a tale of two coalitions, part two
May. 13th, 2010 05:44 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
calimacPart one.
Britain’s second-ever Labour government took office in June of 1929, just in time to be hit over the head with the stock market crash that fall. They spent the next two years frantically bailing water. The government which had been elected to improve public services for the poor – which in those days were pretty damn minimal – had to cut them instead, and keep cutting, because there was just no tax revenue to be had.
Deficit spending, which is what saved the U.S. after 19331, was not an option in Britain, because the country was still digging itself out of its immense World War I war debt, and Labour’s treasury ministers were rigidly orthodox economists.2 The crisis came in the summer of 1931, when the government was informed that there was a run on sterling. The Bank of England’s reserves were nearly exhausted, and the only thing that would restore the financial community’s confidence in British economic planning, the bankers said, would be the one thing that was most anathema to a Labour government: a major cut in unemployment benefits.
Half of the cabinet – mostly the better-educated, more middle-class half, including the Prime Minister, Ramsay MacDonald – were willing to go along with this to save the country. The other half mostly didn’t claim to know anything about economics, but had the gut feeling that the bankers were putting them on.
In fact, the lumpen proletariat were right. There was one solution that would have solved the liquidity problem at a stroke. This would have been to devalue the pound, by going off the gold standard and letting the value float. But that was so far outside a rigidly orthodox Treasury minister’s box that the idea was never even brought up.3 With mulish reluctance, the Cabinet voted by a slim majority to approve the cuts, and then MacDonald drove off to Buckingham Palace to submit the government’s resignation.
To everybody’s surprise, he came back as newly commissioned Prime Minister of what was grandly called a National Government. What had happened was that King George V had appealed to MacDonald’s abundant vanity, telling him he was the only man who could save the country, and calling in the other parties’ leaders to ask if they would serve under him.
The Conservatives, under the same Stanley Baldwin and Neville Chamberlain who’d come to prominence in 1922, approved of the cuts and agreed with alacrity. The Liberals, the third party, were of mixed feelings. Lloyd George, still their leader, was opposed, but he was out sick, and his deputies signed on. Just about the entire Labour Party, however, except for the ministers who’d approved of the cuts, were incandescent with fury. They read MacDonald and his team out of the party, and the Great Betrayal of 1931 became the leading cautionary event of Labour Party mythology for decades to come.
So MacDonald, the illegitimate son of a Scottish housemaid, who’d risen to middle-class respectability and the leadership of the Labour Party, now found himself Prime Minister of a government consisting of a few bedraggled ex-Labourites like himself, a small and reluctant Liberal Party, and a vast horde of Conservatives. Not exactly the all-party National Government he’d had in mind. But MacDonald felt patriotically justified: he’d put his country before his party. And if the economic measures had indeed been necessary, he might have been right.
But the financial situation continued to worsen, and one of the first things the National Government had to do was … guess what. If you’d, earlier, actually asked the bankers what would happen if sterling went off the gold standard, they would have been shocked: it would be the end of the world, or something. Well, the National Government took sterling off the gold standard and … nothing happened. The urgent crisis eased a little bit. But, ironically, the entire Labour Party split had been rendered meaningless.
(That didn’t mean they came together again, though. The sense of betrayal was permanent, and made more so when the National Government, which had promised not to hold an election under that banner, went ahead and held an election under that banner. The Conservatives managed to glom on to an even higher percentage of the seats than they’d had already4, and the Labour Party was nearly wiped out. Just about the only ex-ministers left in Parliament were an old working-class stalwart named George Lansbury5 and a much younger junior minister named Clement Attlee. Attlee soon succeeded Lansbury as leader of the Labour Party by virtue of being the only guy left standing, but he was a remarkably good choice nonetheless, for that is how he was in place to become Labour’s greatest prime minister, after World War II.)
Having taken over the government by stealth, the Conservatives were now in place to propose the great dream that had animated the party since its founding eighty years earlier, but which they’d never had enough popular support to enact before: protective tariffs.6 But in a replay of the previous year, if there was one thing that was anathema to the Liberal Party, it was tariffs. And, in a further replay, half of the Liberals were willing to go along with this to save the country, and the other half weren’t. So they resigned and went into opposition.7 The resigned half, known as the Samuelites, became the anemic separatist Liberal Party that eventually limped along to become an ancestor of today’s healthier Liberal Democrats, and the half that stayed, known as the Simonites8, were promptly absorbed into the Conservatives in everything but name, like MacDonald’s ex-Labourites. The aging, weary MacDonald stayed on as Prime Minister long after he was no longer mentally capable of doing the job, because the Conservatives were eager to have the figleaf of a non-Conservative Prime Minister as evidence that they were still a National Government.
But actually it was Conservative, Conservative all the way9, and MacDonald and the Simonites were indistinguishable from them. After MacDonald finally retired, Baldwin quietly succeeded him for a couple of years10 and then was equally quietly succeeded by Chamberlain. And I should just have to mention the phrase “Man of Munich” to remind you of what happened then. But even at that point, the Conservative government was still calling itself National. When a real national government, genuinely including all parties, was formed in 1940 in the face of the invasion of France, the previous “National” government was just one element.
1. An immense amount of nonsense has been spread around about this by Republicans recently. They claim that the New Deal’s deficit spending did not pull the U.S. out of the Depression. Indeed it did not, but only because FDR was too timid in applying it. The proof of that comes from the fact, acknowledged by all, that what did pull the U.S. out of the Depression was World War II. And what was World War II, in economic terms? Answer: it was an absolute orgy of government deficit spending, far outclassing that of the New Deal. But the New Deal did help create jobs, both government and private, and what it provided mostly was hope, the most important tool of all, because an economic panic is largely a psychological phenomenon.
2. A junior minister named Oswald Mosley, given the responsibility of dealing with unemployment but no power to do anything about it, proposed a remarkably prescient Keynesian economic program. His superiors turned it down, and Mosley snapped. He resigned from office, ran for parliamentary re-election on a new party line (called, with stunning lack of imagination, the New Party), and lost, at which point he concluded that democratic government had failed, and became Britain’s leading fascist. A sad case.
3. In fact, the pound had been let to float during the war, to finance that conflict’s deficit spending. After the war, though, getting the pound back on the gold standard was the top economic priority, despite the economic suffering this caused, which broke out in the General Strike of 1926. The Chancellor of the Exchequer who signed off on the actual restoration of the gold standard happened to be Winston Churchill. Later he admitted this was the worst policy decision of his life, but he’d gone along with what the bankers said, because, like the lumpen Labour ministers a few years later, he didn’t claim to understand economics, which raises the question: why, then, was he Chancellor of the Exchequer? The answer is: essentially for the same reason that Sir Joseph Porter, who never ever went to sea, was First Lord of the Admiralty in H.M.S. Pinafore.
4. Something they also did during the previous coalition, at the 1918 “Coupon Election,” so-called because the political affiliation situation then was so messy that coalition-approved candidates were issued with a letter certifying their approval from the party leaders.
5. Grandfather of Angela Lansbury, by the way. I like pointing that out, for some reason.
6. Protective tariffs depress international trade. This may seem like a way to protect your domestic economy when it’s in trouble, but in fact further depressing trade is the last thing you want to do when trade is already depressed. In the U.S., it was a protective tariff, the Smoot-Hawley Act, that had turned the panic of 1929 into a Great Depression in the first place. Just thought I’d mention that.
7. At this point, MacDonald’s iron Chancellor of the Exchequer, Philip Snowden, whose rigid economic orthodoxy had caused all the trouble in the first place, finally resigned as well.
8. These biblical-sounding appellations were actually the surnames of their respective leaders, Herbert Samuel and John Simon. Lloyd George stayed well out of the whole dispute.
9. The most distinguished Conservative who was completely out of government at this time was Winston Churchill, who’d broken with the party over their acceptance of Labour plans for the self-government of India. During the Thirties, Churchill was constantly denouncing two people he considered deadly existential threats to the British Empire. One of them was Hitler. The other was Gandhi. Is it any wonder nobody listened to him about the first, considering his opinions of the second?
10. During which he performed his greatest service to his country, easing the unsuitable King Edward VIII into abdication.
Britain’s second-ever Labour government took office in June of 1929, just in time to be hit over the head with the stock market crash that fall. They spent the next two years frantically bailing water. The government which had been elected to improve public services for the poor – which in those days were pretty damn minimal – had to cut them instead, and keep cutting, because there was just no tax revenue to be had.
Deficit spending, which is what saved the U.S. after 19331, was not an option in Britain, because the country was still digging itself out of its immense World War I war debt, and Labour’s treasury ministers were rigidly orthodox economists.2 The crisis came in the summer of 1931, when the government was informed that there was a run on sterling. The Bank of England’s reserves were nearly exhausted, and the only thing that would restore the financial community’s confidence in British economic planning, the bankers said, would be the one thing that was most anathema to a Labour government: a major cut in unemployment benefits.
Half of the cabinet – mostly the better-educated, more middle-class half, including the Prime Minister, Ramsay MacDonald – were willing to go along with this to save the country. The other half mostly didn’t claim to know anything about economics, but had the gut feeling that the bankers were putting them on.
In fact, the lumpen proletariat were right. There was one solution that would have solved the liquidity problem at a stroke. This would have been to devalue the pound, by going off the gold standard and letting the value float. But that was so far outside a rigidly orthodox Treasury minister’s box that the idea was never even brought up.3 With mulish reluctance, the Cabinet voted by a slim majority to approve the cuts, and then MacDonald drove off to Buckingham Palace to submit the government’s resignation.
To everybody’s surprise, he came back as newly commissioned Prime Minister of what was grandly called a National Government. What had happened was that King George V had appealed to MacDonald’s abundant vanity, telling him he was the only man who could save the country, and calling in the other parties’ leaders to ask if they would serve under him.
The Conservatives, under the same Stanley Baldwin and Neville Chamberlain who’d come to prominence in 1922, approved of the cuts and agreed with alacrity. The Liberals, the third party, were of mixed feelings. Lloyd George, still their leader, was opposed, but he was out sick, and his deputies signed on. Just about the entire Labour Party, however, except for the ministers who’d approved of the cuts, were incandescent with fury. They read MacDonald and his team out of the party, and the Great Betrayal of 1931 became the leading cautionary event of Labour Party mythology for decades to come.
So MacDonald, the illegitimate son of a Scottish housemaid, who’d risen to middle-class respectability and the leadership of the Labour Party, now found himself Prime Minister of a government consisting of a few bedraggled ex-Labourites like himself, a small and reluctant Liberal Party, and a vast horde of Conservatives. Not exactly the all-party National Government he’d had in mind. But MacDonald felt patriotically justified: he’d put his country before his party. And if the economic measures had indeed been necessary, he might have been right.
But the financial situation continued to worsen, and one of the first things the National Government had to do was … guess what. If you’d, earlier, actually asked the bankers what would happen if sterling went off the gold standard, they would have been shocked: it would be the end of the world, or something. Well, the National Government took sterling off the gold standard and … nothing happened. The urgent crisis eased a little bit. But, ironically, the entire Labour Party split had been rendered meaningless.
(That didn’t mean they came together again, though. The sense of betrayal was permanent, and made more so when the National Government, which had promised not to hold an election under that banner, went ahead and held an election under that banner. The Conservatives managed to glom on to an even higher percentage of the seats than they’d had already4, and the Labour Party was nearly wiped out. Just about the only ex-ministers left in Parliament were an old working-class stalwart named George Lansbury5 and a much younger junior minister named Clement Attlee. Attlee soon succeeded Lansbury as leader of the Labour Party by virtue of being the only guy left standing, but he was a remarkably good choice nonetheless, for that is how he was in place to become Labour’s greatest prime minister, after World War II.)
Having taken over the government by stealth, the Conservatives were now in place to propose the great dream that had animated the party since its founding eighty years earlier, but which they’d never had enough popular support to enact before: protective tariffs.6 But in a replay of the previous year, if there was one thing that was anathema to the Liberal Party, it was tariffs. And, in a further replay, half of the Liberals were willing to go along with this to save the country, and the other half weren’t. So they resigned and went into opposition.7 The resigned half, known as the Samuelites, became the anemic separatist Liberal Party that eventually limped along to become an ancestor of today’s healthier Liberal Democrats, and the half that stayed, known as the Simonites8, were promptly absorbed into the Conservatives in everything but name, like MacDonald’s ex-Labourites. The aging, weary MacDonald stayed on as Prime Minister long after he was no longer mentally capable of doing the job, because the Conservatives were eager to have the figleaf of a non-Conservative Prime Minister as evidence that they were still a National Government.
But actually it was Conservative, Conservative all the way9, and MacDonald and the Simonites were indistinguishable from them. After MacDonald finally retired, Baldwin quietly succeeded him for a couple of years10 and then was equally quietly succeeded by Chamberlain. And I should just have to mention the phrase “Man of Munich” to remind you of what happened then. But even at that point, the Conservative government was still calling itself National. When a real national government, genuinely including all parties, was formed in 1940 in the face of the invasion of France, the previous “National” government was just one element.
1. An immense amount of nonsense has been spread around about this by Republicans recently. They claim that the New Deal’s deficit spending did not pull the U.S. out of the Depression. Indeed it did not, but only because FDR was too timid in applying it. The proof of that comes from the fact, acknowledged by all, that what did pull the U.S. out of the Depression was World War II. And what was World War II, in economic terms? Answer: it was an absolute orgy of government deficit spending, far outclassing that of the New Deal. But the New Deal did help create jobs, both government and private, and what it provided mostly was hope, the most important tool of all, because an economic panic is largely a psychological phenomenon.
2. A junior minister named Oswald Mosley, given the responsibility of dealing with unemployment but no power to do anything about it, proposed a remarkably prescient Keynesian economic program. His superiors turned it down, and Mosley snapped. He resigned from office, ran for parliamentary re-election on a new party line (called, with stunning lack of imagination, the New Party), and lost, at which point he concluded that democratic government had failed, and became Britain’s leading fascist. A sad case.
3. In fact, the pound had been let to float during the war, to finance that conflict’s deficit spending. After the war, though, getting the pound back on the gold standard was the top economic priority, despite the economic suffering this caused, which broke out in the General Strike of 1926. The Chancellor of the Exchequer who signed off on the actual restoration of the gold standard happened to be Winston Churchill. Later he admitted this was the worst policy decision of his life, but he’d gone along with what the bankers said, because, like the lumpen Labour ministers a few years later, he didn’t claim to understand economics, which raises the question: why, then, was he Chancellor of the Exchequer? The answer is: essentially for the same reason that Sir Joseph Porter, who never ever went to sea, was First Lord of the Admiralty in H.M.S. Pinafore.
4. Something they also did during the previous coalition, at the 1918 “Coupon Election,” so-called because the political affiliation situation then was so messy that coalition-approved candidates were issued with a letter certifying their approval from the party leaders.
5. Grandfather of Angela Lansbury, by the way. I like pointing that out, for some reason.
6. Protective tariffs depress international trade. This may seem like a way to protect your domestic economy when it’s in trouble, but in fact further depressing trade is the last thing you want to do when trade is already depressed. In the U.S., it was a protective tariff, the Smoot-Hawley Act, that had turned the panic of 1929 into a Great Depression in the first place. Just thought I’d mention that.
7. At this point, MacDonald’s iron Chancellor of the Exchequer, Philip Snowden, whose rigid economic orthodoxy had caused all the trouble in the first place, finally resigned as well.
8. These biblical-sounding appellations were actually the surnames of their respective leaders, Herbert Samuel and John Simon. Lloyd George stayed well out of the whole dispute.
9. The most distinguished Conservative who was completely out of government at this time was Winston Churchill, who’d broken with the party over their acceptance of Labour plans for the self-government of India. During the Thirties, Churchill was constantly denouncing two people he considered deadly existential threats to the British Empire. One of them was Hitler. The other was Gandhi. Is it any wonder nobody listened to him about the first, considering his opinions of the second?
10. During which he performed his greatest service to his country, easing the unsuitable King Edward VIII into abdication.
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no subject
Date: 2010-05-13 01:12 pm (UTC)no subject
Date: 2010-05-13 02:31 pm (UTC)I do find interesting parallels between then and now in one area: The consequences of Listening To The Lying Bankers. Too bad not enough people know about this, or people in certain positions might've reconsidered their options at the end of Bush the Younger...
no subject
Date: 2010-05-13 03:20 pm (UTC)My own opinion, based on the historical reading I've done, is that they weren't quite that evil, and weren't deliberately lying. It was just another case of not being able to think outside the box.
no subject
Date: 2010-05-13 03:04 pm (UTC)no subject
Date: 2010-05-13 09:24 pm (UTC)no subject
Date: 2010-05-13 09:50 pm (UTC)I know Mosley as the leading British Fascist and, of course, Diana Mitford's husband. I looked him up and found a trail of entertaining scandal about his personal life.