Depression was felt world wide especially in America and Britain. America was affected by the wall street crash more than other countries because many people held shares and due to prices falling were unable to pay their debts which led to financial ruin. Due to many people relying on trade from America and little money being available meant that America could not provide trade to the same extent as previous years. Britain was badly hit by depression in areas where industries such as coal, steal and shipbuilding were based. Due to

The first party to try and tackle the economic problems was the Labour party led by Ramsey McDonald. Labours approach to tackling the economic problems was to follow the traditional line of the classical economists which was to balance the budget and use laissez faire. Laissez faire meant that the government did not get involved in the economy. Their immediate response was to introduce 10% wage cuts for those working in the public sector e.g. teachers. Another change they introduced involved withdrawing about 200,000 women from being eligible to receive benefits. These steps clearly show that the labour party were tackling economic recovery the wrong way. Labours financial advisors called the May Committee wanted Labour to take reform even further. They wanted labour to reduce benefits and introduce a scheme called means testing. Means testing meant families incomes would be examined before any benefit would be handed out. However many of labours party members opposed further reform as they felt that they were elected to help the poor and the working class. By introducing the May Committees proposals the opposing members felt that they would be breaking their promises. Due to the mixed reaction occurring within the labour party and people having different ideas on how to tackle the economic problems the labour party split.

Overall it can be seen that the changes introduced by the National Government were good and contributed to economic recovery. This is most evident when you look at unemployment figures. Unemployment fell from 3 million to 1 million, more houses were being built and electricity was being provided, there was an increase in public spending especially on goods such as hoovers, radios etc and finally living standards had improved. However these changes introduced by the National Government may have made some difference in some areas but not in others. In the Shipbuilding industry 20% of the workforce was still unemployed. In society as a whole 1 million people were still unemployed, there was also families still living in poverty and high death rates also occurred.

Overall it can be seen that the labour party set out to try and solve the economic problems but could not go to the extent needed. It can also be seen that labour took the wrong direction

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Approximate Word count = 1544
Approximate Pages = 6 (250 words per page double spaced)