Two major programs that permanently expanded the welfare state passed in 1919 and 1920 with surprisingly little debate, even as the Conservatives dominated parliament. The Housing and Town Planning Act of 1919 set up a system of government housing that followed the 1918 campaign promises of “homes fit for heroes.” The Addison Act, named after the first Minister of Health Doctor Christopher Addison, required local authorities to survey their housing needs, and start building houses to replace slums. The treasury subsidized the low rents. In England and Wales, 214,000 houses were built, and the Ministry of Health became largely a ministry of housing.
The Unemployment Insurance Act of 1920 passed at a time of very little unemployment. It set up the dole system that provided 39 weeks of unemployment benefits to practically the entire civilian working population except domestic service, farm workers, and civil servants. Funded in part by weekly contributions from both employers and employed, it provided weekly payments of 15s for unemployed men and 12s for unemployed women. Historian Charles Mowat calls these two laws “Socialism by the back door,” and notes how surprised politicians were when the costs to the Treasury soared during the high unemployment of 1921.
The Lloyd-George coalition fell apart in 1922. Stanley Baldwin, as leader of the Conservative Party (1923–37) and as Prime Minister (in 1923–24, 1924–29 and 1935–37), dominated British politics. His mixture of strong social reforms and steady government proved a powerful election combination, with the result that the Conservatives governed Britain either by themselves or as the leading component of the National Government. He was the last party leader to win over 50% of the vote (in the general election of 1931). Baldwin’s political strategy was to polarize the electorate so that voters would choose between the Conservatives on the right and the Labour Party on the left, squeezing out the Liberals in the middle. The polarization did take place and while the Liberals remained active under Lloyd George, they won few seats and were a minor factor until they joined a coalition with the Conservatives in 2010. Baldwin’s reputation soared in the 1920s and 1930s, but crashed after 1945 as he was blamed for the appeasement policies toward Germany, and as admirers of Churchill made him the Conservative icon. Since the 1970s Baldwin’s reputation has recovered somewhat.
Labour won the 1923 election, but in 1924 Baldwin and the Conservatives returned with a large majority.
McKibbin finds that the political culture of the interwar period was built around an anti-socialist middle class, supported by the Conservative leaders, especially Baldwin.
Taxes rose sharply during the war and never returned to their old levels. A rich man paid 8% of his income in taxes before the war, and about a third afterwards. Much of the money went for the dole, the weekly unemployment benefits. About 5% of the national income every year was transferred from the rich to the poor. Taylor argues most people “were enjoying a richer life than any previously known in the history of the world: longer holidays, shorter hours, higher real wages.”
The British economy was lackluster in the 1920s, with sharp declines and high unemployment in heavy industry and coal, especially in Scotland and Wales. Exports of coal and steel fell in half by 1939 and the business community was slow to adopt the new labour and management principles coming from the US, such as Fordism, consumer credit, eliminating surplus capacity, designing a more structured management, and using greater economies of scale. For over a century the shipping industry had dominated world trade, but it remained in the doldrums despite various stimulus efforts by the government. With the very sharp decline in world trade after 1929, its condition became critical.
Chancellor of the Exchequer Winston Churchill put Britain back on the gold standard in 1925, which many economists blame for the mediocre performance of the economy. Others point to a variety of factors, including the inflationary effects of the World War and supply-side shocks caused by reduced working hours after the war.
By the late 1920s, economic performance had stabilised, but the overall situation was disappointing, for Britain had fallen behind the United States as the leading industrial power. There also remained a strong economic divide between the north and south of England during this period, with the south of England and the Midlands fairly prosperous by the Thirties, while parts of south Wales and the industrial north of England became known as “distressed areas” due to particularly high rates of unemployment and poverty. Despite this, the standard of living continued to improve as local councils built new houses to let to families rehoused from outdated slums, with up to date facilities including indoor toilets, bathrooms and electric lighting now being included in the new properties. The private sector enjoyed a housebuilding boom during the 1930s.
During the war trade unions were encouraged and their membership grew from 4.1 million in 1914 to 6.5 million in 1918. They peaked at 8.3 million in 1920 before relapsing to 5.4 million in 1923.
Coal was a sick industry; the best seams were being exhausted, raising the cost. Demand fell as oil began replacing coal for fuel. The 1926 general strike was a nine-day nationwide walkout of 1.3 million railwaymen, transport workers, printers, dockers, iron workers and steelworkers supporting the 1.2 million coal miners who had been locked out by the owners. The miners had rejected the owners’ demands for longer hours and reduced pay in the face of falling prices. The Conservative government had provided a nine-month subsidy in 1925 but that was not enough to turn around a sick industry. To support the miners the Trades Union Congress (TUC), an umbrella organization of all trades unions, called out certain critical unions. The hope was the government would intervene to reorganize and rationalize the industry, and raise the subsidy. The Conservative government had stockpiled supplies and essential services continued with middle class volunteers. All three major parties opposed the strike. The Labour Party leaders did not approve and feared it would tar the party with the image of radicalism, for the Cominterm in Moscow had sent instructions for Communists to aggressively promote the strike. The general strike itself was largely non-violent, but the miners’ lockout continued and there was violence in Scotland. It was the only general strike in British history, for TUC leaders such as Ernest Bevin considered it a mistake . Most historians treat it as a singular event with few long-term consequences, but Pugh says it accelerated the movement of working-class voters to the Labour Party, which led to future gains. The Trade Disputes and Trade Unions Act 1927 made general strikes illegal and ended the automatic payment of union members to the Labour Party. That act was largely repealed in 1946. The coal industry, used up the more accessible coal as costs rose output fell from 2567 million tons in 1924 to 183 million in 1945. The Labour government nationalised the mines in 1947.
The Great Depression originated in the United States in late 1929 and quickly spread to the world. Britain had never experienced the boom that had characterized the US, Germany, Canada and Australia in the 1920s, so its bust appeared less severe. Britain’s world trade fell in half (1929–33), the output of heavy industry fell by a third, employment profits plunged in nearly all sectors. At the depth in summer 1932, registered unemployed numbered 3.5 million, and many more had only part-time employment. Experts tried to remain optimistic. John Maynard Keynes, who had not predicted the slump, said, “‘There will be no serious direct consequences in London. We find the look ahead decidedly encouraging.”
Doomsayers on the left such as Sidney and Beatrice Webb, J.A. Hobson, and G.D.H. Cole repeated the dire warnings they had been making for years about the imminent death of capitalism, only now far more people paid attention. Starting in 1935 the Left Book Club provided a new warning every month, and built up the credibility of Soviet-style socialism as an alternative.
Particularly hardest hit by economic problems were the north of England, Scotland, Northern Ireland and Wales; unemployment reached 70% in some areas at the start of the 1930s (with more than 3 million out of work nationally) and many families depended entirely on payments from local government known as the dole.
In 1936, by which time unemployment was lower, 200 unemployed men made a highly publicized march from Jarrow to London in a bid to show the plight of the industrial poor. Although much romanticized by the Left, the Jarrow Crusade marked a deep split in the Labour Party and resulted in no government action. Unemployment remained high until the war absorbed all the job seekers. George Orwell‘s book The Road to Wigan Pier gives a bleak overview of the hardships of the time.
Vivid memories of the horrors and deaths of the World War made Britain and its leaders strongly inclined to pacifism in the interwar era. The challenge came from dictators, first Benito Mussolini of Italy, then Adolf Hitler of a much more powerful Nazi Germany. The League of Nations proved disappointing to its supporters; it was unable to resolve any of the threats posed by the dictators. British policy was to “appease” them in the hopes they would be satiated. By 1938 it was clear that war was looming, and that Germany had the world’s most powerful military. The final act of appeasement came when Britain and France sacrificed Czechoslovakia to Hitler’s demands at the Munich Agreement of 1938. Instead of satiation Hitler menaced Poland, and at last Prime Minister Neville Chamberlain dropped appeasement and stood firm in promising to defend Poland. Hitler however cut a deal with Joseph Stalin to divide Eastern Europe; when Germany did invade Poland in September 1939, Britain and France declared war; the British Commonwealth followed London’s lead.
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