The 1920’s were a time of contrast in the British economy. On the one hand, life seemed positively prosperous compared to the war years, but yet Britain was still a land stricken with poverty. One of the main problems was the disparity of Britain’s economy to the rest of the world. While Britain was undergoing a boom of industrial production, the post war poverty in much of the world (especially in main land Europe) meant that supply exceeded demand. In addition to this, Britain had grown dependant on overseas labour, due to the lack of manpower that the Great War caused. Now the markets used cheap labour, British prices became uncompetitive. The ending of controls on prices after the war produced great inflation, and government spending was suddenly reduced. Taxation was increased and the bank rate was raised. The result of these deflationary measures was a large increase in unemployment, which reached a high of 2 million in June 1921. Britain had been the workshop of the world, and between 1750 and 1850 had become over-reliant upon four basic elements of industrial produce- coal, iron and steel, textiles and shipbuilding. This dependency on these staples meant that when the post-war boom ended, and the economy contracted, many towns suffered severe social problems, perhaps the largest being the aforementioned unemployment. In addition to this, those who did have jobs could not come to an agreement with employers concerning wages and hours. This eventually resulted in the General Strike of 1926. While the trade unions were indeed fighting for worker’s rights, this meant more bad news for the British economy. The British employers were faced with a contradiction. Their workers were demanding more money, whereas the emergence of foreign rivals meant they had to me more competitive than before. In addition to this, industries (textiles in particular) were now faced with cheaper foreign imports. For the majority of Britain’s at the time, affording luxury British goods was not an option, and so many opted for the more economical alternative.
With all this in mind, it is obvious that Britain was not well prepared for the shock to the world economy that was the Wall Street crash. In 1929, when a general election took place, the three different political parties offered their own programme’s for Britain’s economy. In the end, when Labour won the election, and Britain got socialism (albeit in a very diluted form), it could not stem the tide of poverty that world depression caused. It would be interesting to see if Stanley Baldwin’s “safety first” or David Lloyd George’s radical deficit spending economics would have treated Britain any better. Regardless, even before 1929, Britain was a country of economic hardship. While it may have remained one of the worlds leading industrial nations, to go back in time and witness the poverty that had seized the nation would, for a twentieth century developed nation, be appaling.