1929-1939

1929 - once again dependant on Liberal support

Reforms 1929-30:

• Greenwood housing act - increased subsidies for building houses and introduced slum clearence schemes (250,000 1939)
• Land utilisation act
• agricultural act
• marketing act - reduced day to 7.5 working hours
• unemployment benefits increased

Failed reforms:

• Education bill (leaving age to 15), maximum working week 48 hours and repeal of 1927 trade union act
• due to lack of liberal support

• 1929 - Wall street crash, 1931 - Great depression
• 1929-1931 - exports fell 50%, unemployment 2.5 million 1931 - 3 milliojn 1932
• off gold standard 1931

Crisis and Labour:

• Economic Advisory Council 1930 - industrialisats and economists
• provision of benefits
• rising unemployment undermines a balanced budget
• Labour looked irresponsible

Snowden:

• Balanced budget, maintain gold standard, spending cuts, reduce expenditure on welfare

Mosley:

• expansionary govt spending policy - finance public work programmes and social reform through loans - Keynesian economic
• resigned May 1930 - memorandum rejected

Macdonald:

• not convinced Mosley ideas would work - fearful radical measures undermine economy overseas and create unemployment
• economists divided
• cabinet couldnt agree on size of cuts
• Liberals proposed a committee and Macdonald appointed May committee

May committee:

• ran by Sir George May - head of prudential insurance company
• Published 31st July
• predicted 120 million deficit 1932 - severe cuts had to be made
• 20% cut unemployment benefits - heavier taxation
• two labour members 'minority report' - ignored

• May committee recommendations caused outcry - wanted to tax rich but not cut benefit
• Macdonald agreed to increase tax - divided cabinet
• 12 August - 'CEC' agreed to 38 million and 10% cut in unemployment benefit - not enough
• 19 August - cabinet agreed to 56 million - others saw as too small
• Macdonald rejected May report entirely - pressure on labour
• Bank of England needed loans - unemplpoyment benefit cuts needed to be made
• argued vote for approval in national interest 23 august - won 11 votes to 9
• 24 August - Macdonald offered resignation to King George V

National government:

• Macdonald to resign
• agreed he would continue in national gov
• at time was temporary
• cons and libs saw it as an advantage

Labour reaction:

• cabinet taken by surprise
• only three followed (Snowden)

criticism:

• Attlee - 'greatest betrayal in political history of this country'
• arrogant
• let opponents decide financial policy
• not brave enough and too slow
• easily ignored cabinet
• sacrificied laboiur for interests of himself and upper class

defence:

• no reason to distrust orthodox economics
• acted honorably sacrificing party for country
• George V 'he put all personal and party interests to stand by this country in this grave crisis'
• argued as reluctant

• Henderson - labour leader
• Snowden method gained approval and banks recieved loans Sept 1929
• 21st September  - Gold standard abandonned

1931 'Doctors mandate elction':

• Labour 52 seats
• Nat Gov 554 seats
• Labour leaders - Lansbury and Bevin

• individual membership rose
• won most by-elections 1931-35 (13)
• gained 154 seats 1935
• won 38% votes
• Labour only serious alternative
• under nat gov unemployment rose to 3 million 1932
• labour used more moderate policies to gain respect

• cotton -decreased 50% from 1913 to 1932
• coal - declined to 108 tonnes by 1933 (50%)
• 47% steel workers unemployed 1932
• 60% insured workers in shipbuilding unemployed 1932
• Jarrow 70% unemployment
• nation - 1.5 million, 10% workforce unemployed
• not until 1941 did it fall below 1 million - intractable million

Jarrow crusade 1936:

• 200 unemployed men waled 300 miles to petition to govt
• organised by labour
• had 77% unemployed in Palmers shipyard
• Baldwin refused to meet them - little benefit immediately

• balance budget
• 10%cut in unemployment benefit
• 'means test' for additional dole
• cut in public sector wages
• interest rates to 2% in 1932 - cheap money
• import duties 1932 - tariffs for non empire countries
• imperial tariff agreed  - Ottawa conference 1932
• trade treaties

How effective:

• cutting spending 1931 - stopped banking crisis but lowered demand
• 1931 cuts didnt save gold standard and pound value dropped - exports cheaper
• others introduced protective tarriff - exporting difficult
• cheap money - allowed investment in industry and HOUSING BOOM 2 million in depressed areas
• special areas act - 2 million depressed area houses
• preferred unemployment to moving industry

• Baldwin resigned 1937
• Chamberlain his successor
• many thought Chamberlain would be a good PM
• 1937-38 - appeasement a logical policy
• when Chamberlain signed MUnich agreement 1938 - gained mass popularity
• didnt last