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Pat Wall

How the 1929–31 Labour Government Fell

(February 1976)

From Militant, No. 292, 20 February 1976, pp. 6–7.
Transcribed by Iain Dalton.
Marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

In the days when he claimed allegiance to Marxism John Strachey wrote a perceptive essay in which he examined how the working class switched from industrial to political and back to industrial action in an attempt to find a solution to the perennial problems of poverty, social deprivation and insecurity.

Finding one avenue blocked, the British workers, in particular the organised section, sought another. Far from being compliant and conservative, in the years between the wars the workers launched a whole series of magnificent struggles.

The struggle ebbed and flowed, but as surely as the tide recedes only to return, the working people resumed the fight. It was not any lack of willingness to organise, struggle and sacrifice which led so often to stalemate or defeat. Then as now it was the lack of a clear Marxist leadership, prepared and determined to draw together the separate strands of industrial and political struggle, to achieve a definite solution to the destruction of the moribund capitalist system and the building of a socialist society.

After the defeat of a Labour Government in 1924, the working class swung onto the industrial front culminating in the terrible defeat of the General Strike in 1926. The vicious anti-trade union Disputes Act of 1927 and the policies of conciliation and collaboration of the TUC through the ‘Mond-Turner’ talks of 1927, forced the organised workers to look for salvation through the return of a Labour Government. Such a government could redress the defeats of the past and achieve what industrial action had failed to do. So now the movement swung onto the political scene.

On May 30th, 1929, the second minority Labour Government was elected to office. Once again it was dependent on Liberal votes in the House of Commons and faced a hostile and overwhelmingly Tory House of Lords with power to delay legislation for three years:

Labour had been elected to office mainly on the claim to solve the unemployment problem. The election manifesto Labour and the Nation, boasted: “We can conquer unemployment.” Lansbury said: “our palliative measures for dealing with unemployment are simple. We claim full and complete maintenance for those who cannot find work.”

Unlike 1924, the Government was formed entirely of Labour members, but significantly Wheatley the only success of 1924, was omitted. Beatrice Webb said that the “Labour Cabinet of 1929 unlike the one of 1924 was a pukka Cabinet.” Tawney however warned that the “choice (as in 1924) was living dangerously and honestly or capitulating to the Tories and Liberals.”

The first meeting of the Parliamentary Labour Party was significant. John Wheatley, spokesman for the ILP group, prophesised economic crisis and predicted a Labour Government subject to successive humiliations if it permitted itself to become the instrument for cutting the living standards of wage earners and the unemployed.

Wheatley opposed the very idea of a minority government, but if this was what the Parliamentary Labour Party wanted then he supported Tawney’s idea of “living dangerously.” His ideas were rejected by the vast majority who support McDonald’s programme of accommodation with the Liberals.
 

Churchill

The ruling class understood well, the nature of the Labour leadership. Churchill cynically welcomed the Kings Speech with the following words:

“I am glad to see old Parliamentarians whom I have know for a quarter of a century who have played so distinguished part in our proceedings, having at last their share in the responsibilities of government and testing what are called by those who have not long experienced them ‘the sweets of office’. I look forward to having the Financial Secretary to the Treasury deliver us a clear exposition of the gold standard and the solid advantages which it will confer upon the country, and generally to defend orthodox financial matters. No doubt the Financial Secretary will be able to do this when his education by Treasury officials, the Bank of England and the high financial authorities of the City of London have been completed.”

Here the authentic voice of capitalism brutally stated the truth that if the Labour Government was not prepared to challenge capitalism, then it would have to carry out policies in the interests of capitalism.

Churchill was of course correct in his forecast. From the beginning MacDonald was determined to show that his government would be ‘respectable’ and would stand no truck with opposition from the left of the party within.

He opposed any idea of an early election to gain a firm majority. “If I can prevent it there shall be no disturbance of the country by an election within two years, I wish to make it clear that I am going to stand no ‘monkeying’.” The government was controlled by the ‘big five’: MacDonald, Snowden, Henderson, Thomas and Clynes. Wheatley was left out of the Cabinet and Lansbury was brought in to accommodate the ‘left’. He was given a job in the Ministry of Works, where “he could do a good many small things without the opportunity for squandering money” – Snowden.

The capitalist parties soon perfected a division of labour in Parliament, while the Tories denounced the extravagance of socialism, the Liberals attacked the government for betraying its former ideals. One the one hour reduction of the working week for miners and the rationalisation (not nationalisation) of the mines. Lloyd George said: “I do not say they are betraying the miners, because they cannot carry out nationalisation. They are going to carry out what they can and I think it right, but I am bound to point out they are proposing to do what they rejected in 1919.”

To set the record straight the 1929–31 government carried through a number of reforms. The contributory pension scheme was started, mental hospitals improved, slum clearance started, agricultural marketing boards set up and public regulation introduced for road transport. Other reforms such as the repeal of the Trade Union Act (1927) and the raising of the school leaving age to 15 were destroyed by the Liberals, or the House of Lords.

Welcome as these relatively minor reforms were they in no way challenged the power of capital and had little, or no effect on the unemployment situation.

The government was soon to more from reforms to counter-reforms as did later Labour Governments in 1950, 1967 and 1975.

When the government came to office the economic situation seemed relatively optimistic. Steel production stood at its highest since 1917. It was to be almost halved in three years. The index of industrial production stood at 115.8. By 1932 it would fall to 103.2.

But the reality was that the world was on the eve of a profound crisis. The Wall Street crash of September 1929 was the prelude to the greatest slump in history. By 1931 a quarter of the American workforce was unemployed. Four million, later seven million German workers were thrown out of work. The dominance of American capitalism was shown by the disastrous consequences for Britain of the American collapse.
 

Dole cut

The demand for British goods dropped sharply, unemployment doubled and almost trebled. The slump in world trade led to untrammelled dumping of goods. The employers demanded restriction on imports and cuts in the living standards of the workers both employed and unemployed.

Unemployment rose to levels undreamed of in the worst nightmares of Labour MPs:

Far from improving the lot of the unemployed, the government introduced the so-called Anomalies Bill which meant that some three hundred thousand of the unemployed would have their benefits cut

Throughout its period of office the Labour Government backed the employers’ campaign to reduce the workers’ living standards. The miners, railwayman, cotton and woollen workers suffered cuts. Government spokesmen called for “increased production” and “sacrifices” from the workers. The Labour votes slumped in local elections as sections of the workers abstained in disgust at the government’s policies and others moved to the Tories and Liberals.

All that remained was the final act of the discredited government.

Following Chancellor Snowden’s acceptance of a Liberal amendment, a committee was set up to deal with unemployment. Headed by Sir George May, former head of the Prudential Insurance Company, it consisted in the words of Beatrice Webb “of five clever hard-faced representatives of capitalism and two tame trade unionists.”

It reported in July 1931, with the almost unnoticed dissent of the two trade unionists and recommended savage cuts in Government expenditure, to boost profits and production. Among its proposals was a 15% cut in teachers’ pay, 25% in service pay and a 20% reduction in unemployment benefit.

The May Committee said there would be a budget deficit of £140 million and recommended a total cut of £97 million with £67 million by public expenditure cuts and the rest by taxation. MacDonald expressed his broad agreement when he said in Parliament: “We are of one mind. We intend to balance the budget.”

The report coincided with a real run on international currencies, particularly sterling. Gold was being lost at the rate of £2½ million a day from July 15th.

By August the Bank of England was warning that the economy was on the edge of a precipice and a drastic situation would have to take place. The remedy was in the hands of the government. They advised a balanced budget and cuts in public expenditure, particularly the dole, as suggested by the May Committee, and French and American creditors were insisting on this particular condition for further loans.

This crisis began on August 13th, and by August 17th, the Cabinet as a whole agreed to major cuts in public expenditure. However on Thursday August 17th TUC leaders expressed their total opposition to any cuts, especially in dole money. The stiffened right wingers like Henderson and Clynes into opposition.

Nevertheless on Friday, cuts to a maximum of £56 million, including £36 million off the dole benefits, were agreed by the whole Cabinet, including Attlee and Dalton who were later to suggest that they had reservations. The TUC maintained their total opposition and for their pains were described as ‘pigs’ by Beatrice Webb.

But these cuts were still not enough for the bankers or the Tories and Liberals who were consulted. Another £20–25 million was demanded. To stop the run on the pound, a further loan from the New York Reserve Bank was needed. Harrison, President of the bank said he would only provide the money if the City of London was satisfied that the government was making enough cuts.

MacDonald proposed to the Cabinet on Saturday 19th August, that a further 10% cut in public money, equal to a mere £12¼ million, be made. The Cabinet was split but voted 11–9 in favour and Sidney Webb supported the cuts. But the opposition included the key Labour figures of Henderson, Clynes, of the TUC and Graham.

MacDonald then asked for the resignation of his Ministers and went to the King. It was there and also at a secret meeting with all the opposition leaders at No. 10 that he was advised, and readily agreed, not to resign but form a National Government. He returned to tell his astonished Labour Cabinet that they were sacked but not him or anybody who was willing to follow him over to the coalition which would have Baldwin as deputy. Only Thomas, Snowden and Sankey agreed.

So feel the Labour Government. It seemed it had just been a trifling £12 million that split the Cabinet. After all the National Government when it presented its budget later only increased the cuts by another £20 million. But after a series of retreats on all the government’s promises and continued acceptance of these retrenchments in the interests of profit by the PLP and the TUC, this last one was the ‘straw that broke the camel’s back’. ‘No more’ said the TUC and ‘goodbye’ said MacDonald And MacDonald chortled to Snowden, “Tomorrow every Duchess in London will be wanting to kiss me.”

John Wheatley had not lived to see the predictions he had made at the first PLP meeting come true, but they had and with a vengeance.
 

Fear

The National Government immediately called an election, while the organised core of the labour movement remained loyal. The election was a crushing defeat for the Labour Party.

The campaign of the National Government was completely based on fear. MacDonald brandished German paper marks used in the hyper-inflation of 1923 to demonstrate to audiences what would happen if Labour won. He described Labour as a ’sectional’ faction not a national party. Snowden described Labour leaders like Henderson and Clynes as ‘Bolsheviks run mad’!

Runciman told audiences that Labour would use their Post Office savings to give more money to those on the dole. The general line of the National Government Ministers was “tomorrow there will be a new England or no England” – that was the choice.

Given the humiliation and betrayal of the Labour leaders no wonder the National Government won an overwhelming victory taking 70% of the vote. But it must be remembered that while Labour was decimated in Parliament, its vote only fell from 8.3 million in 1929 to 6.6 million in 1931. The best sections of the working class remained loyal.

The labour movement had paid the price of appeasement and compromise with the Liberals. The results, especially in a period of economic crisis, was complete capitulation to capitalism and the political parties representing the owning class. Far from gaining the so-called ‘middle ground’ this policy led to electoral disaster.

Right from its inception the Parliamentary Labour Party, and in particular the leadership, has never shown any desire or determination to change society. However while little could be expected from the leadership, more should have been forthcoming from the left of the movement and in particular the Independent Labour Party.

With 140 MPs nominally members and 37 of these financially sponsored and bound by the decision of the 1928 ILP Conference to support ILP policies, the ILP constituted an important part of the PLP. Under the stresses of the crisis not all the 37 would remain loyal to their sponsorship let alone the mass of nominal members. Only 18 actually backed ILP policies in the PLP.

Unlike 1924 opposition to the leadership existed from the start of the 1929 government. In 1928 Maxton, leader of the ILP, and Cook issued a joint declaration attacking the timid policy of the Labour leadership and in particular the class collaborationism implicit in the ‘Mond-Turner’ joint committees of the employers and TUC. But with the ignominious defeat of the General Strike, Cook was a spent force and once again the declaration was from the top and no attempt was made to campaign amongst the rank and file.

The policy of the ILP was similar to that adopted by the Tribune MPs and the Communist Party today. Hobson, Wise and Brailsford challenged the financial experts of the Treasury and Universities, adopting Keynesian ideas before Keynes. They demanded the government spend its way out of the crisis.

They rightly saw the orthodox deflationary policy of the government as a curse for the working people. But what was the alternative? No socialist would oppose public works aimed at giving work to the unemployed then or now but to see this as a means of solving the crisis is farcical. Where would the money come from?

Higher taxes for the rich leads to even less investment in private industry and further unemployment in that sector. Higher taxation for the working people would mean a further lowering of consumption and a deepening of the crisis. Even over a short period the printing of bank notes unsupported by gold, or the production of commodities, leads to depression of the currency and the curse of inflation.

In the midst of capitalist crisis of ‘overproduction’ what is the sense of producing more coal, more railway track, more rolling stock, more roads, more steel, when consumption of all these products declined sharply during the two years of Labour Government. Even today when these industries are nationalised it makes no sense while the vast majority of such products are consumed by the 80% of industry which remains in private ownership.

Only a national plan based on the public ownership of the financial institutions, land and the major industries, could use the resources of the economy to meet the needs of society as opposed to the jungle of the capitalist market and the interests of rent, interest and profit.

The failure of the ILP in 1929–31 and the Tribune and the Communist Party today to advance such policies as the essential basis of an alternative socialist programme means they are reduced to sterile, often utopian, verbalising against the policies of the government.
 

Evolution

Such was the fate of the left wing in 1929–31 although the ‘results’ came think and fast.

The Bondfield Insurance Bill when presented was far from the promises made in the election programme, in particular it maintained the hated “not genuinely seeking work” provision. The opposition was taken to the Party Conference and only narrowly defeated. But far from continuing the opposition the Parliamentary revolt collapsed and a number of ILP MPs resigned from the Party.

On May 22nd Oswald Mosley, assistant to J.H. Thomas, resigned over the lack of policies to deal with unemployment. In the Parliamentary Party he received only 27 votes as against 240. Mosley continued his campaign with a speaking tour of the country. Bevan collected the signatures of 100 Labour MPs calling for the dismissal of Thomas. At the 1930 Party Conference in Llandudno the Mosley Manifesto was narrowly defeated by 1,250,000 to 1,046,000. Mosley left the Party at the end of the year and was soon to become a fascist.

In fact when Maxton moved a resolution demanding that the government adopt ‘socialism’ as a solution, MacDonald replied by saying that socialism must be slow and evolutionary “moving as it were in a great eternal ocean of surge towards righteousness, towards fair play, towards honesty.”

The truth is that the majority of the Parliamentary Party, including the ILP supported the government through thick and thin, as did the majority of the trade union leaders. When Sir Charles Trevelyan resigned following the defeat by the House of Lords of the Bill to raise school leaving age to 15, and called for a new leadership he was received in stony silence.

It is ironic that after the MacDonald betrayal his most bitter critics were the same MPs whose abject loyalty had assisted him in office over the years.

Any student of Labour history can see the parallels between today and 1931. For a quarter of a century the leaders of the labour movement have scoffed at the ideas of “outdated” Marxism. Class war had become outmoded, classes were disappearing, mass unemployment could never return, standards of living and social welfare would continue to improve, Keynesian and other methods could control the onset of capitalist crisis.

History however lies in their teeth. One and a half million unemployed and more to come, living standards cut by 10% a year and more to come, savage cuts in social spending and a lot more to come. Alongside the same Treasury orthodoxy as MacDonald and Snowden, the same false promises of jam tomorrow if you sacrifice today.

As in 1931 we have a Labour Government albeit with a tiny majority, with the support of the Liberals and nationalists and with the tacit consent of the Conservative leadership. The Tribunite MPs play the role of a semi-opposition under Wilson as the ILP left played under MacDonald. The threat of a National Government is implicit in the situation.

The Parliamentary Labour Party, containing a high proportion of lawyers, lecturers, ad-men and open Conservatives, is further removed than ever from the lives and aspirations of the working people.

Why did the ruling class seek a coalition government in 1931? After all MacDonald was carrying out Tory policies. Even if he failed to inspire confidence in foreign bankers he could easily have been brought down. The Tories would certainly have won the subsequent elections. Why then a National Government?

Like Marxists, the strategists of capital recognise that it is the relationship of class forces that determine history not simple electoral or parliamentary arithmetic. The experience of the MacDonald Government impelled a growing number of trade unionists, Labour Party and ILP members to draw socialist conclusions.

Under pressure from the rank and file, sections, at least of the trade union leadership, would have been formed into some form of opposition to the policies of the government. The return of an openly Tory Government however would have led to an immediate and growing struggle by the trade union movement and the unemployed. The ruling class had been seriously disturbed at the power and solidarity of the workers shown in the General Strike. To carry through its policies with the minimum social dislocation, the ruling class required a divided labour movement and a National Government including leading members of the Labour Party.
 

‘Consensus’

The pressure for a national government was already building up throughout the period in the circles of the ruling class. MacDonald from the beginning had considered ‘an understanding’ with Baldwin, the Tory leader, to safeguard his majority. In his opening speech to Parliament he said that MPs “should consider ourselves more as a Council of State and less as arrayed regiments facing each other in battle ... let’s put our ideas in a common pool.”

From ‘consensus’ politics would come a ‘consensus’ government.

MacDonald resigned from the ILP in 1930 and continually invited Baldwin and Lloyd George for regular talks but only the latter accepted at this time. During the final economic crisis many papers began to raise the demand for a National Government. MacDonald and Snowden had regular meetings with opposition leaders as soon as the crisis broke, where both the Liberals and Tories suggested to the bold two that what was needed was a ‘reconstructed’ government, which, is of course what they had advised the King to tell MacDonald.

It had also been planted in the minds of the other right wing Labour leaders. J.H. Thomas had boasted as early as April 1931 that he would be in a National Government by September – this was one of the few forecasts that he got right!

The situation today has of course many differences with 1929–31, but the differences are in the main unhelpful to the ruling class. The labour movement is enormously strengthened, the destruction of the relatively privileged position of sections of the British working class outlined by Trotsky early in the century has continued apace and now enhances clerical and administrative workers and the majority of students.

Nor have the workers suffered in the post-war period, anything like the series of shattering defeats suffered in the twenties. Internationally capitalism stands at bay, with the Portuguese revolution and the developing situations in Greece and Spain.

In this situation the return of a Tory Government would lead immediately to a developing strike wave and the very real possibility of a general strike. Given the relationship of class forces and the lack of preparation of the ruling class such a situation poses enormous dangers from capitalism. Even granted that the present leadership of the trade union movement inspires no more confidence than that of 1926.
 

Pressure

Even more favourable is the fact that even before such a split, the National Executive of the Labour Party and considerable sections of the trade union movement are in the hands of the ‘left’ with a strong move towards Marxist ideas within the constituencies. Any split would not leave the leadership of the Labour Party in the hands of the right wing as it did in 1931. The majority of the right wing leaders like Henderson, Clynes, Webb and Morrison remained to hold back the movement towards socialist policies in the Labour Party.

Now the left wing would dominate from the start and while that is certainly no guarantee of socialist policies and action it would open much more quickly the door towards a really fighting labour movement based on Marxist policies. Nevertheless the ruling class sees a National Government as the best possible alternative as the economic situation deteriorates.

If as seems certain the world crisis deepens, opposition to the policies of the government will inevitably grow exchanging TUC policy of tamely accepting savage cuts in living standards coupled with growing unemployment. As such opposition develops the TUC will be forced into semi-opposition to the government which will find itself subject to enormous pressures from big business on the one hand and from the working people on the other.
 

Prentice

In these circumstances a National Government will offer the best available option open to the ruling class. A National Government, a government of “all the talents” could sweep to power with a scare campaign by the mass media which would dwarf the post office savings scare of 1931, to secure an overwhelming majority. It would allow a period when real preparations for dealing with the labour movement could be organised. Does anyone seriously doubt that sections of the Parliamentary Labour Party at all levels would be prepared to take the MacDonald road?

In a recent speech to Oxford University Democratic Labour Club, a “party outside the party”, Reg Prentice once again called for a witch-hunt against the Marxist wing in the Labour Party.

In the course of his speech he said that Marxism was “narrow-minded, bitter and terribly old fashioned. Its leading exponents have never got beyond the class war dogma of the 1920s.”

The tragedy is that if had, as Prentice suggested, a Rip Van Winkle who had fallen asleep at the end of the twenties awoke today he would see now, as then, growing unemployment, a declining standard of living for the producers of our society and above all the like of Prentice carrying out the same old failed policies favoured by MacDonald, Snowden and Thomas.

Unlike Mr. Prentice, Marxists are prepared to study and learn the lessons of history. It is in the Labour Party Young Socialists and the growing number of trade unionists and Labour Party members adopting the ideas of Marxism that the future lies. In a determination that the Prentices in our movement will not be allowed to repeat the betrayals of the past and that the programme, policies and leadership of the movement will be worthy of the best ideals of our class.

 
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