Great Depression in the United Kingdom facts for kids

The Great Depression in the United Kingdom, also called the Great Slump, was a time in the 1930s when Britain's economy faced a big downturn. It was the largest and most serious economic depression in Britain during the 20th century. This slump started with the global Great Depression, which began in the United States in late 1929 and quickly affected the whole world.

Britain hadn't experienced the economic boom that countries like the U.S. and Germany had in the 1920s. Because of this, the Great Depression didn't hit Britain quite as hard as it did some other nations. However, Britain's world trade still dropped by half between 1929 and 1933. Production from heavy industries fell by a third, and profits in almost all areas of business sharply decreased.

At its worst point in the summer of 1932, about 3.5 million people were officially unemployed. Many others only had part-time jobs. Even so, some parts of the country, especially around London, didn't face major difficulties and even saw some growth. New houses built increased by 33% from 1929 to 1933.

The areas hit hardest by these economic problems were the industrial and mining regions. These included the north of England, Scotland, Northern Ireland, and Wales. In some of these places, unemployment reached as high as 70% in the early 1930s. Many families had to rely completely on payments from the local government, known as "the dole."

What Caused the Great Slump?

The Great Depression of 1929–32 happened when the United Kingdom was still recovering from World War I. Some experts believe Britain was already in a long economic slump starting in 1918. Compared to other countries, Britain's economic output only dropped a little between 1929 and 1934.

Britain's main export industries, like coal mining, shipbuilding, and steel, were mostly in specific areas. These included northern England, South Wales, Northern Ireland, and central Scotland. Newer industries, however, were mainly in southern and central England.

The Gold Standard Problem

From 1921, Britain slowly started to recover economically. But in April 1925, the government decided to put the Pound Sterling back on the gold standard. This meant the pound's value was fixed to a certain amount of gold. The problem was that the pound was set at a value that made British goods more expensive for other countries to buy.

This made British exports, like coal and steel, less competitive in the world market. The economy's recovery immediately slowed down. To deal with this, industries tried to cut costs by lowering workers' wages. Many industrial areas faced a tough time for the rest of the 1920s, and unemployment stayed around one million.

Economic Crisis and Government Changes

Unemployed people in front of a workhouse in London, 1930

In May 1929, a new Labour government came into power. It was led by Ramsay MacDonald and supported by the Liberal Party. This was only the second time Labour had been in charge. Many government members didn't have much experience with economics.

In October 1929, the Stock Market Crash in New York started the worldwide Great Depression. This American economic collapse affected the whole world. Global trade shrank, prices fell, and governments faced money problems as American loans stopped. Many countries tried to protect their own economies by adding taxes on imported goods, which made the crisis worse for global trade. The British Empire tried to help itself by lowering taxes on trade among its own members.

The impact on Britain's industrial areas was immediate and severe. Demand for British products dropped sharply. By the end of 1930, unemployment had more than doubled, from 1 million to 2.5 million. Exports had fallen in value by 50%. Since there were few unemployment benefits, many people became very poor. Government income also fell, while the cost of helping the jobless rose. London and the south-east of England were not as badly affected. In 1933, 30% of people in Glasgow were unemployed because of the huge decline in heavy industry.

The Labour government faced pressure to cut public spending, especially payments to the unemployed. This idea was very unpopular with the Labour Party and trade unions. The government split over these disagreements.

The National Government Takes Over

The arguments over spending cuts caused the Labour government to break apart. This political problem made investors worried, and money started leaving the country. To fix this, Prime Minister MacDonald decided to form a "National Government" with the Conservative and Liberal parties.

On August 24, MacDonald resigned and then formed the new National Government with senior politicians from other parties. MacDonald and his supporters were removed from the Labour Party. The Labour Party and some Liberals went into opposition.

Soon after, a general election was held in 1931. The election resulted in a huge victory for the Conservatives. The Labour Party, now without its leader, won only 46 seats. MacDonald continued as prime minister until 1935, but the government was mostly controlled by the Conservatives.

Emergency Measures and Recovery

To balance the budget and restore trust in the pound, the new National Government quickly made changes. On September 10, 1931, they cut public spending and wages. Public sector wages and unemployment pay were cut by 10%. Income tax was also raised. These cuts were not popular and even led to a non-violent protest by the Royal Navy.

These measures actually made the situation worse by reducing people's ability to buy things. By the end of 1931, unemployment reached almost 3 million. The government had tried to protect the gold standard, but money continued to leave the country. Finally, in September 1931, the government had to abandon the gold standard.

Instead of causing disaster, leaving the gold standard turned out to be a big advantage. The value of the pound immediately dropped by 25%. This made British exports much cheaper and more competitive, which helped the economy slowly recover. The worst part of the slump was over.

In 1932, the government also introduced tariffs (taxes) on imported goods, except those from countries in the British Empire. This also helped British industries.

Life During the Slump

Even though the overall economic situation in Britain during the 1930s was difficult, the effects of the depression were not the same everywhere. Some parts of the country and some industries did better than others. For example, areas like the South Wales Valleys faced huge unemployment and poverty, while some areas near London did not.

One positive area was home building. From 1926 to 1939, over 200,000 new houses were built every year, with a peak of 365,000 in 1936. Many new neighborhoods were built around London and other cities during this time.

The South and Midlands Thrive

In London and the south east of England, unemployment was initially high, but the later 1930s were a good time. A boom in house-building, helped by low interest rates after leaving the gold standard, boosted the economy.

The south was also home to new industries, like the electrical industry. These industries grew because more homes and businesses were getting electricity. New products like electric cookers and radios became affordable for many families. Almost half of all new factories opened in Britain between 1932 and 1937 were in the Greater London area.

The British motor industry also did well in the 1930s. Cities like Birmingham, Coventry, and Oxford saw growth. Car manufacturers like Austin, Morris, and Ford were very popular, and the number of cars on British roads doubled in this decade. British Agriculture also improved.

Hard Times in the North

Northern England, however, faced a very different situation. This region was home to most of Britain's traditional heavy industries, such as coal mining in Yorkshire, shipbuilding on Tyneside and Wearside, steel in Sheffield, and textiles in Lancashire. These industries relied heavily on exports. The north suffered the most during the depression, and the 1930s were the hardest time many people could remember. These industries were older, less modern, and had too many workers compared to similar industries in other countries.

In the north east, which included Sunderland, Middlesbrough, and Newcastle-upon-Tyne, the situation was especially bad. This area was a major center for shipbuilding. The depression caused demand for ships to collapse. Between 1929 and 1932, ship production dropped by 90%. This also affected industries that supplied materials, like steel and coal. In some towns, unemployment reached as high as 70%. One of the worst-hit towns was Jarrow, where unemployed workers marched 300 miles (480 km) to London to protest. This became known as the Jarrow March.

The north west, a center for textile industries, was also badly affected. Places like Manchester and Lancashire suffered greatly. The South Wales Valleys, known for coal mining and steel, were also devastated. Towns like Merthyr Tydfil and Swansea had unemployment rates above 25% at times. The industrial area of central Scotland, especially Glasgow with its shipbuilding, was also hit hard.

In these areas, millions of unemployed people and their families became very poor. Waiting in line at soup kitchens became a common sight. A government report in the mid-1930s estimated that about 25% of the UK's population lived on very little food, often showing signs of poor nutrition like scurvy and rickets in children. Writer George Orwell described how people in northern England searched for small pieces of coal in waste piles just to heat their homes.

Welfare Support During the 1930s

In the 1920s and 1930s, Britain had a fairly advanced welfare system compared to many other industrial countries. In 1911, a national unemployment and health insurance plan was started. This plan was funded by the government, employers, and workers. At first, it only covered certain jobs, but in 1920, it expanded to include most manual workers.

However, this plan only paid out based on how much people had contributed, not on how much they needed. It also only paid for 15 weeks. Anyone unemployed for longer had to rely on help from their local authority, which was often very little. Millions of workers who were paid too little to contribute, or who were unemployed for a long time, were left with no money. With the mass unemployment of the 1930s, contributions to the insurance plan dried up, causing a funding crisis.

In August 1931, the old plan was replaced by a new government-funded unemployment benefit system. For the first time, this system paid out based on need. However, people applying for this benefit had to pass a strict "means test." A government official would inspect their homes to make sure they had no hidden earnings or savings. For many poor people, this was a very humiliating experience.

Recovery and Rearmament

After Britain left the gold standard and the pound's value dropped, interest rates were lowered from 6% to 2%. This made British exports more competitive than those from countries still on the gold standard. This led to a slow economic recovery, and unemployment began to fall from 1933 onwards.

Unemployment started to fall in 1934 and continued to drop in 1935 and 1936. However, most of the new jobs were in the south, where lower interest rates helped the house-building boom. The North and Wales remained very depressed for most of the decade. In these severely affected areas, the government tried to help by building roads, giving loans to shipyards, and putting taxes on steel imports. These policies helped a little but were not big enough to solve the unemployment problem completely.

From 1936 onwards, the National Government began to spend a lot of money on rearmament, building up its military due to the rise of Nazi Germany. By 1937, unemployment had fallen to 1.5 million. This spending on defense helped to create jobs and further boost the economy.

Effects of the Great Depression

By the end of World War II in 1945, many British people, especially working-class families and returning soldiers, were very unhappy. They did not want to go back to the economic policies of before the war, which they blamed for the hardships of the 1930s. They demanded big social changes.

In the 1945 general election, the Labour Party, led by Clement Attlee, surprisingly defeated the Conservatives. The Labour government then built a comprehensive "cradle-to-grave" welfare state. This included creating a tax-funded National Health Service, which provided medical treatment based on need, not on how much money someone had. The Labour government also used economic policies to create jobs and ensure full employment. These policies became known as the "post-war consensus" and were generally accepted by all major political parties for many years.

Images for kids

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  Unemployed people in front of a workhouse in London, 1930