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Lecture 7

Lecture 7- Interwar Period--Economy.pdf

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McGill University
HIST 386
Brian Lewis

based on free trade, int'l division of labour, importing raw materials and food stuffs, exporting manufactured goods large portion of world trade carried by Br. merchant navy and dependent on financial institutions of London Br. eco. vulnerable b/c of industrialization of competitors (US+Ger.), and b/c Br. industry concentrated on relatively narrow range of staples coal iron and steel cotton ship-building impact of WWI on economy (price of winning the war) considerable disruption to int'l trade and finance so Br. eco. disproportionately affected shipping tonnage diverted to mil. uses u-boat warfare exports of manufactured goods decreased by a half foreign competitors stepped in increase in national debt emerging as a debtor nation, no longer a creditor nation war cost 11B pounds increased taxation liquidation of overseas investments extra borrowing mostly from Americans changes first masked by widespread desire to reestablish pre-war conditions and revert to the gold standard (abandoned during the war) gold standard viewed as symbol of Br. financial stability transition from total war to peacetime unleashed a boom in Britain 1919-1920 end of rationing and price control unleashed demand for consumer products many firms thought things would go back to normal spent wartime profits on new plants and machinery a bubble, or speculation boom based on a misreading of a changing situation over-expansion increased price inflation treat inflation contraction in gov't expenditure raised interest rates collapse and recession in summer of 1920 prices fell by 45% bankruptcies exports down by 30% export trade in old staple industries felt the pinch the most unprecedentedly high levels of unemployment decline in foreign demand coal is down productivity increasing in foreign countries war had stimulated greater economies in fuel usage coal began to suffer inten
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