BH - 1929 Lab gov & National gov

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Summary

- Lab largest single party, still a minority government

- Relied on the support of Libs 

- Cabinet was very moderate

- Achieved well in foreign affairs, economic crisis hurt Labour gov

- Unemployment figures high

- Labour gov couldnt find a solution, MacDonald handed in government resignation

- MacDonald stayed as National Government leader, followed by Baldwin in 1935 and Chamberlain 1937 

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Labour policies

Domestic - Housing Act of 1930 which renewed government subsidy for council house building and slum clearance, Housing Act suspended due to economic crisis from 31-33, 39 most slum areas cleared, The Coal Mines Act reduces miners working day from 8 to 7 1/2 hrs, Education Bill to raise school leaving age rejected by HoL

Overseas

- Young Plan (1929) aimed to settle the problems of reperations, the French refused to compromise and a committee eventually reduced reparations

- Young Plan was accepted by Germany, as well as withdrawal of troops from Rhineland

- Wall Street Crash brought mass unemployment to Germany, Britain/France released them from most reperation payments (Lausanne Conference in 1932)

- Resumation of foreign affairs w/ Russia, signing a trade treaty in 1930 - cancelled by National Gov

- MacDonald first PM to address the US Congress, healing rifts from Britains war debts to USA

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Economic crisis

- post-war economies relied on American loans from Dawes Plan, due to Wall St Crash - USA halted loans to Germany meaning they couldn't pay reperations

- Britain never experienced same boom as USA in 1920s, so was spared of bank collapses

- Unemployment 1+ mil when Lab took over and in 1 year it was 2.5 mil, and exports had fallen

- Labour took no action to reduce unemployment, and refused advice due to cautiousness - they cut expenditure hoping the free market would regenerate itself

- unemployment benefits strained government finances, a committee set up to investigate expenditure -> forecasted by 32 budget deficit would reach £120 mil  -> Government proposed reduction of salaries in public sector jobs i.e. teachers + police

- foreign bankers were influenced by this May Report, were scared that Britain was near bakruptcy so they withdrew gold, worsening the financial crisis

- Bank of England wanted immediate economies were needed to restore confidence of the £, American/French bankers agreed on further loans if unemployment benefits were cut by 10% which was approved 

- He shortly resigned after conceding the minoritiy gov was too large to continue, he was branded a traitor after leading the National government -> he abandoned traditional Labour policies whilst some see it as a manoveur by the Cons to avoid being seen as a rich mans party making cuts, MacDonald would be a scapegoat

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National Government

- Cabinet consisted of 4 Labs, 4 Cons, 2 Libs

- Snowden (Chancellor of the Exchequer) - emergency budget implemented the May Report to save the £, income tax raised, salaries of public sector reduced, unemployment benefits cut by %10

- forgeign bankers continued to withdraw funds from Britain, and the government went off the gold standard meaning the value of the £ fell by 25% making exports cheaper

- leaders of NG held a general election, initially a temporary measure % w/ financial situation improving most people expected a return to party lines

- MacDonald + Baldwin worked well, Baldwin enjoyed his deputy PM position, Lab shared Cons ideas for unemployment - tariffs in the form of import duties

- MacDonald appealed to the country for a doctors mandate to do whatever necessary, won a landslide victory w/ only 13 Labs, 35 tariff supporting Libs, 33 free trade supporting Libs, 473 Cons -> opposition 52 Labs + 4 LG Libs,,, Chamberlain Chancellor of the Exchquer as Snowden retired

- Labour blamed for depression, seen as weak for resigning, unemployment doubled etc.

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National Government #2

- free trade abandoned - Import Duties Act of 1932 put a 10% tariff on imported goods except those from the empire

- Chamberlain started increasing sales of British goods at home, which brought in extra revenue, meaning he could avoid raising income tax again

- defence expenditure + interest on war loans reduced, and attempted to persuade industries to move into high unemployment areas

- being off the gold strandard made British goods cheaper abroad, thus increase in exports - bank rate also reduced from 6% to 2% which reduced debt charges

- local authorities exploited low interest rates to borrow money for house building, providing extra jobs

- these measures meant sales boosted home and abroad, though exports never regained previous levels -arguably as foreign manufacturers became competitors in the export market due to the tariff restricted the market in Britain

- favourable circumstances include:

1 price of products fell inc. raw materials, which then reduces production costs for industries, and brought down cost of house building, so cost of living drops

2 increase in real wages, enabling the employed to spend spare cash on consumer goods stimulat job creation

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Prosperity

- unemployment fell gradually, encouraging Baldwin to hold an election in 35 - Lab recovered to 154 seats but NG retained 432 seats

- economy in Midlands + South boomed, expansion of new industries i.e. car manufacturing, and an overall higher standard of living

- new council houses avalable, consumer good sales increased... cinemas + dancehalls packed, annual holiday to the seaside became widespread w/ 1st Butlins opened in 1937

- increase in real wages = improved diet, prosperous health

- it recovered greatly, though unemployment still existed particularly in the north

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Communists + Fascists

- remained fringe groups as they were considered undemocratic + foreign

- Communist Party of Great Britain formed in 1920, inspired by 1917 Bolshevik revolution it ideas consisted of a classless society anhd traditional Marx theory on property... this could only be achieved during a crisis in capitalism ... it was financed from Moscow, and avoided by Labour

- some support from trade unions + Londons East End, w/ 2 Communist MP elected in 1922 and 1929-1935 no MPs... organised soup kitchens, and believed mass unemployment displayed failiure of capitalism -> they harassed Fascist movement, and lacked power

- British Fascisti founded 1923 as a reaction to socialism, convinced General Stikes + 1926 miner strike were foundations of a revolution... Communist party was clearly too weak for an uprising, membership dropped from the fascist party to 300 in 1933

- British Union of Fascists founded in 1932 by Sir Oswald Mosley, who admired Mussolinis achievements in Italia... a similar system was the answer to Britains problems

- Poverty eliminated by placing national interests ahead of individuals, this needed strong leadership including the cult of heroic leader, black shirts, military uniforms, jackboots, parades, fascist salutes... it was anti-communist + anti-semetic

- supporters of BUF included some Cons, owners of Daily Mail, its possible prolonging of depression may have turned people to fascism, yet they lacked support even in hard hit unemployment areas... More people were turning to the left than right, and membership had declines greatly by 1936 to 5000 from 50000 in 1934

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Failiures of BUF + Communist Party

- violence from the BUF was appalling to people, the 'Defence Force' formed by Mosley instigated a lot of violence although initially formed to protect his supporters

- BUF held marches at working class districts, the Defence Force actively seeked fights against Communists -> Battle of Cable Street

- BUF anti semitism arroused opposition, even Mosley declared it was a liability

- post 35 the economy was recovering, so the Communist party was steadily declining and perceived less of a threat -> double whammy for BUF too

- Baldwin felt confident to hold an election in 1935, Mosleys BUF wasnt suited as a parliamentary party, and lacked organization needed for an elections

- The Public Order Act of 1936 banned military style uniforms by political parties, and police could now ban marches

- Conditions werent as extreme as Germanys or Italys, the economy improved so Communist threat evaporated... the BUF was seen as corrupted by Nazis in the 1940s and subsequently banned and leaders of the BUF arrested

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Unemployment

- once world economic crisis passed, south and midland economy was prosperous whilst the North/Wales/Scotland/N.I. remained depressed

- the south and midlands were better off due to the new industries i.e. motor cars

- unemployement in depressed areas was persistent as they were typically specialized in older, export based industries i.e. coal, iron and steel

- little done to modernize older export based industries, machinery/techniques was outdated, inefficient + overstaffed compared to foreign competitors... profits fell and re-investment dropped -> 'structural unemployment' unemployment caused by the structure of the economy

- depressed areas exclusive theese staple industries, so few alternatives... married men w/ families couldnt afford to move to low paid jobs in areas where housing was expensive

- high unemployment meant many business were closed, w/ places becoming ghost towns making it difficult to attract investments & men resorted to casual labour... families fell into debt, evicted, poor nutrition, and infant mortality rate were higher in South Wales + Durham

- longer unemployed were deemed suspicious by employers, assumed to be faulty or skills being forgotten, Communists carried out hunger strikes w/ National Unemployed Workers Movement (note Jarrow Crusade)

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NG and unemployment

- variety of ideas suggested such as Keynesian state investment to stimulate new industries to Socialist planned economy... these were all sternly ignored by the National Government

- the NG wanted to avoid spending too much, and refused to believe it could be solved

- The Unemployment Act of 1934 based on the unpopular 'means test, The Special Areas Act of 1934 provided two unpaid comissioners w/ £2 mil to revive depressed areas

- Bank Rate reduction informally led to unintentional Keynesian industry stimulating areas such as road building and house building

- NG prime motive was to reduce debt charges, though the NG imposed tariff on foreign steel and by 1937 it was improving

- total unemployment fallen to 1.4 mil by 1937, the NG didnt produce any planned economy or an attempt to reduce long term unemployment shown by unemployment rates in depressed areas

- another recession in 1938 increasing unemployment

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Abdication crisis

- George V died in 36, succeeded by bachelor son Edward VIII

- Edward was unconventional as he genuinely cared about the hardships of people, he paid a visit to mining valleys in South Wales -> he was appalled by the poverty and unemployment!

- fell in love w/ Wallis Simpsons, an American divorcee now married to a stockbroker... he intended to marry her

- Baldwin explained to Edward a twice divorced American wouldnt be well received by the people in an attempt to dissuade him, a constiutional crisis would occur if Edward acted against his cabinet... since Baldwin would likely resign and no other party leader would take over as PM

- this affair reported by newspapers, some supported Edward i.e. Churchill and Mosley, though the majority were with Baldwin

- Edward hoped an arrangement could be made enabling marriage to Mrs Simpson whilst remaining a private citizen and not becoming a queen.... the cabinet refused to agree to this

- Edward eventually abdicated his throne, succeeded by George VI, Edwrd took Duke of Windsor title and married Mrs Simpson the year after... They spent most of their married lives in exile from Britain

- Baldwin was seen as handling the situation well, his popularity increased and his rep before his limp conduct of pre 36 foreign affairs was restored... he avoided a constitutional crisis, and allowed smooth succession of the throne of the popular George VI & his wife Elizabeth II, whilst saving the monarchy from damaging controversy

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