The National Government - Formation, Economic Policies; Successes/Faliures, Political Impact (Britain 1900-1951 Period Study 1918-51)

An emergency national government formed on 24^th August 1931

• 4 Labour minister's from MacDonald's previous government.
• 4 COnservative minister.
• 2 Liberals
• Role was to pass the National Economy Act
• Measures to reduce spending it proposed
  • Slightly less severe
  • Decided to raise taxes by a greater amount than Snowden had agreed .
• Ecomony Act 1933 was passed by 61 votes.
  • 12 Labour MPs voted for
  • 250 Labour MPs and the TUC opposed
    • Especially the 10% cut in unemployment benefit and reduction in forces’ wages.

Reasons for the Formation of a National Government

• Labour failed to solve the financial crisis
  • Caused by the consequences of Wall Street Crash 1929 and the cost of rising unemployment.
• George V persuaded MacDonald to lead a coalition of the 3 main parties.
  • For the sake of national interests.
  • Put country before party.
• Believed the Banking Crisis was a national emergency.
  • Required party differences to be set aside
• MacDonald had lost confidence in his party.
  • Cabinet split over issue of unemployment benefits cuts.
    • Most MPs and party members opposed them.
• Macdonald was ambitious
• Conservatives could lay the blame on Macdonald if It went wrong
• Macdonald got on well with Baldwin
  • It would be personally more rewarding for Macdonald than working with his party.

Government actions to revive the economy...

• Abandoned the gold standard
  • To encourage exports and trade
  • Unexpectedly positive effects on the economy.
  • Promoted recovery and stimulated growth for much of the rest of the decade. 
  • Led to a fall in the exchange rate
    • Increased the competitiveness of domestic products, including exports and import substitutes.
    • Introduction of ‘cheap money’ after 1932
      • Important stimulus for economic growth - especially housing sector.
• 1932 Import Duties Act
  • Protected certain British industries
  • General tariff of 10% on most imports
• Low interest rates
• 1934 Special Areas Act 
  • Gave aid to the areas of Britain which had the highest unemployment rates.
  • £2 million available to most deprived area

Unemployment

• Fall in unemployment 
  • From 3 million in 1932 to 1.5 million in 1939
• Encouragment from government to find work
  • Meant some workers moved to find employment
• Dole payments still made
  • Although reduced after 1931 crisis
  • Means test introduced
• 1934 Unemployment Act
  • Introduction of the Unemployment Assistance Board under the act 1934
    • Was effective from 1937
  • Dislike for the mean test reduced because of it.
• Low unemployment in many areas of England
  • Especially in the South and the Midlands
  • Due to the expansion of the building industry, providing new houses.
    • Due to the benefits of abandoning the gold standard.
  • Introduction of new industries like  cars and chemicals
  • Rearmament 1935
    • Assisted the revival of the staple industries 

Unemployment

• Levels had never been high or persistent as in the 1930s
• Mass unemployment in the old staple industries
• Limited improvement for unemployed people
• Umemployment movements remained active.
  • National Unemployed Workers’ Movement.
• Hunger marches were frequent
  • Famous being the Jarrow Crusade in 1936.
• Special Areas act
  • Only available to the most severe areas not overall effective 
• Staple Industries
  • Failure to stop the structural decline

Labour

• Major defeat and was severely divided.
• Labour disowned Macdonald 
  • Was bitterly criticised by the TUC and the party
• The ILP left in 1932
• Pacifist Lansbury’s leadership in 1935
  • Was not effective or dynamic
  • Replaced by Atlee and party recovered
• Left wing urged for socialist planning on the Russia model
• Did not come back into power until 1940 in the war coalition  

However, the party recovered from the splits under Atlee.

Was not politically fatal.

Conservatives

• Dominated government 1931.
  • Despite only holding 11/20.
• Get tarriff reform
  • Emergency and national governments let them.
• Introduction of Neville Chamberlain who became Chancellor.
• Baldwin was able to distance himself from the right wing of his party.
• Extreme imperialist and critics of his India stance were cast into political wildness including Churchill
• Rise of Neville Chamberlain
  • Became the dominant force
  • Became PM in 1937

Liberals

• Split and lost all previous influence 
  • Samuel and his support left gov after serving as home secretary
• Lloyd George ceased to be a political force 
• Did not recover like Labour
• Fewer than 2.5 million votes

Defence + foreign affairs

• National gov excluded supporters of a strong imperial foreign policy 
  • E.g. Churchill
• Brought in those who prioritised economic recovery and control of expenses.
  • Rather than those who prioritised aggressive nationalism from Japan, Germany and Italy
• No action against rising threats from Japan or Germany till 1935 with increased defence 

But...

• Failed to prevent the decline of the staple industries.

• Represented all main parties.
• Formed to put country before party.
• Formed in national emergency to solve country's main issues, for the whole country's benefit.
• Import duties to protect Britain and its struggling industries before all else.

Fairly national.

Represented the interests of the country; main one being unemployment.