Britain, 1929-40

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  • Created on: 08-04-14 18:47

Policies of Ramsay Macdonald & second Labour gov.

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
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Policies of Ramsay Macdonald & second Labour gov.

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
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Policies of Ramsay Macdonald & second Labour gov.

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
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Formation of national gov. 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
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From National gov. to general election

  • 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


  • 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
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The national gov. and economic recovery

  • 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
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The national gov. and economic recovery

  • 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

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Labour Party 1931-40

  • 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.

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Labour Party 1931-40

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
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The emergence of political extremism in the 1930's

  • 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
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The emergence of political extremism in the 1930's

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
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The emergence of political extremism in the 1930's

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

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