The ministers were hopelessly split over the benefits cut. The TUC denounced the cuts in benefits and public sector pay to affect teachers, police officers and servicemen. After a fierce argument in the cabinet; to placate the opposition party and the Bank of England, the cut in benefit was approved, but only by 11 votes to 9.
MacDonald claimed that the minority was too large for the government to continue, there was nothing else for it but to resign. He then, under the king’s commission formed a coalition party consisting of Conservatives, Liberals and only three other Labour MP’s, and called it the National Government and he stayed on as Prime Minister.
MacDonald thought a National government was necessary to further the national interest, placing this above party political considerations. As he explained on 24 August, national government was ‘a government of the people not the party’; the Labour party could have wisely been the government of the people in the first place had MacDonald not ignored Keynes and Mosley’s economic plans.
b) How far did problems of unemployment and workforce unrest contribute to political upheaval at the time?
Unemployment was the central problem of inter-war politics and attitudes towards it sometimes caused frictions and disagreement between the main parties; Labour, Liberal and Conservatives.
Labour had benefited from rising unemployment in that whilst it claimed it could not prevent unemployment, it could provide a better quality of life for the unemployed, through higher benefits and healthier lives (this however was put to the test between 1929-1931, and they failed miserably) After the General Strike, the working class put their faith in this claim and voted for the Labour party in 1929 and they won. However their victory was not by a majority vote, they were only slightly stronger than the Conservatives since they were the largest single party winning 288 seats to the Conservatives 260.
The Labour party was however divided between the grass roots Labour and their leaders MacDonald and Snowden. The grass roots Labour share a more sympathetic view towards the unemployed and supported the Strike. MacDonald however did not see the political benefit of an essentially trade union struggle- he was afraid of losing party votes. Trade Unionist complained that the Labour party had failed to support the strike. This will not be first time where MacDonald appeared to be supporting the Conservatives. There was a crucial dispute between the Labour Government and the Trade Unions at this time. This friction between the Trade unionist and the Labour party was repaired only because of the Conservatives political error in issuing The Trade Disputes Act 1927.
Sympathetic strikes and intimidation were illegal and union funds could be seized during a dispute through this Act. Trade union members were not required to contribute to the union’s political fund (the political levy paid to the Labour Party) unless they choose to do so by “contracting-in” instead of the usual “contracting-out”. The new act placed the responsibility on the member and many did not bother to contract-in causing a fall of over 25% of the Labour party’s income. This united the Unions, the Labour party and the people against the Conservatives resulting in the 1929 victory for Labour.
However, MacDonald had a tendency to drift from the grass root Labour ideas and cause a division within the party. MacDonald was despised for his seemingly anti-socialist attitude and he was supported by Snowden who believed in Capitalistic Free Trade. The rise of unemployment to 2.5 million in 1930 caused much friction within the party due to differences of opinion on the most effective socioeconomic strategies.
Mosley’s memorandum proposed imports restrictions, subsidies for farmers (to reduce food imports), bulk purchase from the Dominions, government control of banks to ensure that industry was allowed more credit (to enable new industries to expand), old age pensions at 60 and the school leaving age at 16 (instead of 14). The last two measures would have been expensive but would have made an immediate impact on unemployment. MacDonald and Snowden were far too cautious, they were afraid to make radical moves for fear of losing their positions. They ignored all advice. The government’s minority position was no excuse for its inaction, since the Liberals would have voted for a big programme of government investments to create jobs. There was much support for Mosley the Labour party, but when the leaders emphatically rejected his proposal, he resigned from the party. This is an example of division within and between the parties, Mac Donald appears to disregards the concerns of his fellow party members, and value his very own opinion as more superior and concrete to the rest. Social problems seem to have very little impact with MacDonald and Snowden. The problems within the Labour Party appear to have more to do with the Leadership.
The orthodoxy which dominated everything was to protect the gold standard: abandonment and devaluation was not considered by the authorities. Given the desperate financial circumstances reported by the May committee and need for loans, the cabinet was obliged to discuss cuts in public sector pay and unemployment benefits. The May committee, Snowden and foreign bankers insisted on this. So too did the Conservative leaders busily twisting the knives in Labour’s side. The cuts were opposed by the ministers closest to the TUC and the TUC itself. The cabinet as a whole finally agreed to the budget with benefit cuts as a necessary measure however almost half of the ministers rebelled. This decision was agreed on in order to placate the Conservatives and the Bank of England. As we can see the 3 million unemployed citizens were not in the equation when this decision was made.
MacDonald seeing that he has lost the unanimous support of his party; instead of reconciliation and further discussions as a leader, made the absolute selfish decision of abandoning the party. Taking matters into his hands without consulting anyone, he went on to create the National Government, and remained as Prime Minister.
Some Historians see the formation of the National Government as a futile act in that the upheaval caused was for nothing- France and the US refused credits when Britain applied and Britain was forced to leave the gold standard. Moreover MacDonald disagreed with the Conservative party and failed to alter Conservative policy.
Leaders of the TUC Labour party and Parliamentary Labour Party (PLP) decided to oppose MacDonald’s new government in Parliament and in the country. The PLP had met with members of the TUC general council on 28August 1931 to endorse a TUC Manifesto of opposition. The meeting then elected Arthur Henderson as leader of the party and JR Clynes as deputy leader. MacDonald was expelled from the part for openly ignoring party discipline and forming a government that was anti-socialist and which might pass anti-working class legislation.
The majority of the Labour party was furious with MacDonald; they condemned him as a traitor to the Labour movement and expelled him from the party. They accused him of being vain, ambitious and out of touch with the grass roots of the party, and claimed that he was planning to ditch them for a long time, so that he could remain in power. There is no solid evidence to support this view; his biographer, David Marquand, believes that George V and Baldwin persuaded MacDonald to stay on as Prime Minister of an all-party government as the best way of restoring confidence and avoiding General Election. Robert Skidelsky suggests that MacDonald’s real betrayal of the party occurred not in August 1931, but in the earlier part of his government, when he ignored advice and failed to take actions which might have avoided the crisis in 1931. More recently, Philip Williamson has put forward a slightly different interpretation: he suggests that Neville Chamberlain proposed a National Government in preference to a Conservative government, because “this would shield their party from the electorally damaging accusations that it was a rich man’s party cutting the incomes of the poor”.
Unemployment is not the immediate contributor to this political upheaval, it had more to do with differences of opinion, and an orthodox believe system that was too cautious to make changes.