IDEAS home Printed from
   My bibliography  Save this article

British monetary and fiscal policy in the 1930s


  • Roger Middleton


Current economic turbulence has revived interest in interwar macroeconomic instability and policy. This paper provides a guide to the current state of knowledge on British macroeconomic policy between 1929 and the eve of the Second World War for today's economists and policy-makers. Mindful that some will seek 'lessons' from this earlier age, it makes clear the very particular economic and policy context of the time, including the marked difference between British and American economic performance and policies and the challenge posed by the massive rise in debt brought about by the First World War. Knowledge transfer is possible here for policy learning, but what transpires is that lessons are typically stronger as negatives than as positives: namely what should not be done in general, as against what might be done, this largely situation specific. The focus is the role and effectiveness of the monetary and fiscal policies pursued together with an assessment of the principal policy not adopted, namely the Keynesian solution of significant loan-financed public works to remedy mass unemployment. The analysis is comparative with respect to US macroeconomic economic performance and policy; it explores the different macroeconomic shocks of the 'contraction' phase (the term 'Great Depression' is not really appropriate to the British experience) in the two countries; comparative policy regimes; and then, in turn, analyses the policy mix and policy effectiveness of monetary and fiscal policy, including for Britain the counterfactual Keynesian solution. A business-cycle periodization is adopted, with the key role for the abandonment of the gold standard in terms of regaining freedom of choice in macroeconomic policy, itself experiencing significant developments after 1931. The traditional role of the cheap-money-induced housing boom in Britain's post-1932 economic recovery is reaffirmed; the impact of the fiscal policies actually pursued are then discussed, as are assessments of the likely effectiveness of the Keynesian solution had the 1929 Liberal Party's 'We can conquer unemployment' spending package been implemented. Copyright 2010, Oxford University Press.

Suggested Citation

  • Roger Middleton, 2010. "British monetary and fiscal policy in the 1930s," Oxford Review of Economic Policy, Oxford University Press, vol. 26(3), pages 414-441, Autumn.
  • Handle: RePEc:oup:oxford:v:26:y:2010:i:3:p:414-441

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Crafts, Nicholas & Mills, Terence C, 2012. "Rearmament to the Rescue? New Estimates of the Impact of ‘Keynesian’ Policies in 1930s’ Britain," CAGE Online Working Paper Series 103, Competitive Advantage in the Global Economy (CAGE).
    2. Nicholas Crafts, 2013. "Returning to Growth: Policy Lessons from History," Fiscal Studies, Institute for Fiscal Studies, vol. 34(2), pages 255-282, June.
    3. Kent Matthews, 2013. "No Plan B: But is There a ‘Third Way'?," Economic Affairs, Wiley Blackwell, vol. 33(2), pages 220-231, June.
    4. Nicholas Dimsdale & Nicholas Horsewood, 2009. "The dynamics of consumption and investment in the late Victorian economy," Working Papers 9007, Economic History Society.
    5. Nicholas Crafts, 2014. "What Does the 1930s' Experience Tell Us about the Future of the Eurozone?," Journal of Common Market Studies, Wiley Blackwell, vol. 52(4), pages 713-727, July.
    6. Nicholas Crafts & Peter Fearon, 2010. "Lessons from the 1930s Great Depression," Oxford Review of Economic Policy, Oxford University Press, vol. 26(3), pages 285-317, Autumn.
    7. Nicholas Dimsdale & Nicholas Horsewood, 2012. "The impact of the Great Depression of the 1930s on the British economy," Working Papers 12028, Economic History Society.
    8. Nicholas Crafts, 2013. "Returning to growth: lessons from the 1930s," Working Papers 13010, Economic History Society.
    9. Nicholas Crafts, 2016. "Reducing High Public Debt Ratios: Lessons from UK Experience," Fiscal Studies, Institute for Fiscal Studies, vol. 37, pages 201-223, June.
    10. Crafts, Nicholas & Mills, Terence C, 2012. "Fiscal Policy in a Depressed Economy: Was There a ‘Free Lunch’ in 1930s’ Britain?," CAGE Online Working Paper Series 106, Competitive Advantage in the Global Economy (CAGE).
    11. Barry Eichengreen, 2016. "The Great Depression in a Modern Mirror," De Economist, Springer, vol. 164(1), pages 1-17, March.
    12. Matthias Morys, 2014. "Gold Standard Lessons for the Eurozone," Journal of Common Market Studies, Wiley Blackwell, vol. 52(4), pages 728-741, July.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:26:y:2010:i:3:p:414-441. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.