The Inter-War Economy
Q. What were the main features of the First World War? (Term-I 2014)
Ans. The main features of the First World War are as follows:
(i) The First World War (1914-18) was mainly fought in Europe. But its impact was felt around the world.
(ii) It was fought between two power blocs — the Allies (Britain, France and Russia) and the Central Powers (Germany, Austria – Hungary and Ottoman Turkey).
(iii) It lasted for more than four years.
(iv) It was the first modern industrial war as it saw the use of machine guns, tanks, aircraft, chemical weapons, etc. on a large scale.
(v) To fight the war, millions of soldiers had to be recruited from around the world and most of them were young men and men of working age.
(vi) Death and injuries reduced the able-bodied workforce in Europe. (vii) Industries were restructured to produce war related goods.
Q. Why is it said that there was no other war earlier like the First World War? State in three points. [CBSE 2016]
Q. Explain how the First World War was so horrible a war like none other before. [2010]
Ans. There was no other war earlier like the First World War because of the following reasons:
(a) The First World War which took place mainly in Europe from 1914 to 1918 had a profound impact on economic and political stability which took over three decades to overcome.
(b) The leading industrial nations of the world were taking part, they wanted to harness the vast powers of the modern industries for the greatest possible destructions. Modern weapons like tanks, aircrafts, machine guns and chemical weapons were used, large ships and trains were used to move the recruited soldiers.
(c) Around 9 million died and 20 million injured, the industries were restructured to produce war-related goods and also the societies were reorganized for war.
Another Answer Version:
Ans. The three features of the war that supports the statements are:
(i) It involved the world’s leading industrial nations.
(ii) This war was the first modern industrial war. Machine guns, tanks, aircraft, chemical weapons, were used on a massive scale.
(iii) Most of those who were killed and maimed were men of working age. The scale of death and destruction was great. These deaths and injuries reduced the workforce.
(iv) Industries during the war were restructured to produce war-related products.
(v) The war led to the snapping of economic links between the world’s largest economic powers which were now fighting with each other to pay for them. The war transformed the US from being an international debtor to an international creditor.
Q. Describe in brief the economic conditions of the post First World War period. (Term-I 2013)
Ans. Post First World War conditions:
(i) Britain, which was world’s leading economy in the pre-war period faced a prolonged crisis.
(ii) Indian and Japanese industries developed as Britain was occupied with war.
(iii) After the war, it was difficult for Britain to recapture its earlier position in the Indian market
(iv) Britain was burdened with huge external debts from the US.
(v) Government reduced war expenditure. This led to huge job losses and unemployment.
(vi) Grain prices witnessed a steep fall as wheat supply was restored.
Q. Describe the economic conditions of Britain after the ‘First World War’. (CBSE Compt., 2018)
Q. Explain the impact of the First World War on the British economy. [Term-I, 2016-17]
Q. Explain the three impacts of the First World War on the British economy. [Term-I, 2015, 14]
Ans. Economic conditions of Britain after the First World War:
- After the First World War, Britain found difficult to recapture its earlier position. Britain was burdened with huge external debts.
- The war had led to an economic boom, a large increase in demand, production and employment. When the war boom ended, production contracted and unemployment increased.
- At the same time, the government reduced bloated war expenditures to bring them into line with peace time revenues. These debts led to huge job losses. Many agricultural economists were also in crisis.
Another Answer Version:
(i) After the war, Britain found it difficult to recapture its earlier position of dominance in the colonial market.
(ii) To finance war expenditures, Britain had borrowed from the U.S. At the end of the war Britain was burdened with huge external debts.
(iii) The war had led to a huge increase in demand, production and employment.
(iv) The government reduced bloated war expenditures to bring them at par with peace time revenues.
(v) These developments led to huge job losses. In 1921, one in every five British worker was out of work.
Q. Describe the impact of Great Depression on Indian economy. (SQP 2018-19, 2014)
Ans. The Impact of Great Depression on Indian economy:
(i) India’s exports and imports nearly halved between 1928 and 1934.
(ii) Agricultural prices fell sharply internationally as a result of this prices plunged in India too.
(iii) Despite this, the colonial government refused to reduce revenue demands.
(iv) Peasants’ indebtedness increased. They used up their savings, mortgaged lands and sold their jewellery and precious metals.
(v) India became exporter of metal.
(vi) Town dwellers found themselves better off. (vii) Industrial investment grew.
Another Answer Version:
(i) India’s exports and imports nearly halved.
(ii) As international prices crashed, prices in India also plunged.
(iii) Wheat prices in India fell by 50 percent.
(iv) Peasants and farmers suffered more than urban dwellers.
(v) The colonial government refused to reduce revenue demands.
(vi) India’s peasants’ indebtedness increased.
(vii) They used up their savings and sold jewellery and precious metals. The Great Depression helped the urban people, especially the fixed income earners.
Another Answer Version:
The Great Depression affected the Indian trade in many ways.
(i) India’s exports and imports were halved between 1928 and 1934.
(ii) As international prices crashed, prices in India also plunged.
(iii) Peasants and farmers suffered more than urban dwellers.
(iv) Peasants producing for the world market were the worst hit.
(v) Town-dwelling land owners and middle-class salaried employees found themselves better off as everything cost less for them.
Q. How had Indian trade been beneficial for the British during the seventeenth century? Explain. [OD Set-I, 2020]
Ans. Trade with India was greatly beneficial to the British in the 17th century. Various other products like cotton, silk, indigo dye, salt, pepper and tea were also traded. All these items were in demand in Britain and their availability from India enhanced the quality of life for the British
Q. Elucidate any three factors that led to the Great Depression. [Term-I, 2016-17]
Q. Explain any five factors that led to the Great Depression of 1929. [Term-I, 2015]
Ans. The Great Depression began around 1929 and lasted till the mid-1930s. During this period, most parts of the world experienced decline in production, employment, incomes and trade. Agricultural regions and communities were amongst the most affected.
Causes of Great Depression:
(i) Post-world War economy of the world was fragile. Agricultural over production was a problem. As prices slumped, farm produce rotted.
(ii) Many countries financed loans from the US.
(iii) US overseas lenders panicked at the sign of financial crisis.
(iv) Thus, banks were bankrupt and were forced to close down in Europe and in the US because they were unable to recover investments, collect loans and repay depositors.
(v) American capitalists stopped all loans.
Another Answer Version:
(i) Agricultural overproduction remained a problem and it was made worse by falling agricultural prices.
(ii) As prices slumped and agricultural incomes declined, farmers tried to expand production and bring a large volume of produce to the market but it pushed down prices.
(iii) In the mid 1920s, many countries financed their investments through loans from the US, it was extremely easy to raise loans in the US when the going was good.
(iv) But in the first half of the 1920’s, countries that depended crucially on US loan faced an acute crisis.
(v) The withdrawal of the US loans affected the rest of the world in different ways. In Europe, it led to the failure of small major banks and the collapse of currencies, such as the British Pound Sterling.
Q. Explain why economy of USA was strong in the early 1920s? Would you agree that the roots of the Great Depression lay in the ‘boom’? Give reasons for your answer. (Term-I 2012)
Answer:
(i) Mass production became a characteristic feature of industrial production in the USA.
(ii) Mass production lowered costs and prices of engineered goods.
(iii) There was a spurt in the purchase of refrigerators, washing machines, etc., through hire purchase.
(iv) It was fuelled by a boom in house construction and home ownership, financed once again by loans. Yes, the roots of the Great Depression lie in this boom because of the overproduction in industrial and agricultural sector and liberal credit facility.
Q. Explain the effects of the Great Depression of 1929 on the Unites States. (Term-I 2015)
Answer:
(i) With the fall in prices and the prospect of depression, the US banks also slashed domestic lending and called back loans.
(ii) Farmers were unable to sell their harvests.
(iii) Faced with falling income, many households in the US could not repay what they had borrowed, and were forced to give up their homes, cars and other consumer durables.
Q. How did the withdrawal of US loans during the phase of the Great Depression affect the rest of the world? Explain in three points. [CBSE 2015]
Ans. During the First World War, the US financed through loans a number of countries. The withdrawal of US loans affected the rest of the world in the following three ways:
(a) It caused the failure of some major banks and collapse of currencies in Europe.
(b) The banks in US slashed domestic lending and called back loans but many households were unable to repay the loan due to decline in sale of agricultural products.
(c) Collapse of business and falling income which finally resulted into collapse of the US banking system.
(d) To protect its economy, the US doubled the import duties which led to another severe blow to the world trade.
Q. Describe in brief the world economic condition in the post first world war period. [All India 2010]
Ans. Before the First World War, Britain was the world’s leading economy but after the war Britain was over burdened with external debts.
- In the meantime, industries in India and Japan developed a lot. Due to these conditions, it became difficult for Britain to get its dominance over India back and compete with Japan internationally.
- The First World War led to an economic boom which means large increase in demand, production and employment but the production decreased and the unemployment increased when the war ended. In the year 1921, there was huge job losses, almost 1/5th of the British workers was out of job.
- Eastern Europe was the major supplier of wheat in the world which was disrupted when Europe was busy with the First World War. During this war period the production of wheat rose in Canada, US and Australia. Again, after the war Eastern Europe revived the wheat production. Due to this there was tremendous supply of wheat in the world market which resulted in falling prices, decline of the rural income and the farmers fell in debt.
