Why did unemployment in Britain rise in the 1920s and 1930s?
As most of us are aware the 1920s and 1930s were dark times for Britain, most of Europe and even America. But why was this?
What caused such a huge depression and what was attempted to help stop this?
I will be looking at the effects of the First World War and the already growing international competition on the staple industries. I will also be looking at the ill timed crash of the Wall Street market in America and how this contributed to an already existing problem. How the government and other organisations reacted is also relevant to how Britain tried to cope with a very serious crisis. How effective their response was can be summed up by the fact that Even after the outbreak of WWII, more than one million people were still registered as unemployed.
Prior to the First World War, Britain had been enjoying a strong period of growth and economic stability. This was largely due to her being the first country to have undergone an industrial revolution. The staple industries, coal, oil, ship-building, cotton and wool, dominated the international markets. In 1913, coal fields in Britain had alone mined 287 million tons that year, some of which being sold as exports to European countries. Cyclical unemployment (people changed jobs from time to time causing a temporary period of unemployment for themselves) and seasonal unemployment (mostly affected the agricultural industries at times of the year when crops and land were not needing tending) were the only real problems that troubled the benefits system at this time of economic superiority.
Britain was not the only country to have aspirations of grandeur though. Other countries such as Germany, France and America were beginning to challenge Britain’s dominance on the open market. As early as the 1880s British steel companies accused Germany of dumping cheap export steel onto the market attempting to steal Britain’s trade. Despite growing international competition, Britain remained strong in the market and her population continued to grow as work was consistently there to be done. By early in the 1920s all this was going to change.
Even after the conclusion of the First World War, Britain still had plenty of jobs for people to be doing. The staple industries were needed to repair the damage done by the war. The ship yards especially were busy replenishing ships that were lost or damaged due to the U-boat activity. By 1921 though this all came to an abrupt end. Rebuilding was complete, and the previously fruitful foreign markets had all found other, cheaper ways of gaining the goods they needed. Due to Britain being busy rebuilding herself her staple industries were prevented from carrying out foreign orders. This led to the other countries developing their own means of development or finding cheaper imports to buy. This action by once profitable overseas investors helped to enhance the problems faced by Britain. Those that developed their own means of production instantly had an advantage over Britain. Their machines and factories would be newer and more modernised in design. This meant they could produce faster, which meant their product was on the market faster and it would be cheaper. Britain was still using nineteenth century equipment and buildings. The inevitable loss of trade would mean the inevitable loss of employment in Britain.
For example, in 1913 British shipyards produced 1,930,000 tons of shipping. This dropped to a minute 133,000 tons by 1933, the worst year for British shipbuilding yards#. Things looked bleak, Britain’s failure to modernise and the shipbuilding trade having difficulties in adjusting to building oil powered ships instead of steam powered only added to the problem of losing valuable markets to overseas competitors.
With the post war boom now over, and many previously lucrative customers now shopping elsewhere, unemployment hit Great Britain in a big way. Between December 1920 and June 1921, unemployment doubled from one million to two million registered unemployed. That was in only seven months. The problem was beginning to escalate, most notably in the North of England, The south of Wales and Central Scotland. These were the areas where the staple industries had been built up due to their proximity to the natural fuel mines of coal and gas to power their machinery.
The resulting loss of trade was being tackled by the industries in an attempt to cut their prices. This also meant that wages would have to be cut also to supplement this. In the coal mining trade this was met with outrage. With job cuts meaning less workers, the existing workers were having to carry out longer days work already, and now they were being told their pay was to be reduced. Several strikes in the early 1920s did little to help their cause, in fact it worsened it. With an unreliable source of export, the remaining customers of Britain’s trades began to look elsewhere themselves for produce, this led to further job cuts and wage reductions. It was a vicious circle that finally culminated in the General Strike of 1926. It lasted 9 days and crippled Britain. The next few years were going to be tough, and a bigger problem was going to present itself.
During and after the First World War, Britain had borrowed huge amounts of capital from America to fund its war effort and pay for rebuilding. The crash of the Wall Street Market in 1929 saw America begin to recall many of its debts from the countries that borrowed from her. This created an economic implosion across Europe. Jobs were cut, benefits were tightly monitored and governments had to reduce expenditure in the development and investment of their home industries. In 1933 unemployment in Britain reached over three million, and that’s not counting those that are not registered or who could not claim unemployment benefit.
Structural unemployment had never been seen in Britain on this scale before, the government were ill prepared to deal with the crisis and many suffered because of this. Local parishes were the ones responsible for looking after their unemployed. This proved woefully inadequate when faced with such large numbers. Many parishes would only look after regular visitors to their sermons, which was not a very Christian thing to do. Many unemployed men would have to queue for hours at the local benefit office to claim their monies and sign on as available for work.
The government eventually introduced the Means Test. This was a way to evaluate how much money a family actually needed to claim and whether they could have their benefit reduced. This led to more resentment on the system as the Means Test officer would often take into account personal belongings and their worth, anyone else living in a house that was claiming benefit was also taken into account and incomes were often reduced to the point that much of Britain’s unemployed were living in poverty.
The government did however organise training camps to teach out of work men new skills to help them back to work in the new industries such as car manufacturing, electrical supplies and plastics. They also tried to invest as much as possible into the old industries in an attempt to modernise them and regain trade.
Local churches would lay on holiday camps for the children and even activity camps for the out of work men in order to help them stay healthy and active. Sitting around out of work would often lead to ill physical and mental health.
The National Union of Unemployed Workers arranged marches on London in protest at the lack of work and improper benefits. Though this proved futile as a union is only truly powerful when it has lots of ‘employed’ members.
Many of these schemes had little effect on the numbers of unemployed. Britain had relied heavily on her Impirical status prior to the First World War, and a return to this status just did not happen. This left the government and its infrastructure completely useless against the sheer numbers of unemployed.
Despite all the doom and gloom of the north, things were looking a shade better in the south. Many new industries had set up after the First World War that didn’t rely on location to coal or gas to power their factories. These industries consisted of the automobile industry and the electrical appliance factories. They required electricity to work, which could be produced from a power plant situated anywhere they chose.
Another factor, that has also been attributed to the reason Britain did not suffer a revolution after the First World War, was the falling cost in living. Food and clothing prices had dropped, so even though money was scarce for the unemployed, less was needed to survive.
It was not until the war clouds started looming again in 1937/1938 that the problem was largely solved. Re-armament had to be taken up and the basic industries were infused with cash the government had been keeping by for a special occasion such as this. Workers were now needed to rebuild war ships, tanks and other assorted weaponry. However, after the outbreak of the Second World War, nearly over one million people were still out of work, but the benefits system was now more able to cope with that number. Out of all the countries in Europe, Britain fared better during this economic slump due to the fact that she was already dealing with high unemployment. The empirical days of dominance may have been over, but a new era of industry and infrastructure was able to be born because of it.
In conclusion, unemployment rose as a result of high overseas competition coupled with loss of markets following the First World War. The Wall Street Crash of 1929 only emphasised a problem already being dealt with. Due to the numbers of unemployed involved though, the government was practically helpless in all it tried to rectify the situation. Ironically, only the onset of another world wide war and the call for re-armament really sorted out the problems.