Chapter 2: 1919-1925 Change and the British Economy Why was the British government’s policy to return to normalcy a bad economic policy? The 1920s was marked by the incompatibility of British economic policies with international economic conditions. Throughout the decade, there pervaded in the British government a desire to return to pre-war normalcy, symbolized by the return to the gold standard at pre-war dollar parity in 1925. This desire was disastrous for post-war British economic recovery, given that Britain’s adherence to a pre-war world misplaced it in the post-war era of trade and industrialization. The world economy after the war smarted from a loss of productive resources, industrial capacity and changes in the structure of international trade and finance . Additionally, the political disputes and persistent inflation of the 1920s prevented European economic growth, and caused many countries to turn from international to nationalist policies, accounting for spreading protectionism throughout the continent from 1919 . This contrasted greatly with British endeavors to return to the pre-war arrangement of complete free trade. Britain’s movements against the grain of international trade reduced the competitiveness of British producers in the face of foreign subsidized competition in international markets , thereby indicating the …show more content…
The rise of the US as the leading power in international markets was the major change in the structure of international trade that Britain, by persistently engaging in attempts to push for a pre-war state of normalcy, refused to acknowledge, resulting in a further plunge in her world share of world exports and ultimately the loss of her position as the global hegemon of world