The Second Labour Government

The Formation and Set-up

• MacDonald was urged by several leading figures on the left not to form another minority government as it would be powerless to introduce socialism
• Labour leaders ignored them and saw it as another opportunity to gain experience
• Another cautious Cabinet: Snowden as Chancellor, Wheatley was left out and the first female Cabinet member, Margaret Bondfield, was Minister of Labour
• MacDonald planned to be in office for two years and try and achieve consensus across the three parties
• Was less lonely, having established friendships with several society ladies
• Announced her would try and tackle the two major problems of the day: unemployment and international friction

Foreign Affairs

• Definite success. MacDonald did not double up this time, with J.H. Thomas originally chosen as FS until Henderson said he would accept no other position
• Hard to say no to Henderson due to his reputation, despite the dislike between the two
• MacDonald still insisted on getting involved, leading to even more friction between the two
• MacDonald personally negotiated an Anglo-American naval agreement in Washington at the end of 1929, reducing tensions between the two nations
• Henderson had a larger role in Europe, re-establishing diplomatic relations with the USSR and negotiating the Young Plan on reparations at the end of 1929

Economic Policies

• Real problems in this department
• Removed the means test for benefits so you no longer had to prove you were seeking work, but instead it had to be proved by officials that you had turned down work
• Coal Mines Act reduced the eight-hour day by 30 minutes
• All these were overshadowed by the Wall Street Crash. Many believed this was Marxism coming true
• Between 1930 and '31, exports dropped by nearly a half
• Unemployment rose to a peak of 2.5mil. in Dec. '30, causing the cost of benefits to rise from £12mil. to £125mil. in '31
• It was unfortunate that Lab. were in power at the time but they survived for a time, whereas democracy fell in Germany
• A team headed by J.H. Thomas was set up to deal with unemployment, with George Lansbury and Oswald Mosley helping him
• Thomas pointed out that there was £42mil. was being spent on public works. This annoyed Mosley as it was complacent, and he wished to see protective tariffs and more government direction in industry
• He produced a positive package of proposals…