The Second Labour Government 1929

In this mind map I will only be explaining what happened in the second Labour government: their economic policies, how they faired in foreign affairs, the crisis of '31 and the fall of Labour. The will be no information on the formation of the National Government. All info on the National Government will be on a seperate mind map.

I hope this is useful x

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  • Created by: Millie
  • Created on: 10-03-13 11:24
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  • The Second Labour Government 1929- 1931
    • Economic policies
      • Benefit rules changed:  Applicants no longer had to prove that they were 'genuinely seeking work'. Now the only way to stop an applicant receiving benefits was it officials could prove that he ha turned down an offer of reasonable work.
      • The Coal Mines Act: Reduced  the  standard eight-hour shift by 30 minutes
      • The Great Depression- October 1929
        • Value of exports fell by  nearly 50% between 1929 and 1931
        • Unemployment : Rose every month from November
          • Cost of  unemployment  benefit: £12 million in 1928 to !125 million in 1931
        • Unemployment: July 1930= 2 million
        • December 1930 = 2.5 million
        • J.H. Thomas made the head of a  small team to tackle unemployment
          • The team included Oswald Mosely
            • In May 1930  he made him own plan: He wanted to see protective tariffs, more money to be spent on  public works and increased pensions  to boost domestic consumption and encourage  early retirement
              • This was rejected by  Thomas and the Chancellor. The cabinet rejected  Mosely's scheme in May 1930
              • Snowden = Labour- Chancellor of the Exchequer in both labour governments. Snowden thought  that the government should balance the budget/ reduce expenditure
              • MacDonald didn't know how to handle the economic crisis. Rejection of Mosely's proposals led to political instability. MacD was setting us commissions but was not  listening to what they had to say
          • Thomas claimed that  the government was  spending £42 million of public works
            • Too unhurried for Mosely
    • Foreign Affairs
      • Definite Success
        • Anglo-American relations
          • MacDonald visited Washington himself in 1929 and an agreement was reached on the relative tonnages of  the British and American navies
          • Very important to maintain this
        • European affairs
          • Anderson took charge
          • Diplomatic relations were resumed with the Soviet Union
          • The Young Plan- new reparations deal - was agreed with Germany
          • In 1930 it was agreed that  the last  allied troops occupying the Rhineland under the Treaty of Versailles would be removed 5 years ahead of schedule.
            • Detente being maintained in Europe
      • Arthur Henderson was the Minister for Foreign Affairs
    • The fall of labour
      • August 1931- couldn't  decide on whether benefits should be cut. Snowden thought it was neccessary. At least 10% needed to be  cut. If the budget was left unbalanced  no loan would be given to Britain.
        • Keynes reccmmended taking Britain off the GS but this was rejected by MacDonald
          • MacDonald agreed with  Snowden
            • The cabinet agreed to cuts of £56 million were- excluding the 10% cut in benefits.  Mac D and  Snowden wanted £78 million + the 10% cut in benfits
            • LABOUR WAS BEING  IMPRACTICAL... perhaps no party could have solved the problem, however.
            • MacD left the cabinet on  the 24th August to hand in his resignation to the king
              • The  King urged him  to form a National government instead. The National government was formed on the 24th of August 1931
    • The  crisis of 31
      • Mac Donald set up a 15- man  'think tank' including Keynes who also called for deficit financing like Mosely. MacDonald didn't want to adopt this because it was too similar to what Mosely had proposed ( and he rejected that)
      • MacDonald 's want to remain 'respectable' and adopt only moderate politics limited him in adopting radical approaches
        • Expenditure on public works rose from £70 million  in Feb to £140 million in September 1930
          • Government cuts needed to be made, which is what Snowden  wanted. Labour didn't want to have to make cuts esp. in  unemployment benefits and  they adopted a  policy of drift. The budget was  left unbalanced for as long as possible.
            • Britain was still on the GS. Interest rates had to be kept high so that investors would keep their money in Britain.
              • The Bank of England's gold reserves were rapidly depleting in order to keep up
              • Summer 1931 the situation got worse
                • A Royal Commission called for  a 30% reduction in unemployment benefit.  The May  commission called for a 20% cut
                  • Snowden still thought that retrenchment should replace drift
                    • Snowden wanted a loan but a balanced budget would  be a condition
                  • Foreign investors feared that Britain was on the brink of bankruptcy so  started to withdraw their funds in huge quantities. By the end of July 1930  a quarter of Britain's gold reserves had been used
            • Forreign confidence in Britain would cease to be if the budget was left unbalanced for too long


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