British Politics, 1926 — 29, and the General Election of 1929

The Economy during the period 1926 to 1929

During this period, exports still suffered. The 1927-9 peak was still only 84% of the 1913 level, and imports during this period were 120% of the 1913 level. However, although invisible exports at £100 million per annum were also down from the pre-war level of £200 million per annum, Britain was still had a trade surplus thanks to them. In contrast to the pre-war pattern, most British capital went into the domestic market. There was considerable growth in car-manufacture; privately registered cars rose from 200,000 in 1919 to 1 million by 1930, and there was considerable rationalisation of the industry — by 1930 60% of manufacture was controlled by just two companies. There was some movement towards industrial collaboration. The head of Imperial Chemicals, Sir Alfred Mond, took the initiative and set up a committee of employers and trade union representatives to explore means of improving efficiency in British industry.

Everything was seemingly going very well, and unemployment fell to just over 1 million in 1928, and production increased by 14% between 1924 and 1929 to a record level. However, Churchill, as Chancellor of the Exchequer, did not really prepare balanced budgets, and he was not a Chancellor of the Exchequer with great vision.

The Conservative Government: Chamberlain's Reforms

Neville Chamberlain was the most dynamic influence in the Conservative government. He introduced 25 bills into Parliament, and 21 were enacted. The first thing he did was to attack the practice of councils with Labour majorities of paying higher wages and rates of relief. The act of June 1926 enabled the government to override the decisions of such councils. However, Chamberlain introduced reforms that generally strengthened local government. He abolished the boards of governors who administered the poor law, and gave the responsibility for this to committees drawn from the counties and boroughs. This served to enhance the importance of local politicians, and Britain at this time was unique in Europe in the prestige attached to the role of local councillor. Yet, with about 2/5ths of local funding coming through national government, the councils were more instruments of national policy than they were during the C19th.

There was an indirect method introduced by Churchill of subsidizing industry and agriculture. Agriculture was allowed to pay zero rates, and industry and the railways paid 3/4 of the rate. The shortfall to the local councils was paid by the government. This was in accordance with the belief that subsidies to industry would enhance their competitiveness in export markets.

May 1929 General Election

In May 1929 there was a general election — unique in British history as the only truly three-party contest. Each party had over 500 candidates, a separate, coherent manifesto and was unified under a single leader. The Liberal party had funding problems, which Lloyd George was only able to temporarily solve with a further injection of £300,000 from his Lloyd George fund.

The structure of the Conservative party had changed little. The constituencies and the party had little control over each other. The Conservatives could usually draw on the support of prominent local figures, and promoted themselves as the party of patriots.

The Labour party had undergone substantial changes since its foundation in 1906, especially with the introduction of individual membership in 1918. The period of minority government had served to promote Labour as a party of government. Conflict between the Labour and the Independent Labour Party developed, when the ILP sought to force the Labour party to accept a policy of a "Living Wage". When the Labour conference rejected this the ILP sought to impose a pledge of loyalty to its programme from any candidate that it endorsed. However, the Labour party refused to allow a separate pledge of loyalty. Being a member of the Labour party was beginning to be a source of political advancement — a Labour party member might not so easily be awarded an OBE, but he or she could as easily become a mayor, magistrate or school governor. The Liberal party did not succeed in becoming a source of such advancement, and they were affected by the decline of the nonconformists, who were also less interested in politics. The Liberals were affected by the change in local politics, which was increasingly mirroring national issues. At the local level they lacked a distinctive image — sometimes siding with the Conservatives to defend ratepayers, and sometimes siding with Labour to defend the poor. Lloyd George hoped to overcome this difficulty by making the Liberal party into the party of "ideas". The Labour party did not fight the election with a specific programme; instead they produced an essay, entitled Labour and the Nation, written by R.H. Tawney, which stated vaguely Labour's general principles.

Meanwhile, Lloyd George had commissioned a number of surveys conducted by economists, paid for by his fund, and the upshot was a pamphlet, published in 1929, entitled We Can Conquer Unemployment. He advocated a programme of public works funded by public deficit financing. This was effectively the "New Deal" programme offered by Roosevelt in the United States after the Depression. The originality of Lloyd George's plan was remarkable, for even J.M. Keynes, later regarded as the founder of the underlying theory of public expenditure, had not yet worked out his position fully. However, Lloyd George's plans were premature, and the public was not yet ready for them. Everyone had drawn the opposite conclusion from the upshot of the First World War, that public expenditure ruins nations, which is ironic, given that the economies of the West were buoyant during the war, when public expenditure was high, and depressed after them, in the climate of restrictions and cut-backs. Lloyd George not only failed to convince the public of his proposals, but he failed to inform and carry with him his prospective ministers. The old Liberals were devotees of the old Liberal ideas of laissez-faire, and they did not understand Lloyd George's plans. It would have been difficult for him to run a proper cabinet government. With the public, however, Lloyd George was tarnished by the legacy of distrust that had accumulated during his years of power after the war.

Despite Lloyd George's attempt to make ideas the centre of the election, they were not, central election issue was that of a choice between prime ministers — and each of the candidates had their own claim to significance, so it was, in a sense, an equal contest. The result was that Labour and Conservatives gained over 8 million votes; the Conservatives had 300,000 more than Labour; Labour won 288 seats; the Conservatives won 260. Because they fielded more candidates the Liberals gained 2 million votes, increasing their poll to 5 million; however, they won only 59 seats, 19 more than in the previous Parliament. Most of the successful Liberal candidates were supporters of the Asquithian programme. In order to avoid being defeated in a vote of confidence in the House of Commons, Baldwin resigned immediately, thus putting in a second Labour minority government. Baldwin did this partly to avoid giving Lloyd George an opportunity to turn the Conservatives out of office. Ramsay McDonald became prime minister on 5th June 1929. Arthur Henderson became foreign secretary; Margaret Bondfield was the first ever woman cabinet minister.

The Labour Government, 1929

At the time of their accession to office Britain appeared to be a prosperous nation, and foreign issues were more urgent. The Labour government gave fresh impetus to the process of revising the Versailles Treaty, and in the spirit of Locarno, a conference was convened at The Hague, which in August 1929 endorsed the Young Plan, which was a new scheme of reparations for Germany. It also agreed the early withdrawal from the Rhineland of Allied troops — five years ahead of the original schedule, which restored German sovereignty to the same status as that of its former enemies. At the League, with the death of Streseman in October 1929, and the decline of Briand, Henderson became the leading light, and he became the first, perhaps the only, British statesman between the wars who won the confidence of both France and Germany.

MacDonald dealt with the United States; he was keen for good relations there, and he insisted that the Admiralty accept the limitation of 50 cruisers that had brought previous naval talks to a standstill, and an agreement was signed between Great Britain, the United States and Japan that fixed the ratio of cruisers, submarines and destroyers to 5 to 5 to 3. This agreement accorded well with public opinion at the time, which tended to the view that nations would be able to reach agreement by an effort of "good-will" and that war as a means in foreign policy was at an end. However, this cosy picture was disturbed by the presence of a Marxist regime in Soviet Russia. Nonetheless, the Labour government restored diplomatic relations with the Soviet Union. In 1931 there was also the Statute of Westminster which completed the transformation of the British Empire into a Commonwealth.

India and the Empire

It was also expected that India would become a Dominion, and Lord Irwin, the viceroy, made a public declaration to this effect on 31st October 1929 in advance of the completion of the Simon commission. However, the Indian National Congress did not regard this as a generous offer, and Gandhi initiated a new campaign of civil disobedience with a march across India in order to flout the government monopoly on salt extraction. The authorities responded by arresting and imprisoning him, along with 50,000 others! The Simon commission reported in June 1930. It proposed a conference to reform the Indian constitution, and a Round Table conference was duly held in London in November 1930, to which the Congress refused to attend. However, once the Indian Princes at the Conference agreed to discuss a future Indian federation, the Congress changed their mind, and Gandhi was released from prison and met with Lord Irwin on several occasions, as a result of which Gandhi agreed to attend a second Round Table conference.

Arthur Henderson entered into negotiations with Egypt. Britain offered to restore Egyptian control over internal affairs and to withdraw their troops to the Canal Zone, but the Egyptians demanded joint control over Sudan, and negotiations broke down. The British expected the Egyptians to see sense in time, and were content to remain in occupation of Egypt.

Palestine

There were difficulties in administering Palestine. By the terms of the Balfour declaration, Britain was committed to allowing Jews to enter Palestine. This they did, and generously funded by Zionist movements, they were able to buy land from Arabs. The open intentions of the Jews to convert Palestine into a national homeland offended the Arabs, who rioted. The White Paper of October 1930 drawn up under the direction of colonial secretary Passfield, recommended a cessation to Jewish immigration. Passfield was attacked by Zionists as an enemy of the Jews. The problem in Palestine illustrated the error of foreign policy thinking during this period, where there was irreconcilable conflict between Arabs and Jews.

The Conservatives under Baldwin had continued these policies. In fact, the only opposition to them came from Winston Churchill, who didn't like the word "Commonwealth". He was opposed to moves towards reconciliation with Indian nationalists, and resigned from the shadow cabinet over this issue in January 1931.

The Character of British Politics

There was a tendency for British politics to become less confrontational; a consensus was developing between Labour and Conservatives, although it was not openly stated. Labour accepted democratic socialism, rejected Marxism, and accepted capitalism, provided it was regulated.

The war socialism of the period of the First World War had been dismantled; now regulated capitalism returned. The first experiment was the Central Electricity Board, which was established in 1926. Labour also legislated in the Coal Mines Act of 1930 in order to reduce conflict in the coal industry. The 8 hour day was replaced by a 7.5 hour day, but owners were still allowed to set production quotas and minimum prices. A commission was established to examine ways in which the coal industry could be reorganised and less efficient pits closed. There were other examples of government intervention in industry. The Agricultural Marketing Act of 1931 allowed boards of producers to set fixed prices and control markets, and the majority resolutions of the board were legally binding on minorities. London transport was turned into a public corporation under an act devised by Herbert Morrison for the Labour government, but enacted by the Nationalist government in 1933. It enabled London transport to subsidise the loss making undergrounds with profits from the buses. The minister for health, Arthur Greenwood, restored the subsidies introduced by Wheatley in house-building. The Housing Act of 1930 also introduced slum-clearance schemes, which were very effective. In education, Trevelyan attempted to raise the leaving age to 15, but the Bill was rejected by the House of Lords in March 1931, and as the government were not willing to push it through, Trevelyan resigned. There was also an attempt to repeal the Trades Disputes Act of 1927, but the Liberals were opposed to this, and the bill was lost. The Liberals were pushing for proportional representation, but Labour opposed this. However, Liberals and Labour agreed upon the process of an alternative vote, but the bill was lost when the Labour government fell.

Decline of the Liberal Party

The Liberal party continued to decline and fragment. The Liberal cause of Free Trade was not incorporated in Lloyd George's plans for state intervention. In the commons Lloyd George sought to discredit Labour without himself being discredited, but Baldwin's tactics successfully forced him to support the government. However, he was unable to carry the whole Liberal party with him, which often split three ways in crucial votes. The party split into three factions: one led by Lloyd George was looking at ways of joining the Labour party; one faction led by Sir John Simon were looking at joining the Conservatives; and the remaining faction under Sir Herbert Samuel which was still committed to free trade.

Crisis within the Conservative Party

However, Baldwin also faced attack from within his own camp. Beaverbrook [Max Aitkin, Lord Beaverbrook, owner of the Daily Express and media tycoon of Fleet Street.] took up the cause of Empire Free Trade. Beaverbrook and Rothermere [Harold Harmswoth, Lord Rothermere, owner of the Daily Mirror, Daily Mail and Evening News.] together established a new party, the United Empire party, in July 1929. Baldwin responded by seeming to make concessions. He accepted the idea of a referendum on food taxes, and made an alliance with Neville Chamberlain, who was in favour of protectionism. Chamberlain was Baldwin's chief rival, but he agreed to the alliance with Baldwin because of his dislike of Churchill and Lloyd George. The crisis within the Conservative party came after a by-election defeat of a Conservative candidate by an Empire Free Trade candidate in October 1930. Baldwin agreed to resign, and Chamberlain prepared to succeed him; but then Baldwin decided not to resign, and made an appeal to the general public, challenging Beaverbrook and Rothermere as "harlots" who wanted to rule without responsibility for their actions. At another by-election the official candidate won, and Baldwin's leadership of the party was affirmed. Chamberlain was forced to wait for his turn to lead the party longer than he expected.