Britain, 1929-40

Policies of Ramsay Macdonald & second Labour gov. 29-31

coming to power

• support grew 1924-29
• Baldwin gov. unable to find solution to rising unemployment and depression
• Failure of Gen. Strike to achieve social and political reform - caused many in Labour gov. to return to parliamentary action.
• Labour won 1929 election as largest single party - Stronger than in 1924 when they had to rely on Libs.
• promised ambitious reforms and gov. contained leading figures - Macdonald, Snowden, Henderson - many respected

Domestic measures

• 1930 Coal Mines Act - bought miners+owners closer by reducing 8 hour day by 30 mins - allowed owners to fix minimum prices and area quotas - avoid wage cuts
• 1930 Housing Act - restored Slum Clearance subsidies
• 1930 unemployment insurance act - unemployment benefit increased
• 1931 Agricultural Marketing Act - marketing boards to help farmers
• bills to raise school leaving age to 15 and set maximum 48 hour work week + attempt to repeal 1927 Trade Disputes Act all failed.
• things fell apart as world depression worsened
• conflicts with T.U's and left of party about failure to tackle unemployment crisis
• 1930 onward party did badly in local and by-elections
• mid 1931 Labour had little prospect of future success

Economic Crisis 1929-31

• October 1929 Wall Street stock market crash
• May 1931 nervouseness caused by European Banking Crisis spread to Britain - run on the bank - investors removed nearly all gold reserves bank of England
• end 1931 British exports halved & unemployment reached 2.5 milliom

Policies of Ramsay Macdonald & second Labour gov. 1929-31

The political impact: Labour's response

• Split cabinet and Labour gov. over cause of action to take. Three views emerged:
• Orthodox View: Favoured by Macdonald, Snowden, Thomas - also favoured by Libs+Cons and bankers. Maintain balanced budget, no additional borrowing, protecting Gold Standards, cutting public spending - including wages and benefits.
• Keynesian View: Favoured by Moseley, Henderson, Clynes, Graham. increase borrowing to spend way out of crisis - finance public work to create jobs. Protect pensions, wages, benefits.
• Socialist View: allow Capitalist system to fail, implement nationalisation, increase tax on rich
• Feb 1971 Gov. set up committee headed by George May to make reccomendations for solving budget deficit
• 31st July report published - set in motion chain of events which gripped country in national political crisis between August-October 1931

Impact of May Report

• predicted budget deficit 1932-3 of £120m
• proposed collecting £97m from cuts in umployment benefit and services + additional tax
• recommendations caused furious reaction from Labour - wanted higher tax of rich, not cuts.
• many thought May Report reflected views of rich
• bitterly divided Labour party - Macdonald accused of betrayal
• 6th August - leading bankers send memorandum to Snowden - immediate action needed
• 12th August - Cabinet Economy Committee agreed £78m cut in gov. spending
• 19th August - full cabinet only agree cuts £56m, bankers said not enough to restore faith in economy - many ministers didn't want to be 'forced' into making cuts
• 20th August - TUC reject any cuts in unemployment benefit
• 23rd August - Cabinet vote 11-9 in favour cuts.
• Macdonald offered resignation - convinced cuts couldn't be made with 45% cabinet opposition
• King invited Macdonald to form national gov. with Cons+libs
• 24th August - 4 members cabinet supported Macdonald in creating national gov. 3 joined him in national gov. - Snowden, Thomas, Sankey

• Macdonald+Cons. believed national gov. would be temporary until budget was balanced and Gold Standard balanced then general election would occur.
• Within 6 weeks National gov. stood for election against Labour. Following reasons:

• members new gov. found they could work well together. conflict avoided - all parties agreed shelf any choice between free trade and protection.
• Labour a mess - new leader Henderson clueless at creating clear policy goals
• Labour credibility dropped when became clear some Labour ministers agreed to cuts in August crisis, whereas now they opposed cuts.
• Macdonald realised a 'National' label would appeal to electorate - offer stability
• creation National gov. led to increase in business confidence and unemployment began to fall

Aftermath

• October election National Gov. 554 seats, Labour 46
• Macdonald reigned 1935 - lost his seat in election. Succeeded by Baldwin until 1937 - replaced by Chamberlain
• Lib decline continued - party split into 3 Samuel group joined national gov. left 1932 over imperial preference
• Labour entered 'wilderness years' - no return until Churchill coalition ww2

• 1930's seen as time of great hardship - the 'devil's decade'
• economic growth significant over the period. Some groups/areas became affluent

Economic problems - Mass unemployment

• due to decline of staple industries. Prolongued decline caused growth economic blackspots
• worst hit = dependent on 1 industry. Example = Jarrow Crusade, mining town
• 1932 height depression 16.4% all unemployed out of work more than 1 year
• William Beveridge - 84.9% all unemployment in North England, South Wales, Scotland
• Once depression began never less than 1m unemployed at any point
• Rowntree - up to 70% unemployed were below poverty line

Economic recovery

• due to new industries in South+Midlands: cars, chemicals, electrics, plastic.
• cost of living fell 1/3 between 1920-38
• Rising wages+lower mortgages promoted house building. 2.7m houses built England+Wales 1930-39
• main beneficiaries salaried middle classes who, with availability of hire purchase, created consumer market boosting economy
• Shipbuilding saw revival

• tariffs introduced to protect British industry, Import Duties Act(1932), imperial preference agreed at Ottowa Conference 1932 - retaliatory tarriffs introduced by other countries - reduced effectiveness. Tarriff reform = too little too late
• Special Areas Act, 1934 - aid targetted at most needy areas. Small impact many depressed areas didn't qualify
• unemployment benefit made uniform across country - only enough to stop people from starving
• cutting gov. spending 1931 stopped banking crisis but lowered demand for goods and services
• leaving G.standard made exports cheaper but limited as other countries did same
• lower interest rate made borrowing cheaper but little to help unemployed
• from 1937 Gov. distracted from economy by Hitler actions in Europe

foundation laid for greater state intervention in economy - became norm in post-1945 era

• creation National gov. August 1931 led to period of Cons. dominance

Impact of Macdonald's actions on the Labour party

• Macdonald actions August 1931 - betrayal of party banished Labour to political wilderness
• caused division by putting consensus between parties above loyalty to Labour
• alienated T.U leaders by valueing views of U.S bankers over T.U leaders
• by accepting spending cuts condemned labour tp minority role in Cons. national gov
• Criticised former colleagues Oct 1931 election - accused them irresponsibility - further disruption
• decline of Libs as 3rd party meant Labour couldn't consolidate with lib-lab pact

Macdonald's actions forced Labour in to long process of rebuilding/recovery.

Labour in the 1930's

• Labour forced back to industrial heartlands
• 1931 election Labour won 47 seats(287 previously) - more than half MP's from mining areas
• only former Cabinet member to save seat = George Lansbury - became leader
• Lansbury resigned 1935 - accused pacifist response to Mussolini invasion Abyssinia
• Lansbury successor, Attlee, seen as uncharasmatic & National gov. won 1935 election by large majority
• Attlee bought back strong unity within party but very quiet publicly
• Attlee strength as political organiser recognised by Churchill - made him deputy PM in wartime coalition
• this experience confirmed Attlee as potential national leader in peacetime

• 1930's = age of dictators
• by 1939 many European democracies dissappeared
• Britain = exception, though left+ring wing did arise

The Communist Party Of great Britain(CPGB)

• founded 1920 - small but appealed to w/c. Capitalism crisis 1930's + mass unemployment increased appeal
• several T.U leaders members of CPGB or sympathetic toward it
• CPGB leading role in National Unemployed Workers' movement - 50k members @ peak
• Daily Worker - CPGB newspaper daily circulation of 80,000
• Left Book Club - membership 50,000 by 1939
• some Labour MP's clear Comm sympathies - Comms prominent in some Universities

• CPGB never posed serious threat - despite Cons. propaganda saying otherwise.
• membership peaked 18,000
• few Communist MP's
• activities constantly policed & hindered

The British Union of Facists(BUF)

• established Oswalf Moseley 1932 - modeled on Italian Facism - seemed a threat at first
• BUF never took off despite 50,000 members by 1934
• Moseley seemed to offer solutions to unemployment - felt he could capitalise on dissilusionment with mainstream parties
• won backing of Lord Rothermore - owner Daily Mail - gave ideas popular outlet
• seemed credible alternative to 'traitor' Macdonald or ultra cautious Baldwin
• hoped for economic/political crisis to occure - never arrived
• support for policies of Hitler+BUF thuggery alienated many people

factors limiting political extremism

• Government legislation: Incitement to Dissafection Act 1934 - prosecution for violent disorder. Public Order Act 1936 - banned wearing political uniforms+ gave power to police to ban political demonstrations.
• Government stability: sustained electoral support for National gov. made sure no power vacuum emerged. Parliament+monarchy remained strong
• Labour moderation: Labour+T.U's led by moderates who resisted joining Comms.
• Soviet Comm. discredited: Stalin barbarity+Soviet Nazi pact 1939 undermined CPGB
• European Facism discredited: Mussolini invasion Abyssinia and Hitler aggressive foreign policy undermined BUF
• Economic Recovery: prevented economic distress which may led to support extremism
• Weak leadership: Moseley lacked ability to build effective organisation, no powerful Comm. leader emerged.

Britain even at height of depression remained well ordered and cohesive - strong enough to withstand political extremism