ABSTRACT
This chapter examines governmental attitudes and their impact, look at alternative views of what the government might have done and examine the reasons for economic recovery in the 1930s. Before 1914, it was generally believed that the only significant way in which the government could affect economic activity was through the imposition or non-imposition of tariffs. The war had also been accompanied by high inflation, as a large amount of government spending had been financed by borrowing direct from the Bank of England. The vast increase in government expenditure needed to service the government debt and also meet the increased spending on social services had put it into a particularly strong position. In spite of the dramatic events of 1931-2 and the growth of government economic regulation, the ultimate aim both of the government and of John Maynard Keynes, who was their strongest critic in economic affairs, was for a return to freer trade and a cohesive world economy.
