In the 1895 General Election the Independent Labour Party put up 28 candidates but won only 44,325 votes. Keir Hardie, the leader of the party believed that to obtain success in parliamentary elections, it would be necessary to join with other left-wing groups.
On 27th February 1900, representatives of all the socialist groups in Britain (the Independent Labour Party, the Social Democratic Federation and the Fabian Society, met with trade union leaders at the Congregational Memorial Hall in Farringdon Street. After a debate the 129 delegates decided to pass Hardie's motion to establish "a distinct Labour group in Parliament, who shall have their own whips, and agree upon their policy, which must embrace a readiness to cooperate with any party which for the time being may be engaged in promoting legislation in the direct interests of labour." To make this possible the Conference established a Labour Representation Committee (LRC). This committee included two members from the Independent Labour Party, two from the Social Democratic Federation, one member of the Fabian Society, and seven trade unionists.
Ramsay MacDonald was chosen as the secretary of the LRC. As he was financed by his wealthy wife, Margaret MacDonald, he did not have to be paid a salary. The LRC put up fifteen candidates in the 1900 General Election and between them they won 62,698 votes. Two of the candidates, Keir Hardie and Richard Bell won seats in the House of Commons.
The LRC did much better in the 1906 General Election with twenty nine successful candidates winning their seats. This included Ramsay MacDonald (Leicester) James Keir Hardie (Merthyr Tydfil), Philip Snowden (Blackburn), Arthur Henderson (Barnard Castle), George Barnes (Glasgow Blackfriars), Will Thorne (West Ham) and Fred Jowett (Bradford). At a meeting on 12th February, 1906, the group of MPs decided to change from the LRC to the Labour Party. Hardie was elected chairman and MacDonald was selected to be the party's secretary.
At first James Keir Hardie was chairman of the party in the House of Commons, but was not very good with dealing with internal rivalries within the party, and in 1908 resigned from the post and Arthur Henderson became leader. However, it was Ramsay MacDonald who held the most power. As David Marquand has pointed out: "The British Labour movement had traditionally been reluctant to combine symbolic authority wvith real power. Its chairmen and presidents were figureheads: power rested with secretaries, theoretically responsible to committees. The L.R.C., and later the Labour Party, followed this tradition. The chairman presided over the National Executive: it was MacDonald, the secretary, who controlled the machine."
By 1909 many Labour MPs objected to the strong support that the leadership was giving to the WSPU and the NUWSS in their fight for votes for women. George Barnes argued that the party was being sidetracked from more important issues. James Keir Hardie was not very good with dealing with internal rivalries within the party, and in 1908 resigned from the post and Arthur Henderson became chairman.
Ramsay MacDonald continued to play an important role in developing policy and proposed the introduction of a super-tax on large incomes, special taxes on state-conferred monopolies, increased estate and legacy duties and a taxation on land values."
In 1909 David Lloyd George announced what became known as the People's Budget. This included increases in taxation. Whereas people on lower incomes were to pay 9d. in the pound, those on annual incomes of over £3,000 had to pay 1s. 2d. in the pound. Lloyd George also introduced a new supertax of 6d. in the pound for those earning £5000 a year. Other measures included an increase in death duties on the estates of the rich and heavy taxes on profits gained from the ownership and sale of property. Other innovations in Lloyd George's budget included labour exchanges and a children's allowance on income tax. Ramsay MacDonald argued that the Labour Party should fully support the budget. "Mr. Lloyd George's Budget, classified property into individual and social, incomes into earned and unearned, and followers more closely the theorical contentions of Socialism and sound economics than any previous Budget has done."
Arthur Henderson did not have the full-support of the party and in 1910 he decided to retire as chairman. Ramsay MacDonald was expected to become the new leader but recently his youngest son had died of diphtheria. Eight days later his mother also died. It was therefore decided that George Barnes should become chairman. A few months later Barnes wrote to MacDonald saying he did not want to become chairman and was "only holding the fort". He continued, "I should say it is yours anytime".
Henderson also suggested that MacDonald should become chairman. As David Marquand, the author of Ramsay MacDonald (1977) pointed out: "It is unlikely that he did so out of a sudden access of personal affection, or even out of admiration for MacDonald's character and abilities. He wanted MacDonald as chairman, partly because he wanted to be party secretary himself and believed correctly that he would be a good one, partly because he believed - again correctly - that MacDonald was the only potential candidate capable of reconciling the ILP to the moderate line favoured by the unions."
The 1910 General Election saw 40 Labour MPs elected to the House of Commons. Two months later, on 6th February, 1911, George Barnes sent a letter to the Labour Party announcing that he intended to resign as chairman. At the next meeting of MPs, Ramsay MacDonald was elected unopposed to replace Barnes. Arthur Henderson now became secretary. According to Philip Snowden, a bargain had been struck at the party conference the previous month, whereby MacDonald was to resign the secretaryship in Henderson's favour, in return for becoming chairman."
Bruce Glasier was not convinced that MacDonald was a socialist. In June 1911 he wrote in his diary: "I noticed that Ramsay MacDonald in speaking of the appeal we should send out for capital used the word Democratic rather than Labour or Socialist as describing the character of the paper. I rebulked him flatly and said we would have no democratic paper but a Socialist and Labour one - boldly proclaimed. Why does MacDonald always seem to try and shirk the word Socialism except when he is writing critical books about the subject."
The Liberal government's next major reform was the 1911 National Insurance Act. This gave the British working classes the first contributory system of insurance against illness and unemployment. All wage-earners between sixteen and seventy had to join the health scheme. Each worker paid 4d a week and the employer added 3d. and the state 2d. In return for these payments, free medical attention, including medicine was given. Those workers who contributed were also guaranteed 7s. a week for fifteen weeks in any one year, when they were unemployed.
Ramsay MacDonald declared in the House of Commons that the premiums were too high and the balance between state, employer and employee was unfair. However, he believed that the Labour Party should try to get the measure modified. Some leading figures in the movement, including James Keir Hardie, Philip Snowden, Will Thorne and George Lansbury, disagreed and called for the bill to be rejected. MacDonald was furious about this rebellious behaviour. He continued to negotiate with David Lloyd George and managed to get important concessions including low-paid workers exempted from contributions.
MacDonald also clashed with some members of the party over votes for women. He had argued for many years that women's suffrage that was a necessary part of a socialist programme. He was therefore able to negotiate an agreement with the National Union of Women's Suffrage Societies for joint action in by-elections. In October, 1912, it was claimed that £800 of suffragist money had been spent on Labour candidatures.
However, some leaders of the Labour Party, including James Keir Hardie and George Lansbury, supported the campaign of the Women's Social and Political Union, MacDonald rejected their use of violence: "I have no objection to revolution, if it is necessary but I have the very strongest objection to childishness masquerading as revolution, and all that one can say of these window-breaking expeditions is that they are simply silly and provocative. I wish the working women of the country who really care for the vote ... would come to London and tell these pettifogging middle-class damsels who are going out with little hammers in their muffs that if they do not go home they will get their heads broken."
Ramsay MacDonald also pointed out, the WSPU wanted votes for women on the same terms as men, and specifically not votes for all women. He considered this unfair as at this time only a third of men had the vote in parliamentary elections at this time. MacDonald's friend, John Bruce Glasier, recorded in his diary after a meeting with Emmeline Pankhurst and Christabel Pankhurst, that they were guilty of "miserable individualist sexism" and that he was strongly against supporting the organisation.
MacDonald was totally against Britain's involvement in the First World War. His views were shared by other Labour Party leaders such as James Keir Hardie, Philip Snowden, George Lansbury and Fred Jowett. Others in the party such as Arthur Henderson, George Barnes, J. R. Clynes, William Adamson, Will Thorne and Ben Tillett believed that the movement should give total support to the war effort.
On 5th August, 1914, the parliamentary party voted to support the government's request for war credits of £100,000,000. MacDonald immediately resigned the chairmanship. He wrote in his diary: "I saw it was no use remaining as the Party was divided and nothing but futility could result. The Chairmanship was impossible. The men were not working, were not pulling together, there was enough jealously to spoil good feeling. The Party was no party in reality. It was sad, but glad to get out of harness." Arthur Henderson, once again, became the leader of the party.
Ramsay MacDonald came under attack from newspapers because of his opposition to the First World War. On 1st October 1914, The Times published a leading article entitled Helping the Enemy, in which it wrote that "no paid agent of Germany had served her better" that MacDonald had done. The newspaper also included an article by Ignatius Valentine Chirol, who argued: "We may be rightly proud of the tolerance we display towards even the most extreme licence of speech in ordinary times... Mr. MacDonald' s case is a very different one. In time of actual war... Mr. MacDonald has sought to besmirch the reputation of his country by openly charging with disgraceful duplicity the Ministers who are its chosen representatives, and he has helped the enemy State ... Such action oversteps the bounds of even the most excessive toleration, and cannot be properly or safely disregarded by the British Government or the British people."
In May 1915, Henderson became the first member of the Labour Party to hold a Cabinet post when Herbert Asquith invited him to join his coalition government. Bruce Glasier commented in his diary: "This is the first instance of a member of the Labour Party joining the government. Henderson is a clever, adroit, rather limited-minded man - domineering and a bit quarrelsome - vain and ambitious. He will prove a fairly capable official front-bench man, but will hardly command the support of organised Labour." Henderson was also President of the Board of Education (May, 1915 - October, 1916) and Paymaster General (October, 1916 - August, 1917), during the First World War.
Horatio Bottomley, argued in the John Bull Magazine that Ramsay MacDonald and James Keir Hardie, were the leaders of a "pro-German Campaign". On 19th June 1915 the magazine claimed that MacDonald was a traitor and that: "We demand his trial by Court Martial, his condemnation as an aider and abetter of the King's enemies, and that he be taken to the Tower and shot at dawn."
On 4th September, 1915, the magazine published an article which made an attack on his background. "We have remained silent with regard to certain facts which have been in our possession for a long time. First of all, we knew that this man was living under an adopted name - and that he was registered as James MacDonald Ramsay - and that, therefore, he had obtained admission to the House of Commons in false colours, and was probably liable to heavy penalties to have his election declared void. But to have disclosed this state of things would have imposed upon us a very painful and unsavoury duty. We should have been compelled to produce the man's birth certificate. And that would have revealed what today we are justified in revealing - for the reason we will state in a moment... it would have revealed him as the illegitimate son of a Scotch servant girl!"
After the overthrow of Tsar Nicholas II in Russia, socialists in Britain, France, Germany, Austria-Hungary, United States and Italy called for a conference in a neutral country to see if the First World War could be brought to an end. Eventually, it was announced that the Stockholm Conference would take place in July 1917. Arthur Henderson was sent by David Lloyd-George to speak to Alexander Kerensky, the leader of the Provisional Government in Russia.
At a conference of the Labour Party held in London on 10th August, 1917, Henderson made a statement recommending that the Russian invitation to the Stockholm Conference should be accepted. Delegates voted 1,846,000 to 550,000 in favour of the proposal and it was decided to send Henderson and Ramsay MacDonald to the peace conference. However, under pressure from President Woodrow Wilson, the British government had changed his mind about the wisdom of the conference and refused to allow delegates to travel to Stockholm. As a result of this decision, Henderson resigned from the government.
William Adamson replaced Arthur Henderson as chairman of the party in October 1917. David W. Howell has argued: "His experience as effectively party leader in the Commons was unhappy. Many felt that he lacked the necessary qualities." Beatrice Webb commented in her diary: "He has neither wit, fervour nor intellect; he is most decidedly not a leader, not even like Henderson, a manager of men."
In the 1918 General Election, a large number of the Labour leaders lost their seats. This included Arthur Henderson, Ramsay MacDonald, Philip Snowden, George Lansbury and Fred Jowett. Adamson held the post until February 1921 when he was replaced by John R. Clynes. Snowden commented: "Clynes had considerable qualifications for Parliamentary leadership. He was an exceptionally able speaker, a keen and incisive debater, had wide experience of industrial questions, and a good knowledge of general political issues. In the Labour Party Conferences when the platform got into difficulties with the delegates, Mr. Clynes was usually put up to calm the storm."
As leader of the Labour Party, John R. Clynes was strongly opposed to working with the Communist Party of Great Britain: "In countries where no democratic weapon exists a class struggle for the enthronement of force by one class over other classes may be condoned, but in this country where the wage-earners possess 90 per cent of the voting power of the country agitation to use not the power which is possessed but some risky class dictatorship is a futile and dangerous doctrine."
In the 1922 General Election the Labour Party won 142 seats, making it the second largest political group in the House of Commons after the Conservative Party (347). David Marquand has pointed out that: "The new parliamentary Labour Party was a very different body from the old one. In 1918, 48 Labour M.P.s had been sponsored by trade unions, and only three by the ILP. Now about 100 members belonged to the ILP, while 32 had actually been sponsored by it, as against 85 who had been sponsored by trade unions.... In Parliament, it could present itself for the first time as the movement of opinion rather than of class."
At a meeting of the Parliamentary Labour Party on 21st November, 1922, Emanuel Shinwell proposed Ramsay MacDonald should become chairman. David Kirkwood, a fellow Labour MP, commented: "Nature had dealt unevenly with them. She had endowed MacDonald with a magnificent presence, a full resonant voice, and a splendid dignity. Clynes was small, unassuming, of uneven features, and voice without colour." After much discussion, John R. Clynes received 56 votes to MacDonald's 61. Clynes, with characteristic generosity, declared that the whole party was determined to support the new leader.
In the 1923 General Election, the Labour Party won 191 seats. Although the Conservative Party had 258 seats, Herbert Asquith announced that the Liberal Party would not keep the Tories in office. If a Labour Government were ever to be tried in Britain, he declared, "it could hardly be tried under safer conditions". On 22nd January, 1924 Stanley Baldwin resigned. At midday, Ramsay MacDonald went to Buckingham Palace to be appointed prime minister. He later recalled how George V complained about the singing of the Red Flag and the La Marseilles, at the Labour Party meeting in the Albert Hall a few days before. MacDonald apologized but claimed that there would have been a riot if he had tried to stop it.
Ramsay MacDonald agreed to head a minority government, and therefore became the first member of the party to become Prime Minister. MacDonald had the problem of forming a Cabinet with colleagues who had little, or no administrative experience. MacDonald's appointments included Philip Snowden (Chancellor of the Exchequor), Arthur Henderson (Home Secretary), John R. Clynes (Lord Privy Seal), Sidney Webb (Board of Trade) and Arthur Greenwood (Health), Charles Trevelyan (Education), John Wheatley (Housing), Fred Jowett (Commissioner of Works), William Adamson (Secretary for Scotland), Harry Gosling (Paymaster General), Vernon Hartshorn (Postmaster General), Emanuel Shinwell (Mines), Noel Buxton (Agriculture and Fisheries), Stephen Walsh (Secretary of State for War), Frank Hodges (Lord of the Admiralty), Ben Spoor (Chief Whip) and Sydney Olivier (Secretary of State for India).
Ramsay MacDonald also took the post of foreign secretary but he had the capable Arthur Ponsonby as his deputy in the department. Both men had been strong opponents of the First World War. Ponsonby wrote to MacDonald: "The incredible seems about to happen. We are actually to be allowed by an extraordinary combination of circumstances to have control of the Foreign Office and to begin to carry out some of the things we have been urging and preaching for years."
MacDonald received a salary as prime minister of £5,000 a year. He received no entertainment allowance and had to pay out of own pocket for such items of household equipment as linen and china. To save coal, the family ate their meals not in their private quarters but in the official banqueting-rooms which were centrally heated at the Government's expense. He was also told that he had to wear a special uniform of black evening dress and knee breeches when he appeared before the king. The cost of this was £30 from Moss Brothers. He was told that if any of his cabinet ministers refused to wear this uniform they would not be allowed to attend official functions.
Two days after forming the first Labour government Ramsay MacDonald received a note from General Borlass Childs of Special Branch that said "in accordance with custom" a copy was enclosed of his weekly report on revolutionary movements in Britain. MacDonald wrote back that the weekly report would be more useful if it also contained details of the "political activities... of the Fascist movement in this country". Childs wrote back that he had never thought it right to investigate movements which wished to achieve their aims peacefully. In reality, MI5 was already working very closely with the British Fascisti, that had been established in 1923. Maxwell Knight was the organization's Director of Intelligence. In this role he had responsibility for compiling intelligence dossiers on its enemies; for planning counter-espionage and for establishing and supervising fascist cells operating in the trade union movement. This information was then passed onto Vernon Kell, Director of the Home Section of the Secret Service Bureau (MI5). Later In Kell placed in charge of B5b, a unit that conducted the monitoring of political subversion.
As MacDonald had to reply on the support of the Liberal Party, he was unable to get any socialist legislation passed by the House of Commons. The only significant measure was the Wheatley Housing Act which began a building programme of 500,000 homes for rent to working-class families. The legislation involved developing a partnership between political parties, local authorities and specially appointed committees of building employees and employers. The plan was to build 190,000 new council houses at modest rents in 1925, and that this figure would gradually increase until it reached 450,000 in 1934.
As Ian S. Wood has pointed out: "Wheatley's Housing (Financial Provisions) Act was the only major legislative achievement of the 1924 Labour government. Until its subsidy provisions were repealed by the National Government in 1934, a substantial proportion of all rented local authority housing in Britain was built under its terms and sixty years later there were still people in Scotland who spoke of Wheatley houses. The act was a complex one, bringing together trade unions, building firms, and local authorities in a scheme to tackle a housing shortage which was guaranteed central government funding provided that building standards set by the act were adhered to. The act did little for actual slum clearance but it hugely enhanced Wheatley's reputation despite the loss of a companion measure, the Building Materials Bill, which would have given central government a wide range of controls over supplies of building materials to local councils operating the Housing Act."
On 25th July 1924 John Ross Campbell published an "Open Letter to the Fighting Forces" in the Worker's Weekly newspaper that had been written anonymously by Harry Pollitt, the leader of the Communist Party of Great Britain (CPGB). The article called on soldiers to "let it be known that, neither in the class war nor in a military war, will you turn your guns on your fellow workers". Sir Patrick Hastings, the Attorney General, initially advised Ramsay MacDonald, to prosecute Campbell under the Incitement to Mutiny Act 1797. However, Hastings later changed his mind because he was "a man of otherwise excellent character with a fine war record." The opposition parties accused the minority Labour government of being under the influence of the CPGB.
In September 1924 the MI5 intercepted a letter written by Grigory Zinoviev, chairman of the Comintern in the Soviet Union. The Zinoviev Letter urged British communists to promote revolution through acts of sedition. Vernon Kell, head of MI5 and Sir Basil Thomson head of Special Branch, told MacDonald that they were convinced that the letter was genuine.
While this was going on Ramsay MacDonald faced a motion of no confidence in the House of Commons over the way he had dealt with the John Ross Campbell case. In the debate that took place on 8th October, MacDonald gave an unispiring account of events and when he lost the motion by 304 to 191 votes, he decided to resign and a general election was announced for Wednesday, 29th October, 1924.
It was initially agreed that the Zinoviev Letter should be kept secret. However, just before the election, someone leaked news of the letter to the Times and the Daily Mail. The letter was published in these newspapers four days before the 1924 General Election and contributed to the defeat of MacDonald. The Conservatives won 412 seats and formed the next government. With his 151 Labour MPs, MacDonald became leader of the opposition in the House of Commons.
Following Labour's defeat in the 1924 General Election, Philip Snowden and other leading figures in the movement tried to persuade Arthur Henderson to stand against MacDonald as leader of the party. Henderson refused and once again became chief whip of the party where he tried to unite the party behind MacDonald's leadership. Henderson was also the main person responsible for Labour and the Nation, a pamphlet that attempted to clarify the political aims of the Labour Party.
Ramsay MacDonald continued with his policy of presenting the Labour Party as a moderate force in politics and refused to support the 1926 General Strike. MacDonald argued that strikes should not be used as a political weapon and that the best way to obtain social reform was through parliamentary elections. He was especially critical of A. J. Cook. He wrote in his diary: "It really looks tonight as though there was to be a General Strike to save Mr. Cook's face... The election of this fool as miners' secretary looks as though it would be the most calamitous thing that ever happened to the T.U. movement."
MacDonald's moderate image was popular with the voters and he was expected to lead his party to victory in the 1929 General Election. However, some thought that the party needed to promise more dramatic reform. Richard Tawney sent a letter to the leaders of the party: "If the Labour Election Programme is to be of any use it must have something concrete and definite about unemployment... What is required is a definite statement that (a) Labour Government will initiate productive work on a larger scale, and will raise a loan for the purpose. (b) That it will maintain from national funds all men not absorbed in such work." MacDonald refused to be persuaded by Tawney's ideas and rejected the idea that unemployment could be cured by public works.
During the election campaign, David Lloyd George, the leader of the Liberal Party, published a pamphlet, We Can Conquer Unemployment, where he proposed a government scheme where 350,000 men were to be employed on road-building, 60,000 on housing, 60,000 on telephone development and 62,000 on electrical development. The cost would be £250 million, and the money would be raised by loan. John Maynard Keynes, the country's leading economist, also published a pamphlet supporting Lloyd George's scheme.
In the 1929 General Election the Conservatives won 8,664,000 votes, the Labour Party 8,360,000 and the Liberals 5,300,000. However, the bias of the system worked in Labour's favour, and in the House of Commons the party won 287 seats, the Conservatives 261 and the Liberals 59. MacDonald became Prime Minister again, but as before, he still had to rely on the support of the Liberals to hold onto power. Egon Ranshofen-Wertheimer wrote: "In the slums of the manufacturing towns and in the hovels of the countryside he (MacDonald) has become a legendary being - the personification of all that thousands of downtrodden men and women hope and dream and desire... he is the focus of the mute hopes of a whole class."
MacDonald's appointments included Philip Snowden (Chancellor of the Exchequor), Arthur Henderson (Foreign Secretary), Charles Trevelyan (Education), Jimmy Thomas (Lord Privy Seal), John R. Clynes (Home Secretary), Arthur Greenwood (Health), Sidney Webb (Secretary of State for the Colonies), Noel Buxton (Agriculture and Fisheries), William Adamson (Secretary for Scotland), John Sankey (Lord Chancellor), George Lansbury (First Commissioner of Works), Herbert Morrison (Transport), William Graham (President of the Board of Trade), Tom Shaw (Secretary of State for War), Earl De La Warr (Under-Secretary of State for War), Emanuel Shinwell (Financial Secretary to the War Office), Frederick Pethick-Lawrence (Financial Secretary to the Treasury), Hastings Lees-Smith (Postmaster General), Hugh Dalton (Under-Secretary of State for Foreign Affairs), Lord Thompson (Secretary of State for Air), Arthur Ponsonby (Under-Secretary of State for Dominion Affairs), Susan Lawrence (Parliamentary Secretary to the Ministry of Health), William Wedgwood Benn (Secretary of State for India), Margaret Bondfield (Minister of Labour), Frederick Roberts (Minister of Pensions) and Oswald Mosley (Chancellor of the Duchy of Lancaster).
Ramsay MacDonald refused to ask John Wheatley office to join the government: Philip Snowden later recalled: "During the time we had been in Opposition (1925-29), Wheatley had dissociated himself from his former Cabinet colleagues, and had gone to the back benches into the company of the Clydesiders. In the country, too, he had made speeches attacking his late colleagues. MacDonald was strongly opposed to offering him a post in the new Government. Wheatley had deserted us and insulted us, and MacDonald thought the country would be shocked if he were included in the Cabinet, and it would be taken as evidence of rebel influence." However, Arthur Henderson, disagreed with MacDonald. So did Snowden, who argued: "Arthur Henderson took the view, and I was inclined to agree with him, that it might be better to have him inside than outside. I took this view from my experience of him as a Minister. he was a man who, when free from the responsibility of office, would make extreme speeches; but as a Minister I had always found him to be reasonable and practical."
The election of the Labour Government coincided with an economic depression and MacDonald was faced with the problem of growing unemployment. In January 1929, 1,433,000 people were out of work, a year later it reached 1,533,000. By March 1930, the figure was 1,731,000. In June it reached 1,946,000 and by the end of the year it reached a staggering 2,725,000. That month MacDonald invited a group of economists, including John Maynard Keynes, J. A. Hobson, George Douglas Cole and Walter Layton, to discuss this problem.
In January 1930 Oswald Mosley proposed a programme that he believed would help deal with the growing problem of unemployment in Britain. According to David Marquand: "It made three main assertions - that the machinery of government should be drastically overhauled, that unemployment could be radically reduced by a public-works programme on the lines advocated by Keynes and the Liberal Party, and that long-term economic reconstruction required a mobilisation of national resources on a larger scale than has yet been contemplated. The existing administrative structure, Mosley argued, was hopelessly inadequate. What was needed was a new department, under the direct control of the prime minister, consisting of an executive committee of ministers and a secretariat of civil servants, assisted by a permanent staff of economists and an advisory council of outside experts."
MacDonald passed the Mosley Memorandum to a committee consisting of Philip Snowden, Tom Shaw, Arthur Greenwood and Margaret Bondfield. The committee reported back on 1st May. Mosley's administrative proposals, the committee claimed "cut at the root of the individual responsibilities of Ministers, the special responsibility of the Chancellor of the Exchequer in the sphere of finance, and the collective responsibility of the Cabinet to Parliament". The Snowden Report went onto argue that state action to reduce unemployment was highly dangerous. To go further than current government policy "would be to plunge the country into ruin".
MacDonald recorded in his diary what happened when Oswald Mosley heard the news about his proposals on 19th May: "Mosley came to see me... had to see me urgently: informed me he was to resign. I reasoned with him and got him to hold his decision over till we had further conversations. Went down to Cabinet Room late for meeting. Soon in difficulties. Mosley would get away from practical work into speculative experiments. Very bad impression. Thomas light, inconsistent but pushful and resourceful; others overwhelmed and Mosley on the verge of being offensively vain in himself."
At a meeting of Labour MPs took place on 21st May where Oswald Mosley outlined his proposals. This included the provision of old-age pensions at sixty, the raising of the school-leaving age and an expansion in the road programme. Arthur Henderson appealed to Mosley to withdraw his motion so that his proposals could be discussed in detail at later meetings. Mosley insisted on putting his motion to the vote and was beaten by 210 to 29.
In a debate in the House of Commons on 28th May 1930, MacDonald argued that the rise in unemployment was caused by factors outside the government's control. The public disagreed and the Labour Party suffered several by-election defeats. MacDonald wrote in his diary that the "party is showing signs of panic". He added that "Mosley is hard at work capturing the party".
David Marquand argues in his book of Ramsay MacDonald (1977) that he faced a serious dilemma: "Should the Government after all embark on a big public-works programme, financed by loan? If not, what should it do instead? Was there a halfway house, somewhere between the Mosley memorandum on the one hand and the Snowden report on the other? How could the Government's existing public-works expenditure be made more effective, and the delays in implementing its decisions be cut down?... He was profoundly sceptical about the public-works solution advocated by Mosley and Lloyd George, not least because of the sweeping claims they made for it, but he was at least sceptical of the dogmatic negatives of his chancellor (Snowden).
MacDonald did give approval for several public-works projects. By June 1930 the projects were valued at £44 million. Vernon Hartshorn, who had been put in charge of these projects, estimated that the total number employed directly and indirectly as a result of this investment, would be about 150,000. The prime minister admitted in his diary on 24th June that this was not enough: "Unemployment is baffling us for the moment. Up 110,000 in a fortnight. Nothing can dam the flow at the moment."
Philip Snowden wrote in his notebook on 14th August that "the trade of the world has come near to collapse and nothing we can do will stop the increase in unemployment." He was growing increasingly concerned about the impact of the increase in public-spending. At a cabinet meeting in January 1931, he estimated that the budget deficit for 1930-31 would be £40 million. Snowden argued that it might be necessary to cut unemployment benefit. Margaret Bondfield looked into this suggestion and claimed that the government could save £6 million a year if they cut benefit rates by 2s. a week and to restrict the benefit rights of married women, seasonal workers and short-time workers.
In March 1931 Ramsay MacDonald asked Sir George May, to form a committee to look into Britain's economic problems. The committee included two members that had been nominated from the three main political parties. At the same time, John Maynard Keynes, the chairman of the Economic Advisory Council, published his report on the causes and remedies for the depression. This included an increase in public spending and by curtailing British investment overseas.
Philip Snowden rejected these ideas and this was followed by the resignation of Charles Trevelyan, the Minister of Education. "For some time I have realised that I am very much out of sympathy with the general method of Government policy. In the present disastrous condition of trade it seems to me that the crisis requires big Socialist measures. We ought to be demonstrating to the country the alternatives to economy and protection. Our value as a Government today should be to make people realise that Socialism is that alternative."
When the May Committee produced its report in July, 1931, it forecast a huge budget deficit of £120 million and recommended that the government should reduce its expenditure by £97,000,000, including a £67,000,000 cut in unemployment benefits. The two Labour Party nominees on the committee, Arthur Pugh and Charles Latham, refused to endorse the report. As David W. Howell has pointed out: "A committee majority of actuaries, accountants, and bankers produced a report urging drastic economies; Latham and Pugh wrote a minority report that largely reflected the thinking of the TUC and its research department. Although they accepted the majority's contentious estimate of the budget deficit as £120 million and endorsed some economies, they considered the underlying economic difficulties not to be the result of excessive public expenditure, but of post-war deflation, the return to the gold standard, and the fall in world prices. An equitable solution should include taxation of holders of fixed-interest securities who had benefited from the fall in prices."
The cabinet decided to form a committee consisting of Ramsay MacDonald, Philip Snowden, Arthur Henderson, Jimmy Thomas and William Graham to consider the report. On 5th August, John Maynard Keynes wrote to MacDonald, describing the May Report as "the most foolish document I ever had the misfortune to read." He argued that the committee's recommendations clearly represented "an effort to make the existing deflation effective by bringing incomes down to the level of prices" and if adopted in isolation, they would result in "a most gross perversion of social justice". Keynes suggested that the best way to deal with the crisis was to leave the Gold Standard and devalue sterling. Two days later, Sir Ernest Harvey, the deputy governor of the Bank of England, wrote to Snowden to say that in the last four weeks the Bank had lost more than £60 million in gold and foreign exchange, in defending sterling. He added that there was almost no foreign exchange left.
Philip Snowden presented his recommendations to the MacDonald Committee that included the plan to raise approximately £90 million from increased taxation and to cut expenditure by £99 million. £67 million was to come from unemployment insurance, £12 million from education and the rest from the armed services, roads and a variety of smaller programmes. Arthur Henderson and William Graham rejected the idea of the proposed cut in unemployment benefit and the meeting ended without any decisions being made.
Frederick Pethick-Lawrence and Susan Lawrence both decided to resign from the government if the cuts to the unemployment benefit went ahead: Pethick-Lawrence wrote: "Susan Lawrence came to see me. As Parliamentary Secretary to the Ministry of Health, she was concerned with the proposed cuts in unemployment relief, which she regarded as dreadful. We discussed the whole situation and agreed that, if the Cabinet decided to accept the cuts in their entirety, we would both resign from the Government."
The cabinet met on 19th August but they were unable to agree on Snowden's proposals. He warned that balancing the budget was the only way to restore confidence in sterling. Snowden argued that if his recommendations were not accepted, sterling would collapse. He added "that if sterling went the whole international financial structure would collapse, and there would be no comparison between the present depression and the chaos and ruin that would face us."
The following day MacDonald and Snowden had a private meeting with Neville Chamberlain, Samuel Hoare, Herbert Samuel and Donald MacLean to discuss the plans to cut government expenditure. Chamberlain argued against the increase in taxation and called for further cuts in unemployment benefit. MacDonald also had meetings with trade union leaders, including Walter Citrine and Ernest Bevin. They made it clear they would resist any attempts to put "new burdens on the unemployed".
At another meeting of the Cabinet on 20th August, Arthur Henderson argued that rather do what the bankers wanted, Labour should had over responsibility to the Conservatives and Liberals and leave office as a united party. According to Malcolm MacDonald, the opposition to the cuts in public expenditure was led by Henderson, Albert Alexander and William Graham.
Ramsay MacDonald went to see George V about the economic crisis on 23rd August. He warned the King that several Cabinet ministers were likely to resign if he tried to cut unemployment benefit. MacDonald wrote in his diary: "King most friendly and expressed thanks and confidence. I then reported situation and at end I told him that after tonight I might be of no further use, and should resign with the whole Cabinet.... He said that he believed I was the only person who could carry the country through."
According to Harold Nicolson, the King decided to consult the leaders of the Conservative and Liberal Parties. Herbert Samuel told the King that he should try and persuade MacDonald to make the necessary economies. Stanley Baldwin agreed and said he was willing to serve under MacDonald in a National Government.
After another Cabinet meeting where no agreement about how to deal with the economic crisis could be achieved, MacDonald went to Buckingham Palace to resign. Sir Clive Wigram, the King's private secretary, later recalled that George V "impressed upon the Prime Minister that he was the only man to lead the country through the crisis and hoped that he would reconsider the situation." At a meeting with Stanley Baldwin, Neville Chamberlain and Herbert Samuel MacDonald told them that if he joined a National Government it "meant his death warrant". According to Chamberlain he said "he would be a ridiculous figure unable to command support and would bring odium on us as well as himself."
On 24th August 1931 Ramsay MacDonald returned to the palace and told the King that he had the Cabinet's resignation in his pocket. The King replied that he hoped that MacDonald "would help in the formation of a National Government." He added that by "remaining at his post, his position and reputation would be much more enhanced than if he surrendered the Government of the country at such a crisis." Eventually, he agreed to form a National Government.
Ramsay MacDonald returned to 10 Downing Street and called his final Labour Cabinet. He told them that he had changed his mind about resigning and that he agreed to form a National Government. Sidney Webb recorded in his diary: "He announced this very well, with great feeling, saying that he knew the cost, but could not refuse the King's request, that he would doubtless be denounced and ostracized, but could do no other." When the meeting was over, he asked Philip Snowden, Jimmy Thomas and John Sankey to stay behind and invited them to join the new government. All three agreed and they kept their old jobs. Other appointments included Stanley Baldwin (Lord President of the Council), Neville Chamberlain (Health), Samuel Hoare (Secretary of State for India), Herbert Samuel (Home Office), Philip Cunliffe-Lister (Board of Trade) and Lord Reading (Foreign Office).
Morgan Philips Price commented: " I found Members delighted that Ramsay Macdonald, Philip Snowden and J. H. Thomas had severed themselves from us by their action. We had got rid of the Right Wing without any effort on our part. No one trusted Mr Thomas and Philip Snowden was recognized to be a nineteenth-century Liberal with no longer any place amongst us. State action to remedy the economic crisis was anathema to him. As for Ramsay Macdonald, he was obviously losing his grip on affairs. He had no background of knowledge of economic and financial questions and was hopelessly at sea in a crisis like this. But many, if not most, of the Labour M.P.s thought that at an election we should win hands down."
The Labour Party was appalled by what they considered to be MacDonald's act of treachery. Arthur Henderson commented that MacDonald had never looked into the faces of those who had made it possible for him to be Prime Minister. His close friend, Mary Hamilton, wrote on 28th August: "But greatly as I admire your courage, and ready as I am to believe your gesture may have saved us all, I could not, as I thought the whole situation out on my long journey home, find it possible to support this Government or believe in its policy. It is a very hard decision to make; and this afternoon's party meeting does not make it agreeable to act on - but, there it is. I felt I must write this line to express the deep regret I feel about this, temporary severance between you and the party."
Ramsay MacDonald replied: "Whether you believe it or not, I have saved you, whatever the cost may be to me, but you are all quietly going on drafting manifestoes, talking about opposing cuts in unemployment pay and so on, because I faced the facts a week ago and damned the consequences... If I had agreed to stay in, defied the bankers and a perfect torrent of credit that had been leaving the country day by day, you would all have been overwhelmed and the day you met Parliament you would have been swept out of existence... Still I have always said that the rank and file have not always the same duty as the leaders, and I am willing to apply that now. I dare say you know, however, that for some time I have been very disturbed by the drift in the mind of the Party. I am afraid I am not a machine-made politician, and never will be, and it is far better for me to drop out before it will be impossible for me to make a decent living whilst out of public life."
On 8th September 1931, the National Government's programme of £70 million economy programme was debated in the House of Commons. This included a £13 million cut in unemployment benefit. Tom Johnson, who wound up the debate for the Labour Party, declared that these policies were "not of a National Government but of a Wall Street Government". In the end the Government won by 309 votes to 249, but only 12 Labour M.P.s voted for the measures.
The cuts in public expenditure did not satisfy the markets. The withdrawals of gold and foreign exchange continued. On September 16th, the Bank of England lost £5 million; on the 17th, £10 million; and on the 18th, nearly £18 million. On the 20th September, the Cabinet agreed to leave the Gold Standard, something that John Maynard Keynes had advised the government to do on 5th August.
On 26th September, the Labour Party National Executive decided to expel all members of the National Government including Ramsay MacDonald, Philip Snowden, Jimmy Thomas and John Sankey. As David Marquand has pointed out: "In the circumstances, its decision was understandable, perhaps inevitable. The Labour movement had been built on the trade-union ethic of loyalty to majority decisions. MacDonald had defied that ethic; to many Labour activists, he was now a kind of political blackleg, who deserved to be treated accordingly.
The 1931 General Election was held on 27th October, 1931. MacDonald led an anti-Labour alliance made up of Conservatives and National Liberals. It was a disaster for the Labour Party with only 46 members winning their seats. Several leading Labour figures, including Arthur Henderson, John R. Clynes, Arthur Greenwood, Hastings Lees-Smith, Herbert Morrison, William Graham, Tom Shaw, Emanuel Shinwell, Frederick Pethick-Lawrence, Hugh Dalton, Susan Lawrence, William Wedgwood Benn, Albert Alexander, Margaret Bondfield and Frederick Roberts, lost their seats.
The Government parties polled 14,500,000 votes to Labour's 6,600,000. In the new House of Commons, the Labour Party had only 46 members, the Independent Labour Party 6 and the Lloyd George Liberals 4. George Lansbury, William Adamson, Clement Attlee and Stafford Cripps were the only leading Labour figures to win their seats. Lansbury was elected as the new leader and Attlee became his deputy.
MacDonald, now had 556 pro-National Government MPs and had no difficulty pursuing the policies suggested by Sir George May. MacDonald was constantly attacked by the Labour movement. On 30th December 1912, MacDonald wrote to a friend: "In spite of their excommunications I am a member of the Labour movement, and would defy them and all their caucuses to turn me out of it. But what I should do would be to try to get the movement back to its proper position, and rescue it from being a glorified board of guardians."
George Lansbury hated fascism but as a pacifist he was opposed to using violence against it. When Italy invaded Abyssinia he refused to support the view that the League of Nations should use military force against Mussolini's army. After being criticised by several leading members of the party, Lansbury resigned and was replaced by Clement Attlee.
In 1940 Clement Attlee joined the coalition government headed by Winston Churchill. He was virtually deputy Prime Minister although this post did not formally become his until 1942. It was afterwards claimed that during the Second World War Attlee worked as a restraining influence on some of Churchill's more wilder schemes.
In the 1945 General Election Attlee lead the Labour Party to its largest victory at the polls. During his six years in office he carried through a vigorous programme of reform. The Bank of England, the coal mines, civil aviation, cable and wireless services, gas, electricity, railways, road transport and steel were nationalized. The National Health Service was introduced and independence was granted to India (1947) and Burma.
The National Insurance Act created the structure of the Welfare State and after the passing of the National Health Service Act in 1948, people in Britain were provided with free diagnosis and treatment of illness, at home or in hospital, as well as dental and ophthalmic services. However, when Hugh Gaitskell announced that he intended to introduce measures that would force people to pay half the cost of dentures and spectacles and a one shilling prescription charge, three members of the government, Harold Wilson, Aneurin Bevan and John Freeman resigned from office.
After being narrowly defeated in the 1951 General Election, the former prime minister, Clement Attlee, led the Labour Party until resigning in 1955. Hugh Gaitskell was hated by the left-wing of the Labour Party for the introduction of National Health charges. However, when Clement Attlee resigned in 1955 he defeated Herbert Morrison to become the party's new leader. The following year he led the protests against the Anthony Eden and his policy on the Suez Canal.
Hugh Gaitskell urged Britain's entry to the European Economic Community but was unable to persuade the majority of members of the Labour Party to agree to this policy. in 1959 he also attempted to change party policy on nationalization (Clause IV). Gaitskell was also in conflict with his party over his opposition to unilateral nuclear disarmament.
After the death of Aneurin Bevan in 1960, Harold Wilson became the main figure on the left of the party. The following year he challenged Gaitskill for the leadership but was defeated by 166 votes to 81.
During the 1964 General Election campaign Harold Wilson promised to modernize Britain. Making full use of his academic background and poking fun at the aristocratic Alec Douglas-Home, Wilson was able to obtain a five-seat majority in the House of Commons. After the 1966 General Election this majority was increased to 97.
Some members of MI5 believed that Wilson was a Soviet agent. Anatoli Golitsyn also told them that Hugh Gaitskell had been poisoned by the KGB. Peter Wright, a senior figure in MI5, explained in his biography Spycatcher: "The story started with the premature death of Hugh Gaitskell in 1963. Gaitskell was Wilson's predecessor as Leader of the Labour Party. I knew him personally and admired him greatly. In 1968 Wright became involved with Cecil King, the publisher of the Daily Mirror, in a plot to bring down Wilson's government and replace it with a coalition led by Lord Mountbatten.
Wilson was fairly successful in his promise to modernize Britain. His government brought an end to capital punishment, reformed the divorce laws and legalized abortion and homosexuality. He had more difficulty with the economy and in November, 1967, his Chancellor of the Exchequer, James Callaghan, was forced to devalue the pound. By the end of the 1960s, with unemployment and inflation increasing, Wilson's popularity declined and the Conservative Party, led by Edward Heath, won the 1970 General Election.
Edward Heath also came into conflict with the trade unions over his attempts to impose a prices and incomes policy. His attempts to legislate against unofficial strikes led to industrial disputes. In 1973 a miners' work-to-rule led to regular power cuts and the imposition of a three day week. Heath called a general election in 1974 on the issue of "who rules". He failed to get a majority and Wilson and the Labour Party were returned to power.
When Harold Wilson returned to power in 1974 Peter Wright once again became involved in a plot against the Labour government. It was suggested that MI5 files on Wilson should be leaked to the press. Wright was eventually persuaded by Victor Rothschild not to take part in the conspiracy. Rothschild warned him that he was likely to get a caught and if that happened he would lose his job and pension.
In 1975 Wilson decided to hold a referendum on membership of the European Economic Community. Wilson allowed his Cabinet to support both the Yes and No campaigns and this led to a bitter split in the party.
Wilson's government again had trouble with the economy. Faced with the prospect of having to get a loan from the International Monetary Fund, Wilson came under increasing attack from all sections of the Labour Party. Wilson was also suffering from the early signs of Alzheimer's Disease and in 1976 decided to resign from office. James Callaghan surprisingly defeated Roy Jenkins and Michael Foot for the leadership of the Labour Party.
The following year Callaghan, and his Chancellor of the Exchequer, Denis Healey, controversially began imposing tight monetary controls. This included deep cuts in public spending on education and health. Critics claimed that this laid the foundations of what became known as monetarism. In 1978 these public spending cuts led to a wave of strikes (winter of discontent) and the Labour Party was easily defeated in the 1979 General Election.
Margaret Thatcher became the new prime minister and Callaghan was leader of the opposition until he resigned in 1980. He was followed by Michael Foot (1980-1983), Neil Kinnock (1983-1992), and John Smith (1992-1994). After the death of Smith on 12th May 1994, Tony Blair became leader of the Labour Party.
The Labour Party won the 1997 General Election and Blair became prime minister. Blair also won elections in 2001 and 2005 but resigned in 2007 and was replaced as prime minister by Gordon Brown.
% of total votes