The Basis of Economic Recovery in the 1930s : A Review and a New Interpretation

The main difference between Britain’s economic experience in the 1930s and that of other countries was that her recovery from the world depression of 1929-33 not only started earlier but was more persistent. Signs of recovery began to show themselves in late 1932, the revival became noticeable in 1933 and gathered momentum until 1937. Towards the end of that year there was some falling off closely related to the recession in the United States. But in spite of contemporary fears this relapse did not reach the dimensions of a slump for industry, and trade revived under the stimulus of heavy government expenditure on armaments, and in 1939 production figures were higher than ever. The extent of recovery can best be illustrated by a few statistics. The production index (1925-9 annual average = 100) fell from I 1 I in 1929 to 92 in 1931, but, then rose to 147 by 1937. Net capital formation took a larger share of national income, 7⋅7 per cent for the five years 1934-8 against 4⋅6 per cent in the preceding quinquennium and 6⋅6 per cent in the period 1924–81 Other indicators of economic activity shot upwards too: the number of workers in employment rose from 10⋅2 millions in 1932 to 11⋅5 millions in 1937, profits rose by to per cent and wages by 7 per cent in the same period, while real national income went up from 103 in 1932 (1925–9 annual average = l00) to 125 by 1938.