The sterling crisis of 1931 saw the fall of MacDonald’s second government and the creation of a national government, the short-lived first version of which is shown above. To understand how that happened, and its true importance, we need to look either side of the year itself. For now, the years before.
The argument is actually pretty simple. The politics of 1931, whether those of the MacDonald government, or the creation of the national government, or the decision to have a general election, are best understood in the context of the previous 30 years. Those years saw immensely fluid party loyalties, saw Britain become and democracy, saw the coming of Labour and the decline of the Liberals.
The party political fluidity was not anything new, though it wrought a far more fundamental change in the ‘twenties. More will be written about Joe Chamberlain anon, but he had already split the Liberal Party in 1886, over the issue of Irish home rule. In 1886, the Tories had renamed themselves the Unionist Party. Then, in 1903, Chamberlain all but split the Tories over tariff reform (that was when Churchill crossed the floor from Tory to Liberal). There were fluidities on the left too. In the years either side of the turn of the century, some one-time Liberals had become Labour (one of Labour’s founders, Kier Hardie, for example; you can read about some of the early Labour leaders here). Others remained Lib-Lab, supporters of the Liberals with the backing of the trade unions (the railway men’s leader, Richard Burns, for example). Some of the key figures in the early Labour Party, especially among the Fabians, had strong links with liberalism too. In 1903, the MacDonald-Gladstone Pact saw Labour form an electoral pact with the Liberals, a pact that sometimes went by the name of the Progressive Alliance.
The years before the Great War brought also forth two constitutional crises, over the people’s budget and the House of Lords, and (once again) Irish home rule. There are several features of both which are of particular interest when turning to 1931. The first is that both crises saw genuine, if unsuccessful, attempts to get cross-party agreement, in part involving the good offices of the crown. Edward VII was perhaps less tractable, but in the end both he and George V played their constitutional role admirably.
They needed to. Both crises saw the Conservative Party take a potential wrecking ball to Westminster’s unwritten constitution. In the end, the crisis over the People’s Budget and the powers of the House of Lords was resolved when enough Tories backed down. Yes, Tories can back down in a crisis (you can read about the Conservative leader, AJ Balfour, here). The subsequent Parliament Act, 1911, which made the Lords’ veto suspensory rather than absolute, meant that a Home Rule Bill would be law by 1914. The home rule crisis was an even more serious threat to constitutional politics. In it, the Tories (officially known as the Unionist Party, remember) came perilously close to abandoning constitutional politics, threatening to support an armed insurrection against the legitimate government and an act of parliament. Perhaps they might not have backed down this time. The precipice was, in the end, avoided only by the coming of war.
Another feature of the House of Lords crisis was that it cost Balfour the leadership of his party, and his replacement by the more stridently unionist Bonar Law (you can read about him here). At the same time, in both crises, there were strident hard liners on both sides, though it must be said that the Tories penchant for outrage outdid their rivals. But there was also talk of what we would later describe as political realignment: both Lloyd George and Churchill talked to Conservatives, and talked of a national government.
That political realignment came in the war. In May 1915, Asquith was forced to create a coalition government. Then, in December 1916, Lloyd George became head of a national government in which most of Asquith’s supporters refused to serve. In 1918, the supporters of that government ran with a letter of endorsement from both Lloyd George and Bonar Law, what Asquith dubbed ‘the coupon’ (left, a poster for Albert Martin, a Lloyd George Liberal). The Coupon Election saw Lloyd George win a landslide. By 1919, there was serious talk of fusion: the formation of a new Centre Party, formed by the Conservatives and Lloyd George’s supporters.
If political loyalties were fluid on the centre-right, they were equally so on the left. The war had seen the fledgling Labour Party split. The formation of the Union of Democratic Control, an umbrella group of Liberals and Labour supporters who either opposed the war outright or were opposed to the way it was being fought, saw a number of more left-wing Liberals drift towards Labour (such as Charles Trevelyan, for example, right). There had been close connections between Liberals and Labour before the war. The Progressive Alliance had seen them cooperate, both had links to the trade unions, and the likes of the Fabians (such as the Webbs) had connections at the top of the Liberal Party too. The Labour split was never accompanied by the hatreds that the Liberal one aroused, and when Arthur Henderson resigned from the government in 1917, the party was able to heal the rift and reform itself (more of which anon).i
After the war, the Lloyd George Liberals were in bed with the Tories and the Liberal Party as a whole was split, and directionless (unless you count tearing each other’s heads off as having direction). The newly reorganised Labour Party reaped the electoral harvest. In 1922, Labour secured 29.5% of the popular vote and 141 seats, many of them formerly safe Liberal industrial and urban working class seats. Labour would not poll below 30% again until 1983; with the exception of 1931, it would never fall below 150 seats between the wars. A hastily reunited Liberal Party ran Labour close in 1923, but Labour secured 191 seats and formed a minority government. When the Liberal vote collapsed in 1924, and they were reduced to just forty seats, Labour were the second party of British politics, and the alternative government to the Conservatives. In 1929, they would be the largest party in the House of Commons and, once more, in government.
In 1922, what Alan Clarke nicknamed the Peasants’ Revolt saw the Conservative backbenches oust Lloyd George, and with him their own leader, Austen Chamberlain. If Bonar Law was the messiah, Baldwin had been the John the Baptist of the whole process. In essence, Baldwin and the majority of his colleagues had decided to restore the independence of the Conservative Party. However, the vote at the Carlton Club split the party. In this case though, it really just split the head form the body. Bonar Law’s government was nicknamed the 2nd XI, primarily because most of the old coalitionists (those who had wanted to continue the coalition with Lloyd George) refused to serve. Bonar Law, and Baldwin after him, had the support of the backbenches.
Just after becoming prime minister, Baldwin called a snap election on the issue of tariff reform, in part hoping to enthuse and unite some of his critics. He lost. However, the shock of a Labour government, albeit one that was only going to be short-lived, probably did much to keep the party united behind him as anything else.
In some senses, both Baldwin and MacDonald had some political objectives, and outlooks, in common. In part, that reflected changed political realities. The Representation of the People Act, 1918, gave all adult men and most women the vote. The Equal Franchise Act, 1928, finally gave women the vote on the same terms as men. In 1929, there were three times as many voters as there had been in 1910. The political upheavals of the ‘twenties took place just as Britain was becoming a democracy.
For some, democracy looked as much like a threat as promise. Traditionally, both Conservatism and Liberalism had been wary of democracy, fearing the the gullible masses would be led astray by demagoguery. That danger is always present, as current American politics has amply illustrated. In a world of Mussolini and Hitler, or Lenin, the dangers of the demagogue seemed all too real. For many Tories, and plenty of Liberals, the nearest thing Britain had to a demagogue was Lloyd George (in AJP Taylor’s famous the nearest thing Britain had to a Napoleon).
For someone that was, we now know, destined to never hold high office again, the Lloyd George of the late ‘twenties was remarkably chipper. For something that was undergoing its ‘strange death’, liberal England was pretty robust. After years of bitter infighting, the hastily reunited Liberals had polled 30% of the popular vote i n 1923, only just shy of Labour. In 1929, Lloyd George’s revived Liberals polled 24%: almost one in four voters were Liberal. Nor were liberal ideas dead and gone. In fact, most of the new economic and social policy of the inter-war (and post-war) years had a liberal stamp: from welfare to economics, from Beveridge to Keynes. The late ‘twenties saw the Liberals adopting new ideas, such as electoral reform, or the industrial policy of the Yellow Book and We Can Conquer Unemployment. For Baldwin and MacDonald, Liberalism and with it Lloyd George seemed anything but dead.
The problem, for Lloyd George and the Liberals, was turning votes into seats. The disaster of the 1924 general election had seen the Liberals reduced to just 40. In 1929, they won just 59. The British electoral system did what it does to third parties (see the 1983 and ’87 elections, for example). As the possible price for supporting MacDonald, the Liberals had opened talks with Labour about electoral reform, in the form of the alternative vote. Those talks began to flounder, but in any case the fracture in the parliamentary Liberal Party widened once more to an actual split between the Simonites and the Samuelite rump. The Simionites were about to become de facto Tories.
Both the other parties had courted liberal voters, and Liberal Party men and women, throughout the ‘twenties. For Herbert Gladstone, after the Coupon Election had ‘broken’ the Liberals, ‘many of our best men’ had gone over to Labour. After having been sacked as minister of housing and subsequently leaving the cabinet, the old coalitionist Christopher Addison had become a bitter critic of Lloyd George; by 1924, he was a Labour man. In 1927, the radical Liberal William Wedgewood Benn (father of Tony Benn), resigned from the party and joined Labour. The future Labour leader, Michael Foot, was the son of a ‘Squiffite Liberal MP. Lloyd George’s daughter Megan would eventually cross the floor to Labour. What Henry Pelling called ‘undogmatic Labourism’ (as contrasted with dogmatic radical socialism) gave many Liberal trade unionsts a natural path to Labour. Meanwhile, back in the ‘20s, MacDonald actively courted the liberal vote. Labour’s Manny Shinwell, who defeated MacDonald in Seaham in 1935, recalled that his opponent had an almost magical way to liberal hearts. In was good electoral politics too. Colonising liberal ground helped Labour just edge the Liberals in the 1923 election: in that contest, Labour were no less opposed to tariffs than the Liberals. The same political cross-dressing also helped them win in 1929.
There were other political fluidities too. Stanley Baldwin’s eldest son, Oliver (right), was a Labour MP from 1929-31, and again from 1945-47, when he inherited his farther’s earldom. Oswald Mosley entered parliament in 1918 as a Conservative. By 1924, he had crossed the floor to Labour. In 1929, Ramsay MacDonald made him chancellor of the duchy of Lancaster: he was part of JH Thomas’s committee looking into the unemployment situation. Mosley was one of a number of Labour MPs that believed MacDonald’s government needed to be more radical. Another was Charles Trevelyan. Trevelyan (the older brother of the historian GM Trevelyan and great-nephew of the great Victorian historian Lord Macaulay), was from a great liberal aristocratic dynasty. Having entered parliament in 1899, Trevelyan went on to serve under Asquith as parliamentary secretary to the Board of Education. In 1914, he founded the Union of Democratic Control; in 1918, he lost his seat running as an Independent Labour candidate. In 1922, he won Newcastle Central for Labour, and served as president of the Board of Education in both of MacDonald’s governments. In 1931, after his education bill had been defeated in the Lords, Trevelyan resigned in frustration. A year earlier, Mosley had resigned when his Mosley Memorandum, calling for public works to tackle unemployment, had been rejected by Jimmy Thomas, the cabinet and the party conference. The Mosley Memorandum attracted support from the likes of teh miners’ leader, AJ Cook, Aneurin Bevan and Oliver Baldwin. Mosley and five other Labour MPs then founded the New Party. It attracted widespread support: it got money from Lord Nuffield, Harold Nicholson edited its paper, Action, and the open sup[port of the Daily Mail. Oliver Baldwin joined, but only for one day. By 1932 (more of which anon), Mosley was a Fascist (you can read about that here). Harold Nicholson would go on to be National Labour MP, supporting MacDonald and Baldwin (who had sat as an independent Labour MP after his dalliance with the New Party) lost his seat in 1931, and returned to Labour.
Then there were the Liberals who moved to the right. Gladstone also noted how many erstwhile Liberal councillors had become independents after 1918: that was often tantamount to becoming Conservative. Before the formation of the national government in 1931, the Simonites had resigned the Liberal whip and were Conservatives in all but name: Simon would hold all three of the great offices of state in the national governments of the ‘thirties (you can read about him here, here and here). As we have seen, Lloyd George had been the Liberal prime minister of a largely Conservative government. When Baldwin became prime minister in 1923, he (unsuccessfully) tried to persuade the old Liberal chancellor Reginald McKenna to return to the post; the previous year, Bonar Law had also offered McKenna a cabinet job. Neville Chamberlain stood as a Liberal Unionist throughout his career and claimed on becoming prime minister that he was always a liberal at heart. Years later, Lloyd George’s younger son, Gwilym, would be a Conservative home secretary (you can read about him here). Back in 1924, Churchill had crossed the floor again: he was Baldwin’s chancellor in his 1924-29 government (you can read about that here). Churchill, an old coalitionist under Lloyd George, made the avowedly non-party National politician Sir John Anderson both home secretary and chancellor in his national government (you can read about him here and here). When Churchill returned to number ten in 1951, he tried to persuade Asquith’s daughter, Violet Bonham Carter, to join his government; he also tried to recruit the Liberal leader, Clement Davies. Like MacDonald, the Conservatives donned liberal garb, whether in the form of Neville Chamberlain’s social reforms or the post-war word of Beveridge and Keynes. For Baldwin’s Conservatives, as for Macmillan’s, liberal cross-dressing worked too.
It had to. When the Liberal vote turned out (or had candidates to vote for) in the ‘twenties, the Tories lost: in 1923, again in 1929. A Liberal collapse helped Churchill win in 1951 (you can read about that here); a Liberal recovery helped Wilson win in 1964 and again in 1974 (you can read about them here and here). The consensus is now that the creation of the SPD did more to suppress Thatcher’s vote than it hurt Labour. The Tories were vulnerable to Liberal recovery.
Then there was Lloyd George. For Baldwin, Lloyd George had wrecked the Liberal Party and, in 1922, was in danger of doing the same to the Conservatives. Nor did the idea of coalition go away after the Carlton Club. The old Tory coalitionists, the likes of Austen Chamberlain or Birkenhead, remained lurking on the backbenches. Rumours that Lloyd George was about to embrace tariffs (an idea that would have appealed to many of them, especially Chamberlain), is sometimes thought to have helped persuade Baldwin to call the snap election of 1923 on that very issue. The hung parliament that ensued raised the possibility of coalition again. When he returned to number ten in 1924, he made sure that some of the big coalitionist beasts were inside the tent: the Chamberlains at the Foreign Office and Health, Churchill in number 11.
After defeat in 1929, Baldwin’s position was under serious threat, and that threat had old coalitionist fingerprints all over it. India had seen both Churchill and Birkenhead turn violently against him. Neville Chamberlain had been no supporter of Lloyd George, but he was a Chamberlain, a Liberal Unionist.
Then, there were the popular press. Beaverbrook, proprietor of the Daily Express, had played a role in bringing Lloyd George and Bonar Law together in 1916. The Express was Britain’s best-selling daily newspaper; the next best-selling, the Daily Mail, was owned by Rothermere. Both men served in Lloyd George’s wartime government. After the war both turned against him, attacking him in their papers. Rothermere was behind the Anti-Waste League, which ran by-election candidates against the government; Beaverbrook backed anti-government independent Conservatives. In 1930, both had formed splinter parties campaigning for tariffs. In 1930, they were combined into the Empire Free Trade Crusade. In 1930, Ernest Taylor won the Paddington South by-election for the Empire Crusade, in what had been a safe Conservative seat.
When Duff Cooper won the Westminster St George’s by-election in 1931, the press barons had been seen off. Similarly, Neville Chamberlain did not pounce (you can read about that here). Nonetheless, Baldwin’s position was hardly secure.
Labour were fast coming to his rescue though, as their palpable failure to handle the mounting ‘economic blizzard’ undermined them. In many ways, MacDonald’s finest hour had come just two years earlier. The 1929 general election saw Labour poll 37% of the popular vote, just 1% shy of the Conservatives. However, the vagaries of our electoral system, and the aforementioned Liberal revival, had made Labour the largest party in the Commons. By any lights, Labour’s 287 seats (a gain of 136) was a stunning achievement.
It was the final triumph of Labour’s first generation. It looked anything but likely in 1914. Labour’s 42 seats were wholly dependent on the MacDonald-Gladstone pact: they had failed to win a single three-way by-election in that parliament. Not only that, the performance of that parliamentary party had been, in Beatrice Webb’s words, ‘pathetic’. Then, the war saw them split and MacDonald had to resign the leadership of the parliamentary party.
Then they got lucky. The war saw some Liberals gravitate to Labour via the UDC (see above). It also saw Labour enter government: Arthur Henderson was in Lloyd George’s war cabinet. Then came the February Revolution in Russia, which gave hope to socialists throughout the world. With the hated autocracy of the Romanovs replaced by a democratic republic, the war now became the war for democracy against the militarist autocracies of Berlin and Vienna. Later in 1917, Henderson resigned, after Lloyd George had forbidden him from travelling to a proposed multi-national conference of socialists in Sweden, which would have included German socialists. He and MacDonald were no longer, necessarily, on opposite sides of the political divide.
If Labour were lucky, the used their luck very well. They set out Labour’s War Aims in a document that prefigured Wilson’s 14 points and statement of domestic policy, Labour and the New Social Order, that was more reformist than socialist: both would set them on course for the Liberal ground they would later seize (see above). They reformed their constitution in a way that gave them a coherent national structure, a Clause IV that kept the left on board and a national executive in which the trade unions would have a dominant role. Constitutional politics, and the pursuit of electoral success, were the watchwords.
They would reap the electoral dividends. It was important that they did so. There were some on the left who saw things differently. The October Revolution, which saw Lenin’s Bolsheviks take power, had no less a convulsive effect on the left than its February predecessor. Some now looked to the prospect of revolution, others to the trade unions. Red Clydeside, the radical socialism of Glasgow that culminated in the battle of George Square in January 1919, may not have been revolutionary in intent, but it could be seen as such. In 1920, the Communist Party of Great Britain was founded. Some members of the Labour movement itself were attracted to the idea of direct action, and willing to break the law: George Lansbury and Poplarism being a prime example. Again, in 1919, tanks were deployed against socialist protesters in Liverpool.
Then there were the trade unions. The years before the Great War, and 1913 in particular, saw a wave of strikes; the same applied in the years after the war. It has sometimes been though that this represented the coming of revolutionary Syndicalism into Britain (the belief that strike action would lead to a general strike and then a revolution). It didn’t. When the Triple Alliance of the miners, railwaymen and transport workers threatened to strike in 1913 and, again, in 1921, Lloyd George talked them down. The strikes were about wages, hours and conditions.
That is not to say that there weren’t revolutionary trade unionists (you can read about the Communist Harry Pollitt and the far left here). The Communist shop steward was a staple of British national life (think of Fred Kite in the great Boulting brothers comedy, I’m All Right, Jack). AJ Cook, the miners’ leader, was a Marxist (you can read about him here). However, the trade union movement as a whole was anything but revolutionary. The General Strike happened when the moderate leaders of the TUC felt they had been backed into a corner. It was called off after 9 days.
The Labour Party leadership in parliament were studiedly ambivalent about the General Strike, which threatened Labour’s hard-earned reputation for constitutionality. In truth though, the leaders of the TUC were almost as ambivalent themselves. If, in 1926, they had dallied with unconstitutional politics, that dalliance was brief and then well and truly over. British trade unionism would be personified by the likes of Ernie Bevin, rather than Cook. The parliamentary party was firmly in the hands of the likes of MacDonald, Snowden, Henderson and Jimmy Thomas.
MacDonald’s decisions in 1931, as covered in the first part, can be explained in that light. He was facing an economic and financial crisis. His was a minority government. There seemed to be a lack of alternative options: the Lloyd George, Keynesian and Mosleyite approaches were beyond the pale and, in Sidney Webb’s words, ‘nobody told us we could’ come off the gold standard. MacDonald had no alternative other than to seek cuts. It was his national duty, and it was also a political imperative if Labour were to keep their reputation as a party of government intact. Indeed, the electoral slaughter that befell them in 1931 makes that point all too well.
The short term politicking of the formation of the national government is dealt with in the part one, but placing those events in the context of what had gone before helps make sense of it.
When he could not convince his cabinet and went to resign, the offer of a national government as a short-term expedient in an emergency probably made sense. It was also a way, one might suspect, in which MacDonald could drag his party, or at least enough of it, to do what was necessary, and demonstrate that Labour was acting in the national interest. Nor should we discount personal ambitions, and vanity. MacDonald was increasingly cut off from his won supporters, and the idea of being the saviour of his nation played to his evident vanity. But, he surely felt that he, above all others, had dragged Labour to the summit, and himself into number ten: remaining there as head of national government if certainly congenial was hardly dishonourable. Furthermore, it kept the ballot box at bay.
Perhaps more surprising was Baldwin’s decision. He could have formed a minority Conservative government and, if defeated in the House, go to the country and probably win. And, he had made his career by ending a coalition. Nonetheless, a national government had several advantages from Baldwin’s point of view. Had he formed a minority administration, he would have been faced with the potential of losing a key vote in the House (the Simonite Liberals, even if they proved reliable supporters, could not give him a majority). Furthermore, that government would be compelled to introduce unpopular cuts. Making Labour part of a national government would tie them even more tightly to constitutional politics as well as to financial and economic probity (one suspects that neither Baldwin or MacDonald expected so few Labour ministers or MPs to follow their leader). Doubtless, it also helped that Lloyd George was ill: thus he was kept well away from office, something both Baldwin and MacDonald would not have wanted. It would also help Baldwin keep his own party in line, and his right wing side-lined.
Both men, above all else, saw themselves as guardians of constitutional parliamentary democracy. In a national emergency, that must be defended above all else, they believed. Furthermore, both accepted the good faith and good offices of the Liberal leader, Sir Herbert Samuel, and the king: their roles should not be underestimated.
Perhaps the political fluidities of the era might be illustrated once more by the story of the MP for Leeds Central, Richard Denman (right). Denman had entered the Commons in 1910, as a Liberal (he would become PPS to the president of the board of trade, Sydney Buxton). At the start of the war he joined the UDC. By 1917, however, he was a supporter of the Lloyd George’s national government, serving as PPS to two Lloyd George Liberal ministers. Having stood down in 1918, and then run unsuccessfully as a Lloyd George Liberal in 1922 (in Newcastle), and as a Liberal in 1923, he joined Labour in 1924. In 1929, he won Leeds Central for Labour. In 1931, he won it again, but this time as a supporter of Ramsay MacDonald. From 1931 to 1945 he remained the National Labour MP for Leeds Central. His 1931 campaign was even commemorated by a local artist, Ethel M Mallinson: Election of Leeds MP Richard Denman National Labour Party.
As it was, the government was less national than advertised, primarily because only 12 other Labour MPs like Denman followed their erstwhile leader who was, in haste, expelled from the party he had done so much for. That, in part, explains Baldwin’s decision to go to the country once the government had been forced to abandon the gold standard after all. Without the Labour Party per se, it might have been argued that MacDonald’s national government had no real mandate. One cannot avoid a more cynical conclusion though, that Baldwin believed Labour would be punished by the electorate. They certainly were: Labour were reduced to 52 seats (a result that made MacDonald deeply unhappy).
What had been a genuinely national government, now became a Conservative government with a few National Liberals, even fewer National Labour, and a Labour prime minister of sorts. But that is for part three. The political reconfiguration of the ‘twenties was over. The question was one of how the dust would settle forthwith.
Let’s leave MacDonald in happier days, introducing his new cabinet on 16th June, 1929: