By A S Milward
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Extra resources for The Economic Effects of the Two World Wars on Britain
1 1 It has to be remembered that there were more than a million people registered as unemployed in Britain in April 1940. Nonetheless in the Second World War as in the First the expansion of the armed forces to more than four and a half million meant dramatic changes in labour markets and in the nature of employment. In the Second World War the main instrument ofcontrol and planning was the 'manpower budget' which allocated labour resources to the different tasks. The 35 question we have to resolve is how far these bewilderingly rapid shifts ofemployment had any long-term effect on the economy.
The incidence of income and supertax combined reduced the highest incomes by one-twelfth in 1914 and by almost one-half in 1925. The number of people with gross incomes above £3,000 in 1913-14 was 32,500, but the number above an equivalent income limit, allowing for the change in prices, by 1924-5 was only 24,000 [8: 138]. It would appear therefore that the most important force making for an improvement in the working-class position in the Second World War was the increase and greater progressiveness of taxation, and that this was also a powerful influence in the First World War but one whose effects were more limited.
T o ensure a n ade q ua te supply of fund s to th e government, mor eover, th e inter est rate on mon ey had to be in cr eased rep eatedl y, only falling aft er 1917 whe n eco nom ic controls became reall y effective. Those wh o lent to th e governmen t wer e th erefore a ble to p rot ect th em selves against inflation , while a t th e sa me tim e th e govern me n t provid ed th em with important conce ssions in th e pa ym ent of d eath duties a nd , after th e war, whe n reducing th e burden of d ebt, offered th em relatively favourable terms of conversion [39; 52].