Courtesy Reuters

The Economic Progress of Britain

AFTER the sudden collapse of the hectic postwar boom in 1920, the British economy found itself faced with problems of a long-run, secular kind. The fissiparous effects of war on the world economy; the onrush of self-sufficiency programs; the over-extension of productive and shipping capacity in the world; technical advances in fuel and power production -- all these influences created "depressed areas" in Great Britain where formerly an expanding world trade had developed prosperous business activity. Britain's postwar unemployment problem was mainly in these areas, and it persisted throughout the period of world recovery from 1924 to 1929; nor could hard-hit export industries look forward to sufficient future earning power to be able to borrow money and equip themselves so as to increase their competitive capacity. Foreign countries could secure loans in the City of London at the prevailing high interest rates; the postwar gold exchange standard provided a makeshift international standard of costs; but the net effect of these two influences was to put Britain's competitive strength out of court. From 1925 to 1931 the national economy was under constant strain in an effort to come into line with the world's newly established level of costs. In fact, the British economy never even bridged the 10 percent differential between the dollar and the pound in 1925. The collapse of the postwar world's levels of debt and prices after 1929 rendered the British effort hopeless.

Between the financial crisis of 1931 and the beginning of recovery early in 1933, the National Government effected at least four major economic revolutions in the British economy. Had they been attempted by an administration that was not a Conservative one they would have been execrated as "Bolshevistic." These revolutions were: first, abandonment of the gold standard and pursuit of a managed currency standard; secondly, cast-iron governmental control of the money and capital markets; thirdly, establishment of a medium-to-high general protective tariff; and lastly, a rapid and extensive intervention of the State in foreign trade, agriculture and industry through a congeries of regulatory boards, statutory commissions

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