The Reasons of The Scottish Economy Encounter Provoking so Many Problems in The Period from 1918 to 1939

The period between 1918 and 1939 is infamous for being a time of economic struggle for Scotland. Victory in the First World War was followed by a great deal of post war economic depression. With a growth in economic nationalism, Britain had abandoned previous free trade. Further depression in 1929 taking another blow at Scottish economy, accompanied. Yet there are a number of key factors that contributed to the downfalls in Scottish economy. Steel production and shipbuilding certainly saw effects after the war had ended. The colossal drop in demand for further production saw a gradual decrease in contracts and profits that proved crippling for some businesses. In 1920, 2m tons of steel were produced followed by 672k tonnage launched on Clyde. However, by 1931, only 670k tons of steel were produced and a tonnage 67k launched. This saw shipbuilders such as Brown’s see profits as low as 0.4% on contracts.[1] This went hand in hand with unemployment. Many chose emigration as an option to escape unemployment, and between 1921 and 1931 Scotland lost a great number of people who left in search of opportunities elsewhere. As businesses and factories began to struggle in Scotland, employment issues began to rise, ending in a series of protest marches in the likes of Glasgow and Edinburgh. The effects of struggling Scottish agriculture also had its effects on economy. Livestock farming dominated the rural work force, accompanied with a drop of around 20,000 agricultural workers.

Scotland had built a huge reliance on heavy industries such as shipbuilding during the war. The naval arms race had brought a great surge in demand that would create thousands of jobs and spur new means of production. After the end of the war in 1918 however, these heavy industries saw a slump in demand that proved critical to Scottish economy. The real issue in steel and iron output stemmed from Scotland’s position prior to the war. It was clear on examining Scotland’s steel output on the build up to war that the country’s means of production would fall short. This meant that there was a huge push to force more from heavy industries that would create a massive increase in proportions when compared to other countries. This meant that Scotland’s huge success during the war would contribute to its heavy fall during the post war world depression. In terms of iron, the focus on production remained in a pre war mindset, seeing a huge amount of neglect to the production of basic pig- iron. Scotland was focusing on a structure of production that had served them beautifully previously, and would last on a short term basis. However, the tendency to focus on traditional sectors such as hematite, foundry and forge iron meant that there was now an emphasis on production in areas that had the least demand worldwide. Although there was a lowering in the production of the likes of hematite, there was still a far higher proportion of this kind of iron output in comparison to the rest of the U.K. Hematite made up around 44% of all of Scotland’s iron output, whilst forge and foundry iron made up another 35%.[2] There was also a completely inadequate reserve of domestic iron ore, further limiting the opportunity for the ongoing output of pig- iron. The production of these heavy components such as steel of course revolved around shipbuilding. Shipbuilding however, was an industry that had to base its own production on world demand. The end of the war saw the beginning of huge inconsistencies in demand for ships to be built, with sudden increases between short periods of time followed by critical slumps. There was also a lower in demand from within Britain itself. During the interwar period the proportion of the country’s trade that would be carried by mercantile marine declined. There was also the issue of shipbuildings’ own progressive techniques. By 1934, the general holding capacity of ships built in Scotland had risen by 50% in comparison to that of 1914.[3] These kind of improvements in shipbuilding essentially saw the industry shoot itself in the foot. As ships became more powerful and able to hold larger cargo, there was a clear drop in their need for numbers.

There was also a sense of international sabotage when looking at the decline in Scottish shipbuilding. Britain as a whole had created a reputation as a leader in the production of ships during the war. Germany, followed by Japan and Italy began a seemingly deliberate policy to harm the British ship building industry, by attempting to cut off Britain from already established trades. During the 1930s, credits held in Germany by overseas shipping interests were only available to be collected if ships were ordered exclusively form German yards. As a result, millions of pounds worth of ship orders that could have been made via British contracts were lost to Germany. There was a clear sense of underlying sour relations as Germany attempted to regain its balance from defeat.

Shipbuilding was so important to Scottish economy because of its sense of locality. Historians such as Neil Buxton have described its products as “incorporating and providing the market outlet for the output of several other trades”[4]. Each item needed to assemble a ship was sourced from its own area of industry. Transport costs meant that a great deal of this was sourced locally. So when the main source of demand came under fire, so did each of its counter parts. This is where Scotland’s huge reliance on heavy industry becomes apparent. There was such a focus on war time production that there would be clear consequences as demand began to fall.

In order to fully understand the problems Scotland’s economy faced in the period from 1918 to 1939, it is important to analyse the causes and consequences of unemployment. Scotland's First Commissioner Sir Arthur Rose wrote in 1934, “I have placed Industrial Development, as the only real cure for unemployment”.[5] Scotland’s reliance on heavy industry meant that there was a great deal of employment based around these factories. With previous demand and a great proportion of the population fighting on the Western front, there had been more than enough jobs to go around. However on return form war many of the men came home to realise that they were not returning to any form of employment paradise. Heavy industry factories lost jobs due to their lack of financial success but also from the push in technology the war had brought with it. The introduction of automatic machinery and production assembly lines meant there was now less need for manual labour. Another example of wartime success leading to post war depression. This caused a seer in government pressure to fill these employment gaps that would prove costly. Schemes were set up to improve public utility by the likes of road improvement and slum clearance. There was also the concept of land reclamation to create jobs, yet this was hugely unsuccessful. By 1929 there was only one scheme of this sort that was ready to be set into operation. It would cost £7000 pounds and employ 30 men for a 9 month period. Other larger schemes were proposed to higher 300- 400 men, costing £151,000 but were never put into action.[6] The goal to improve employment was slow and did not meet demand. Marches occurred in protest in the likes of Edinburgh and Glasgow as people grew weary of the desperate lack of jobs. Of course, downfalls in employment meant long term set backs for Scottish economy. Times of hardship meant the country could not boost its economy from within. Depressed areas which had relied on industry just didn't have the money to spend. There was a huge increase in Scottish emigration due to this. Many chose to look elsewhere for job opportunities that could no longer be provided at home. There was little to no action that could be take to tackle these issues. The whole world was feeling the costly effects of large scale war, and Scotland was no different. It was not until the eventual recovery of industries nearing the Second World War that employment would truly have the opportunity to rebound. Unemployment issues caused a slippery slope for Scottish economy. The lack of national income was a blow in its self, but the increase in the number of those effected only made matters worse. This industrial downfall went hand in hand with setbacks in Scottish agriculture, there was no escape from the economic failure, even in rural areas.

Agricultural effects were present, but not nearly as dramatic when compared to those of industry. After 1921 Scottish farmers were faced with the same general depression prices as everyone else. Farmers responded the same way the had before the boom of the war. Shifting from arable crops to more cost effective extended rotations and permanent pasture. However farmers returns were still effected. Prices began to fluctuate violently in items such as potatoes and oats, rising and falling on their continual downward trend. The inconsistencies in crops meant that there was a rise in the likes of sheep farming as livestock appeared more profitably consistent. The post war depression saw a revival in land settlement schemes as the government made attempts to support with the likes of corn production. The government had no intention for long term aid in the decontrol of food prices however, farmers were amongst the strongest factors in support.

The war had created certain advancements with agricultural workers unions that aimed to tackle wage problems. Although there was not a dramatic wage drop for these workers at the end of the war, lowering wages accelerated during the 30s. There was a drop from 26 shillings to 23 shillings in the weekly agricultural wage rates between 1933 and 1937.[7] Employment was also a rising issue. Similarly to heavy industry, advancing technology had given employment a beating. New and more frequently used advancements such as tractors and ploughs had filled a number of gaps in the employment of many skilled agricultural workers.

The uneasy years that followed the war lead to a great deal of outrage in employers who demanded some sort of government intervention. The 1930s are regarded as a time of change in government attitude, as the country veered away from its laissez- faire approach. Policies aimed to target three main areas. Protection, marketing, and then direct assistance in finance for producers. Agriculture was an asset too important to be ignored. Minister of Agriculture Walter Eliot described the need to control the structure of production as ‘quasicorporatism’[8] and this was engrained into the 1933 Agricultural Marketing Act. Previous attempts during the war at government intervention had been met with farmer hostility, but the proposed marketing boards were to be producer- elected in order to eliminate any fear of loss of control. However, there was a mixed success rate, and only those concerning milk and potatoes showed any promise. The real effects of government intervention have been debated as lacking in success. Similarly to heavy industry, there was little ability for improvement until the brink of the Second World war.

Agriculture had proved itself as a driving force when keeping Scotland afloat during the First World war. The war had created a boom in employment, rising wages and a demand in a variety of crops that had seen previous neglect. Yet the war’s impact was only a blip for productivity. Produce prices became scattered and inconsistent whilst employment and wages grew ever more endangered in the interwar era. Further depression in the 1930s could not be truly countered by government intervention, and there could be no real positive impact for Scottish economy until war loomed yet again.

To conclude, Scottish economy encountered a great deal of problems during the period between 1918 and 1939 for a number of reasons. A lack of international demand for industrial output meant for a great deal of suffering in Scotland’s heavy industries. Ship building in particular suffered, and its knock on effects to steel production and its assembly’s counter parts shook Scottish industry. The heavy reliance on such industry throughout Scotland meant its effects on the economy were large. This lead to a huge rise in unemployment. With limited opportunity to decrease unemployment, economic depression continued as the numbers of those struggling financially continued to grow. Agriculture also had its struggles that showed effects to Scotland’s economy. Advancing technologies and a lowering in demand for crop output saw a slash in agricultural employment as farmers attempted to save money. Although advances in agricultural unions had arisen, there was little they could do to counter the most prominent issues. Government intervention although helpful did little to tackle major problems and there was little hope for agriculture to redeem Scotland’s dragging economy.