nation that had been divided into different fractions. One of the groups was celebrating the end of the war by cheering and congratulating even the strangers; while there was a section of people, who demanded retaliation and revenge from Germany. Sir Eric Geddes, First lord of the Admiralty promised to strip and starve the German prisoners of war as soon as the armistice is sought out. Others, war-weary or touched with revolutionary feelings, hated the war government, the profiteer and the yellow journalists more fiercely than they hated the Germans. (Cole & Postgate, 1969: 533). Similarly, the socialist groups had been divided into many rival sects, majority of which belonged to the Labour Party. But all were theoretically impoverished, trammelled in their contribution to the class struggle and often loathed each other with an exaggerated passion. (Weekly Worker, 2006). Great Britain Pound had fallen from 4.85 $ to 2 $ only during the course of war. Lloyd George administration re-established the value of national currency according to the standard of gold. It also took measurements for the eradication of unemployment. Women were encouraged to work shoulder to shoulder with men in the national reconstruction programme. The government gave women the right to vote. Industrial reforms were also introduced along with the agricultural ones. In addition the independent post war reconstruction ministry devised methodology and articulated schemes for housing and town planning. The scheme were introduced for the allocation of ex-soldiers , who were facing imminent threat of joblessness on their return home. The government instructed the companies and industries to work day-in and day-out to produce for the people. The ex-army men were given preference in the shifts as workers according to their skills and expertise. The efforts were accelerated to produce goods for the civilians and the problem of seeking work for former soldiers was tactfully handled by the Liberal Party Government. Another predicament of grave concern was at hand soon after the war was over. It was the matter of high inflation rate that was reducing the purchasing power of general public. The wholesale prices, boosted up to more than 225% than the pre war time. Moreover, the Socialist mania was also hovering on the very head of the country. The labour unions and their leaders stood up to strive for their individual interests, rather than working for the uplift of the national cause. There were arranged regular strikes to get the wages increased according to the inflation level. An average of 49 million working days, according to Arnstein, a year was lost to strikes from 1919 to 1921. (1988: 273). For some months, the Government expressed modest attention towards the need of combating strike nuisance. The trade activities suspended and economy was at grave stake. But as the strikes went on along with large level of demonstrations, the government had to intervene in this regard. Lloyd George, who was still Chancellor of the Exchequer, and Walter Runciman, the President of the Board of Trade, summoned representatives of the parliament Committee and of the Trade Unions to a conference at the board room of the treasury. The government forced the leaders of the trade unions to reach on agreement to compulsory arbitration and the relaxation of the prevailing trade practices in almost each and every industry and company to promote production level in the country. Freeing the labour classes from the shackles of poverty and low wages was really a matter of grave concern. The government had to fight on dual fronts i.e. to combat the socialism as well as economic adversity. The external crisis had disintegrated the internal unity too and people were thinking with view point of individual interests. War had put the national unity in intense jeopardy, where there was uncertainty, tensions and turmoil. The 1866 crisis was mere financial; but the 1921 crises were both financial and industrial. All the main three nineteenth century industries of England, including cotton manufacturing, ship-building and coal mining observed shocking set backs after the WWI. The War itself brought improved pay, a national minimum wage, and government control of the mines. In 1919, the Miners’ Federation of Great Britain (MFGB) demanded a shorter working day, higher wages, and nationalization of the mines. The Government temporised by establishing a Royal Commission under Justice Sankey, promising to observe its recommendations. The Sankey Commission was divided but, in its final reports published in June, a majority of commissioners (Sankey himself and the six labor representatives) favoured nationalization. However, the Government rejected public ownership. (Boughton :1921, 1926 Miners strikes; 1926 General Strike). Now, in such a precarious situation, the major responsibility of the government was to restore the morale of the industrialists and workers so that further collapse could be avoided. The government was for its glory in a tantalizing position. It sought no idea of the real economic outlook. (Cole & Postgate, 1948:535). All that had affected civilians and the ex military personnel and pacifying the unsatisfied stratum had become had nut to crack. Strikes were eminent all over the country, especially the industrial areas, where urbanization was either at peak or in budding. The Coalition Government had task of making peace and harmony in civilian circles on the one hand, and demobilizing the troops on the other. Re-establishment of economic stability was the pivotal point where the whole steadiness and harmony could revolve. An important measure taken by the government was repealing of the compulsory arbitrary clauses regarding Munitions Acts, and to maintain the prevailing wages structure all over the country. One of the timeliest decisions taken by the Coalition Government included introduction of Unemployment Insurance Act of 1920. As the unemployment rate was at the cutting edge, the welfare measures were inevitable. Fortunately, post-war boom of 1919 pacified the flames of unrest for the time-being, though it lasted for less than two years. The economy started falling swiftly in 1921. The main reasons before that all was German re-insurgence out of the ashes of WWI. The German Coal industry was at its rise and the German products were capturing the international markets. It was an ill omen for the British economy, and necessary measures were inevitable to save the economy from further crumples. British mines were working on old patterns and out-dated techniques, which were unable to meet the demands of the changing world markets. The export price of the British product dropped down by nearly 50%, and the Coalition Government had to lick the dust due to such unbalanced and precarious market scenario. By 1921 the government allocated approximately £5 millions a month to subsidize the industry. The mine owners announced drastic wage cuts and district agreements. The MFGB’s refusal to accept these conditions led to the publication of lock-out notices to come into effect on the day of de-control. (Boughton:1921, 1926 Miners strikes; 1926 General Strike). Though the economic slump of 1921 could not weaken the political position of Lloyd George, yet the continuous uneven and untoward situation looked uncontrollable by the Coalition Government. The masses sought some other leaders, out of the circle of ‘war-heroes’, to save the drowning ship of the British economy. The prime minister and his cabinet started losing popularity in public. He revised his external and internal policies and withdrew his forces from the Soviet Russia and entered into peace agreement with the Bolshevik government of the USSR. In addition, he entered into an agreement with the Irish leaders signing the Irish Treaty of December, 1921, yet he looked helpless in bringing economic constancy in the wake of the WWI. He resigned from the government after losing the elections of 1922. REFERENCES Arnstein, Walter L. 1988 Britain Yesterday and Today: 1830 to the Present. Fifth Edition. University of Illinois, Urbana-Champaign. Pp 263-300. Cole, G. D. H. & Postgate, Raymond 1948. Methuen & Co. Ltd. London. Pp 531-573 Johnson, Paul Barton 1968. Land Fit for Heroes. University of Chicago Press. Larkin, P. J. 1984. English Economic and Social History. Hulton Education Publication Limited. Pp 368-407. Pelling, Henry. 1969. A History of British Trade Unionism. Penguin Books Limited, Harmondsworth, Middlesex, England. Pp 149-180. The Aftermath of WWI Leading to the Great Depression (Quoted in http://www.angelfire.com/ca2/shammons/aftermath.html). THE GREAT DEPRESSION; UPDATE. July 21, 2005. (Quoted in http://www.parida.com/depresupdate.htm). Weekly Worker, May 11, 2006. Days of Black and Red (Quoted in http://www.cpgb.org.uk/worker/624/general%20strike.htm http://faculty.goucher.edu/history231/Boughton_General_Strike.htm Read More