How was a mixed and managed economy established in the 1940s

Learning objective – to be able to explain the developing mixed and managed economy of the 1940s. I can describe some of the key features of the British government’s economic policy of the 1940s. Grade D I can explain the impact of the British government’s economic policy of the 1940s. Grade B I can explain and assess the economic performance of the British government of the 1940s. Grade A

Starter – What can you learn from this cartoon?

What was the impact of the Second World War on the direction of economic policy? Churchill expanded the government’s role in managing the war economy and created a series of ministries which had a specific role in economic management. These ministries had extensive powers of economic management. The government also controlled prices through controlling production levels. The growth of state intervention led to a huge increase in war production and military spending. Between 1941 and 1945, over half the government spending was on military.

How important was economic aid to the British economy during the 1940s? By December 1940, Britain’s cash reserves were spent. Churchill was able to secure the Lend-Lease Agreement with the USA. This allowed the USA to supply Britain with what it needed and the debt would be paid after the war. This was supported by supplies from America being brought to Britain by ‘Liberty Ships’. Immediately after the war, John Maynard Keynes aimed to negotiate an emergency loan from the American Government. He managed this but not on the favourable terms he wanted. Britain was also a recipient of Marshall Aid from 1948.

What was the impact of austerity economic measures in the 1940s? In 1945, Britain had accumulated £4 billion worth of debt to the USA and with an additional loan in 1945, it would cost Britain £70 million a day just to finance the debt. The Attlee Government embarked upon a series of austerity measures – which was a programme of cuts in government spending, controlling private spending and rationing of goods. This was unpopular with the British public – the most outraged were the trade unions, who were requested to accept a wage freeze or face legal pay restraints. However, austerity measures did not work alone. With the harsh winter of 1947 which hit industrial production and Britain having to pay for goods in dollars and not pounds, making imports more expensive, Attlee was forced to devalue to pound in 1949.

What was the impact of nationalisation of key industries in the 1940s? The nationalisation of key industries was a centrepiece of Attlee’s economic policy. The aim of nationalisation was to create full employment and to ensure the effective management of the key industries, which had been for too long inefficient. The nationalisation of coal, the Bank of England, transport infrastructure, electricity, gas, iron and steel cost the government over £2 billion in buying out the previous owners of the key industries. This meant that the government had little money left over the invest in the key industries in modernising them. Eventually, this left them lagging behind international competitors.

Task This visual hexagon activity helps you make links between the different areas of the establishment of a mized, managed economy in the 1940s. In pairs, make links between each hexagon and write two sentences for each link explaining them fully.

Home learning task Pair up with another member of the class. Here are two events that relate to the British economic policy of the 1940s. Between each pair, choose who is going to research which event. The policy of austerity economics. The devaluation of the pound in Your task is to produce a one page summary of the events using bullet points and divided by sub-headings. This is to be exchanged with your partner next lesson.