1.3 First Labour government and politics of 1923-1931
When Bonar Law resigned in April 1923, Baldwin was appointed Prime Minister by the King. He wanted to introduce protectionism, something that Conservatives were strongly against, and called a general election. The result was a ‘hung’ parliament. That meant that the strength of all three parties was more or less the same, although the Conservative Party was still the strongest, and that any two parties could outvote the third. Furthermore, Baldwin did not win the mandate for protectionism and as a result he soon resigned. The King appointed the leader of the second strongest party to form a government and as a consequence the first Labour government, with James Ramsey MacDonald as Prime Minister, was born.
The Labour administration did not differ much from that of Liberal or Conservative ones. On the domestic scene some changes in the social sphere could be seen, for example old-age pensions and unemployment benefits were raised, but only on a minor scale as the government was very careful about extra spending. As a result not much was done about the unemployment and several strikes had to be dealt with.
MacDonald was more active on the international scale. He initiated the Dawes Plans, which lowered Germany’s reparations, in order to avoid an economic collapse, and was actively involved in the League of Nations.
MacDonald resigned in September 1924 because the Conservative Party accused the Labour Party of interfering with justice, when the Labour General-Attorney withdrew charges against left-wing newspaper editor J.R. Campbell. Although the government of the Labour Party was quite short, it gained the much needed experience and achieved an enormous success by persuading the public that it was not a communist party. One of the prime members of the Labour party was young Oswald Mosley. He agreed with Labour politics and offered fresh outlooks towards economical policies.
The General election in October 1924 was won by the Conservative Party giving Baldwin a second chance. The most significant appointment made inside his cabinet was the one of Winston Churchill as the Chancellor of Exchequer. The most important event was the adoption of the Gold Standard in April 1925, which had a disastrous impact on the economy and resulted in the General Strike, which is described in chapter 2. The government was able to deal with it quite well due to the union leaders’ willingness to compromise and co-operate.
However, British people were quite unsatisfied with the way the General Strike crisis was dealt with as well as with the results of it. Many of them started to seek different ideologies and parties they could give their allegiance to. So the situation led to rise of many small political parties, such as the Communist party and the British Fascists. The Communist party reached their membership peak just after the Great Strike, with 10 000 members. The cooperation with the workers and diplomatic approach shown by the British Fascists during the Great Strike gained them many members too and their numbers reached as high as 57 000 during this period.
The government carried out many reforms during its reign. Most of them were connected with the social sphere and local government. In 1928 further adjustments to the Representation of the People Act were made, granting the same right to vote to all people regardless of their gender. The right to vote for every woman over 21 was a very important win for the Suffragette movement and because the Act itself was passed almost unanimously "there were just ten votes against the Bill" (Purvis and Holton, 283) it meant a change in attitude towards women too. The only people excluded from voting were lunatics, peers and criminals. Further, the Local Government Act passed in 1929, gave local authorities more responsibility for public health, maternity and child welfare or power over roads.
On the international scene the most important matter was the Locarno Treaty of 1925, which was intended to secure the post-war territorial settlement and to stabilize relations with Germany.
In the 1929 election the Conservative Party was closely defeated by the Labour Party. MacDonald formed a new cabinet with the first woman minister, Margaret Bondfield, in it. The optimistic mood, caused by the fact that the economy was slightly recovering and unemployment was falling, did not last long. In October 1929 a crash on the stock market in the USA came and changed everything. Exports were declining and unemployment was rising to unheard highs. The solution for unemployment and stabilization of the economy became the most important objectives.
Sir Oswald Mosley worked out a complex plan, known as Mosley Memorandum, to fight unemployment.
Mosley's proposal pointed out that unemployment was becoming so grave that tried and tested economic orthodoxies had to be set aside to deal with it. Drastic solutions were the only answer. The Mosley Memorandum reiterated his suggestions for early retirement pensions and publicly-funded road-building scheme. In addition, it recommended the setting up of government-controlled industrial bank to channel funds into work-creation schemes. (Nigel Jones, 48)
The steps proposed in memorandum were somehow similar to those shortly afterwards introduced to American government by George Roosevelt’s New Deal. However, British politicians considered the steps too radical and Mosley's proposal was dismissed, and as to that twice - for the second time later the same year. After that Mosley left the party to form his own ‘New Party’ and later the British Union of Fascists (further explained in chapter 6). Meanwhile, MacDonald set up many committees to investigate the depth of unemployment and economic distress, but did nothing concrete to fight it.
In 1931 the crisis deepened and the only solution was seen in the government and public spending. That meant 10 per cent cuts in unemployment benefits and postponing of almost all social projects. The 10 per cent cuts in unemployment benefits created a serious split in the government and MacDonald decided to resign. However, the King did not accept his resignation, quite the contrary, he appointed him to form a coalition government.