Impact of World War I on the British Economy
The First World War transformed British society in various ways, humans and resource lost during the World War in Britain were enormous. Between 1914s and 1929s were years of transition in Britain, particularly in economic, real gross domestic product per person in Britain fell around 1 percent, while the same measure of all officially recognized final goods and services rose about 24.5 percent in the rest of the world (source 1). Before the war started, Great Britain was one of the most important world’s trading and lending country but after the First World War, the entire world faced a serious depression (source 2). Britain whose economy had relied on trading, heavily suffered from financial problem. The primary causes were massive debts by borrowing a large sum of money from aboard, especially from the Unite states and the decline of trade (source 3). The purpose of this essay is to discuss about the causes of the long and deep depression of the British economy after World War I. World War I
World War I took place between 1914s and 1918s. In August 1914, the War engulfed Europe which causes around 9 million soldier deaths and another 20 million wounded. At the beginning of the war, it seems to be just a small conflict between Austria-Hungary and Serbia but it spread rapidly (source 4). Although the First World War began between European countries, it ultimately far away countries such as the United States and Japan also involved in this war. The British economy on the eve of World War I
In the beginning of the First World War, Britain was the one of world’s leading country in trading and lending. Compared with Germany, commodity imports and exports were almost three times larger than Germany’s and half of the United States’ imports and exports (source 5). In that time, London was central international payments, most of trading in the world was invoiced in the British pound sterling, and largest proportion of official reserves, excluding gold, also was held in British pound sterling. (Source 6) In 1914s, Britain invested in oversea s assets almost £4 billion, far exceeded than any other nations which create massive high incomes (source 7). British economy during World War I
According to Feinstein (1972: Table 6), Gross Domestic Product in Britain during the World War 1 increased to a peak in 1918s which around 13 percent higher than GDP in 1913, before reducing back close to 1913s after the war ended. GDP during the first World War I increased because an increase in the income tax of worker in Britain by up to 150 percent (Source 8). Even though the GDP in Britain increased during the war but because of production decline, since fighting the war requires people more than producing munitions combine with the loans that had been made to Italy, Russia and France forced Britain to use up its money that has been set aside for emergencies and borrow a large sum of money from the United States. The cost of war is incredibly high, in 1917s the war expenditure was running at £3 million a day in normal situation and can run up to £5 million during the critical situation (Book page 437). Although the ship that used to imports food may vulnerable to undersea boat strike but since it highly expected that the war would not be long, that is reason why agricultural policy took very long time to change. Million tons of British shipping was sunk during the war which consider as another major issue that cause Britain lack of money and resources because Britain was the one of world’s leading country in trading and lending in that time. In April alone, half a million tons of British shipping were sunk then Britain decided to organize convoys for merchant ships (source 9). Turning to industry, there was a massive decline of coal production at the beginning of the war from 288 million tons per year in 1913s to 254 million tons per year in 1915s. The main problem of decreased...
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