Unemployment in Britain Between the Wars (Seminar Studies) [1 ed.] 0582352320, 9780582352322

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Unemployment in Britain Between the Wars Stephen Constantine Seminar Studies in History

SEMINAR STUDIES IN HISTORY

Unemployment in Britain between the Wars

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SEMINAR STUDIES IN HISTORY Editor: Roger Lockyer

Unemployment in Britain between the Wars Stephen Constantine Senior Lecturer in History, University of Lancaster

ROUTLEDGE

Routledge Taylor & Francis Group

LONDON AND NEW YORK

First published 1980 by Pearson Education Limited Published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN 52 Vanderbilt Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright© 1980, Taylor & Francis. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing

from the publishers. Notices Knowledge and best practice in this field are constantly changing. As new research and experience broaden our understanding, changes in research meth-

ods, professional practices, or medical treatment may become necessary. Practitioners and researchers must always rely on their own experience and knowledge in evaluating and using any information, methods, compounds, or experiments described herein. In using such information or methods they should be mindful of their own safety and the safety of others, including parlies for whom they have a professional responsibility. To the fullest extent of the law, neither the Publisher nor the authors, contributors, or editors, assume any liability for any injury and/ or darnage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions, or ideas contained in the material herein. ISBN 13: 978-0-582-35232-2 (pbk) British Library Cataloguing in Publication Data Constantine, Stephen Unemployment in Britain between the Wars. (Seminar studies in history). 1. Labour supply- Great Britain- History - 20th century I. Title I!. Series 331. 1 '37941 HD5765.A6

Set in 10111 Press Roman, IBM

Contents

INTRODUCTION TO THE SERIES ACKNOWLEDGEMENTS

Part One: The Background 1 THE UNEMPLOYMENT PROBLEM 2 ECONOMIC CAUSES

Cyclical unemployment Structuralunemployment

Part Two: The Effects of EconomicDepression

vi vii

1 5 6 9

3 SOCIAL CONSEQUENCES

17 17 22 25 30 36

4 UNEMPLOYMENT POLICIES

1920-1925 1925-1931 1931-1939

45 46 57 67

Part Three: Assessment

77

Part Four: Documents

85

The geographyof unemploymentand migration Who were the unemployed? Poverty Health Morale

BIBLIOGRAPHY INDEX

108 115

Introduction to the Series

The seminarmethod of teachingis being used increasingly.It is a way of learning in smaller groups through discussion,designedboth to get away from and to supplement the basic lecture techniques.To be successful,the membersof a seminarmust be informed - or else,in the unkind phrase of a cynic - it can be a 'pooling of ignorance'.The chapter in the textbook of English or Europeanhistory by its nature cannot provide material in this depth, but at the same time the full academicwork may be too long and perhapstoo advanced. For this reason we have invited practising teachersto contribute short studies on specialisedaspects of British and Europeanhistory with thesespecial needsin mind. For this seriesthe authorshave been askedto provide, in addition to their basic analysis, afull selectionof documentarymaterial of all kinds and an up-to-dateand comprehensive bibliography. Both these sectionsare referred to in the text, but it is hoped that they will prove to be valuable teachingand learningaids in themselves.

Note on the SystemofReferences: A bold numberin round brackets(5) in the text refers the readerto the correspondingentry in the Bibliography sectionat the end of the book. A bold number in squarebrackets,precededby 'doc' [docs 6, 8] refers the reader to the correspondingitems in the section of Documents, which follows the main text. PATRICK RICHARDSON GeneralEditor

vi

Acknowledgements

In preparing my text I receivedmuch help and valued criticism from two of my colleagues,Dr Eric Evansand Dr GordonPhillips. I am grateful for their assistance.I also wish to record my sincerethanks for the admirablesecretarialsupportI havereceivedfrom Miss Linda Parkinson and from Wendy, my wife. StephenConstantine We are grateful to the following for permissionto reproducecopyright material: The Rt. Hon. Julian Amery, M.P. for an extract from a letter by L.S. Amery to StanleyBaldwin dated11th Feb. 1924from the Amery Papers Box G. 82; H.L. Beales for extracts from Memoirs of the Unemployededited by H.L. Beales and R.S. Lambert, pub. by Victor GollanczLtd; The Controllerof Her Majesty'sStationeryOffice for data from Investigationin the CoalfieldsofSouthWales- Cmd.3272 andThird Report of the Commissionerfor the SpecialAreas - Cmd. 5303; James Nisbet& Co. Ltd for extractsfrom The UnemployedMan by E.W. Bakke. Cover:Worklessposterfrom the LabourPartyarchives(in fact datingfrom a slightly earlier period). Photo: Michael Holford.

vii

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Part One: The Background 1

The UnemploymentProblem

For many years historians have been struggling to modify a deeply entrenchedview which regards the interwar period, and especially the 1930s, as essentially a time of persistentdepression,gloom and failure. In contrast they have properly emphasizedthe real achievementsof thesetwo decades.Far from beinguniformly yearsof suffering, there was much that justified celebration.Greatly helped by a fall in the cost of living in the 1920s and early 1930s, averagereal wage earningsbetweenthe wars went up, until by 1938 they were perhaps one-third higher than in 1913 (2). The expansion of the chemical, motor car, electrical and other consumergoods industriesand of the retailing trade provided better-paidjobs for more workers. Moreover, parentswere limiting the size of their families and with fewer mouths to feed incomes went further. On average,hours of work were also down. As a result more and more people were left with higher real earningsand greaterleisure. The consequencewas a conspicuousimprovement in the living standardsof the majority of peoplein Britain. For someit broughtreal affluence, perhapsthe opportunity to own a sparkling mass-produced motor car, an Austin or a Morris, or a chanceto buy a semi-detached house with a garden and modern conveniencesin one of the new estatesbeing laid out in the suburbs.For many more peopleit meantat least some additional domesticcomforts. Better equipped,newly built council houseswere availablefor rent; modernfurniture, radios,laboursavinghouseholdequipmentsuchas electriccookersandother consumer goods could be bought. There was more cash left over for entertainments. Audiences packed the cinemas and dance halls with regular enthusiasm,and more people were taking annualholidays,many in the holiday campswhich sprangup on the coastin places likeSkegnessand Pwllheli. Most strikingly, social investigatorsfound a marked drop in the number of people condemnedto live in poverty. Dire need still regrettably existed, but it was much less prominent betweenthe wars than it had beenin the supposedlygoldendaysof EdwardianEngland. Another valuableresult of higher incomeswas an increasein the consumption of better food: more vegetables,fruit and dairy productsfor

1

The Background

example. Together with improved medical and social services, this brought about an impressive advancein the health of the nation as a whole. Death rates fell, life expectancyincreased.The killer diseases of the nineteenthcentury such as tuberculosis,typhoid, scarlet fever and diphtheria were in retreat by 1939. Thesewere years of progress when, in spite of the depression,economicgrowth was above prewar levels and materialliving standardsimproved(2, 7, 8, 11, 28). And yet these realities have on the whole failed to prevent a bitter and gloomy image of the interwar years from surviving to this day. These years are still characterisedas a period of massunemployment when, particularly in the North andin Wales,onceprosperousindustries and the workers who servedthem were suffering. There remain sharp pictures of out-of·work men clusteredat dusty street corners,and of the abandonedshipyardsat Jarrow on the Tyne [doc. 1]. Nor, as this study is intended to show, are these impressionsentirely misleading. Unemploymentdid blight the lives of many people,and the issue be· came an unavoidable topic of public discussion and an inescapable worry for governmentministers. Interwar Britain was, then, a land of contrasts [doc. 2] . Indeed, set against the averagerise in living standards and the prosperousregions of the country, the wastedyears of the unemployedand the decay of the depressedareasstand out more starkly. Unemploymentwas as much a feature of the 1920sand 1930s as busy new factories, modern housing estatesand cinemasbuilt like fantasy palaces. The problem of unemploymentwas not new to British society. It had been a recurrent blight in the nineteenth and early twentieth centuries,and the bitternessand distressit causedlay behind many of the social and political disturbancesof those years.What was unprece· dented about the interwar unemploymentproblem was its extent, its durationand its effects. Attempts to comparethe extent of unemploymentbetweenthe wars with the level before 1914 are hamperedby the absenceof satisfactory statistics, particularly for the earlier period (18). Not until the 1920 UnemploymentInsuranceAct beganto operatewere reasonablyaccu· rate figures made available. Except for domesticservants,agricultural labourersand civil servants,this Act provided unemploymentinsurance cover for most manualworkers and other employeesearning less than £250 a year (67). Henceforthit was possibleto calculatethe numberof insuredpeopleout of work and the rate of unemployment(expressedas a percentageof the insured labour force). Before the war we have to rely on figures which are far less comprehensivebut which give us some idea of the extent of unemploymentamongthat small proportion 2

The UnemploymentProblem

of the workforce organisedin trade unions. The figures thereforetend to cover mainly skilled and semi-skilled workers. What they show is that in the period 1881 to 1913 unemploymentamongtheseworkers in the United Kingdom was on averageabout 4.8 per cent (expressed as a percentageof trade unionists).The rate fluctuateda good deal but at its maximumin 1886 it was about 10 per cent (17). In spite of the inadequaciesof thesefigures for comparativepurposes it is probably true that the extent of unemploymentwas seriously higher betweenthe wars. Following a short sharp economicboom in 1919-20,depressionsettledlike a dark cloud over the United Kingdom. There were fluctuations in the density of this cloud but it neverlifted before the outbreakof the SecondWorld War. Between1921 and 1939 unemploymentaveraged14 per cent of the insuredworkforce. Records show an early peakof 16.9 per cent in 1921 and a later one of 22.1 per cent in 1932. Once the depressionbeganthere,were neverless than one million workers cut of a job. There were over two million insured workers registeredas unemployedin December1921, and in January 1933, the worst month of all, there were 2,979,000(17, 19). If we add those unemployed workers who for one reason or another did not register as unemployedwe reach an estimatedtotal of 3,750,000in September1932. Taking into accountthe families of the unemployed, six or seven million people in the United Kingdom were living on the dole in the worst monthsof the depressionin the early 1930s(12). What made unemploymentsucha scourgebetweenthe wars was not just its extentbut also its duration.In the thirty yearsor so before 1914 workers might be hit by a run of three or four yearsof high unemployment. In the bad years 1884-7 unemploymentremainedover 7 per cent. There were other periods-1892-5,1903-5,1908-10 -when unemployment climbed to over 5 or 6 per cent. But betweenthese clusters of grim years there were times of improved trade and better employmentprospectswhen rates of unemploymentfell to 2 or 3 per cent. In the 1920sand 1930s,however,the depressionseemedto be far less a temporary dislocation. Only in 1927 did the rate of unemployment slip temporarily below 10 per cent. Unemploymentremaineda permanentburdenin British societybetweenthe wars (17, 19). The effect on the individual worker might be serious. For most people a period of unemploymentwas usually short. In September 1929 nearly 90 per cent of those who applied for unemployment benefits and allowancesin Britain had been unemployedfor less than six months. But since a surprisingly large number of insuredworkers changedjobs at least once a year, with consistentlyhigh levels of unemploymentthe chancesof repeatedbouts of unemploymentbetween 3

The Background

jobs were higher and the effect of theseon savings,living standardsand morale could be grave. Moreover, the tendencyfor workers to suffer from long-term unemployment,lasting for twelve months or more, eventuallydevelopedas one of the most worrying featuresof the 1930s. In September1929 less than 5 per cent of those applying for unemployment relief in Britain, about 45,000, had been unemployedfor twelve months or more, but by August 1932, near the bottom of the depression, there were over 400,000, making 16.4 per cent of the total. Such recovery asthen took placeleft many of theseworkersstill without a job: the long-term unemployed numbered over 330,000 and formed 25 per cent of the total number of unemployedworkers in August 1936. As late as August 1939 there were 244,000long-term unemployed,nearly 23 per cent of the total. For many workers in the 1930s there was little prospectof ever finding a job again (17, 50). Even before 1914 unemploymenthad becomea public issue.Economists and social scientistshad begun to examine more seriously the causes of industrial unemployment and had identified some of its social consequences. The labour movementhad helped make the provision of work and the relief of distressa political issue.Politicians of all parties had offered panaceasof varying degreesof value, and there had been some government action (60,65). But the severity of the interwar depressionhad more far-reaching consequences. Unemployment reflectedfundamentalchangesin the nation'seconomicstructure. It affected living standardsand the quality of life for many workersin Britain. It arousedconsiderableconcernabout the damageit was doing to the physicaland mental wellbeing of its victims. It forced a major reexaminationof many well-establishedideas and assumptionsaboutthe role of the state as an economicmanagerand as a provider of welfare services.And it profoundly altered the demandsand expectationsof the British people. To a considerableextent, the failures of interwar Britain rather than the real achievementshad the greater effect on governmentpolicy and popularaspirations.

4

2

Economic Causes

Total national figures of the number of unemployedworkers in the United Kingdom in each year disguise the variety of problemswhich account for unemployment.Before the First World War and especially betweenthe wars social scientistsbeganto classify the types of unemployment which togetheraccountedfor high national totals. They defined them as personal, frictional, seasonal,cyclical and structural unemployment.It is not easy to distinguish the predominantfactor in the case of each individual worker, and one cause of unemployment undoubtedlyaffected the severity of others. But the conceptsinvolved do help clarify the economic problems from which Britain suffered betweenthe wars. To begin with there were those unfortunate people who were unemployedprimarily for personalreasons;becauseof physicalor mental handicapsthey were only marginally members of the labour force. Most of them were not unemployable,for in times of economicboom their servicesmight be required,but in normal years,and especiallyin times of depression,they were often the first people to be laid off and the last to be re-employed.Quite a lot of the long-termunemployed, out of work for twelve months or more, were found to be suffering from some form of disability in the 1930salthough few of them were incapableof any work (SO). Frictional unemployment tended to be short-term. In any year, irrespectiveof economicboom and slump and for a varietyof reasons, thousandsof workers changedjobs. Many of them found new employment fairly rapidly, but while looking for new openingsthey usually registeredtemporarily as unemployed.In addition a numberof workers such as dock workers were employedonly on a casualbasisand might fmd themselveswithout work for two or threeworking dayseachweek. Seasonalunemploymentwas also normally short-term.Even in an industrial society activity in certain tradesvaried with the time of year. Building workers, for example,often found themselvesunemployedin winter. Total unemploymentfigures were therefore usually higher in the winter monthsthan in the summer. 5

The Background

Cyclical unemployment Between the wars people were much more concernedwith cyclical unemployment.This not only affectedmore workersbut might leave them without a job for many months.During the nineteenthcentury businessmenhad beenawareof a fairly regularcycle of economicboom followed by economic slump. In periods of boom British exports overseasrose, investmentin new factoriesat homeincreased,industrial output went up, wages might rise and the labour force was fully employed. But then followed the downturn. The value of exports fell, investment slackenedoff, output dropped and wages might fall. The only thing that rose was cyclical unemployment.Peaksof higher unemployment and social distress were repeatedat intervals of about eight to ten years.Explanationsof the tradecycle are complex,but one thing is clear. The British businesscycle was not due to factors operating solely within Britain. From the last quarter of the nineteenthcentury the pattern of boom closely followed fluctuations in the business activity of other nations overseas,especiallyFrance,Germanyand the United States. Becauseof the type of economic structure that had evolved in Britain by the end of the century, the level of prosperity at homehadbecomecrucially susceptibleto boomsandslumpsoverseas. By 1914 Britain had such a specialisedindustrial economythat she neededto import over half of her food suppliesand about seven-eighths of the raw materialsneededby industry. To pay for theseimports she relied mostly on the sale of her own productsabroad.In the decade before the First World War the output of more than one British worker in every four was exported (14). Moreover those exports were made up of a limited range of products: 38 per cent were textiles, mainly cotton goods, 14 per cent iron and steel, 10 per cent coal and 10 per cent engineeringproductsincluding ships(9, 10). Thesewere the staple export industries, relying heavily on their overseassales.Early in the century about 33 per cent of the coal mined in Britain, 22 per cent of the ships built, 79 per cent of the cotton goods manufacturedand 50 per cent of the iron and steel producedwere exported(2, 6). Inevitably a slump in the United States,in Europe or elsewherereduced demand in those markets for these products and seriously affected Britain's prosperity. Since the cotton, coal, shipbuilding and iron and steel industries together employed about two million workers before the First World War, a downturn in the businesscycle overseashad a profound effect on the level of employmentin Britain. Moreover repercussionswere felt in other industries as a result. Depressionand unemploymentin the stapleexport industriesreducedincomesat home 6

EconomicCauses and hence the demand for the products of other British industries catering more for the home market. Consequentlydepressionin overseas markets spread via depressionin Britain's export industries to other sectors of the economyand unemploymentbecamemore widespread. In the years betweenthe wars this prewar trade cycle continuedto operate.As before, the fairly regular pattern of boom and slump was repeated.Onceagainthe stapleexportindustriesweresensitiveto fluctuations in levels of demandoverseas.Once again depressionin those industries was transmitted to other sectors of the domestic economy. The alarming new featuresof the cycle in theseyearswere the severity of the depressionsand the limited extentof the subsequentrecoveries. Initially, wartime expectationsthat Britain would enjoy unprecedented prosperity after the war seemedto be realised.During 1919-20 exports rose and much new investment took place, especially in the cotton and shipbuilding industries.Wagesrose and unemploymentfell. But then came a downturnof unexpectedseverity.In 1921 the volume of exports from the United Kingdom fell to 50 per cent of the level of 1913; industrial production slumped,money wagesfell and unemployment rose to the disturbing peak of nearly 17 per cent. Economicdislocation and currency instability delayedeconomicrecoveryin Europe but by the mid-1920simprovementsthere and especiallyexpansionin the United Statesincreasedoverseasdemandfor British exports.However,evenin 1929they reachedonly 80 per cent of the volume of 1913. Other industriesproducingconsumergoods for the home market grew a little and there was an upturn in building activity. But recovery was slow comparedto the United Statesand with unemploymentstill high it hardly seemedcompletebefore a new downturnbeganin 1929. The world depressionof 1929-32which followed seemedto many observers to herald the final collapse of capitalism. There were two features of the slump overseaswhich were bound to create more cyclical unemployment in Britain. The bursting of the Wall Street stock market boom in 1929 devastatedbusinessconfidencein America, reducedthe level of her domesticinvestment,cut real incomeby 37 per cent and pushedher unemploymentrates over 30 per cent. As a result American consumptionfell, and with it went the demandfor British products.Britain's staple export tradeswere hit. This American depression causedparallel depressionsin other industrial countriesin Europe, reducing their demand for British products. It also exacerbatedthe problems of the non-industrialisednations, and this was the second feature of the overseasslump which hit Britain. Even before the American collapse,the prices of food and raw materialsexportedby those 7

The Background

countries had begun to fall. A devastatedAmerican and European economy then demandedless of those products and their prices fell even more. Earning less abroad, those countries could afford to buy fewer industrial products;as a major supplier of such productsBritain suffered. Togetherthese two featuresof the slump overseasshatteredBritish exportersonce again: in 1931 and 1932 exports were about half the volume of 1913. Depressionin that sectorof the economyon such a scale inevitably reduced total domestic consumption and therefore depressedinvestment,output and employment in many other industries. Total unemploymentreacheda new level of over 22 per cent in 1932. The revival which then took place was more rapid than in the United Statesbut, Significantly, it was led by industrieswhich catered more for the domestic market. Exports were slower to recover. Just before the SecondWorld War the proportion of production going to export was one in eight,half the level of before 1914.And the recovery, which reacheda peakin 1937,still left much unusedindustrial capacity and high unemployment(2, 14). The businesscycle goes a long way towards explaining variationsin the rate of unemployment.During periodsof recovery and boom the rates fell; when depressionstruck they rose. In those bad years, unemployment was severe and widespread.An enquiry undertakenin August 1922 showedhigh rates of unemploymentfor workersin some of the staple export industries: 39 per cent in shipbuilding and 24 per cent in engineeringand the metal industries.The coal industry was not yet affected by depressionand cotton industry employeestendedto be on short time rather than out of work. In other industriesaffectedby this cyclical downturn unemployment\Vas serious. High rates were recorded in the pottery, glass, chemical and brick industries,in the building trade and among dockers,seamenand transportworkers(30). When cyclical depressionstruck again in 1929-32,high and evenmore widespreadunemploymentwas experienced.In 1932 the stapleexport industries were all very distressed with high unemploymentrates: 35 per cent of coalminers,about 46 per cent of iron and steelworkers, 62 per cent of shipbuildersandrepairers,31 per cent of cotton workers. But as before, unemploymenttroubled many other tradesas well. For example,36 per cent of workersin the potterieswere out of a job (19). Thesecyclical depressionsclearly createdmuch distress,and victims of cyclical unemploymentfrom many tradestroopeddown to thelabour exchangesto join the queues.According to orthodoxeconomictheory at the time, their plight would only be temporary,sinceeconomicboom would inevitably follow depression.It is true that a recoverytook place

8

EconomicCauses

later in the 1920s and again in the 1930s, and many workers found jobs. But the striking feature of theseyears is that even at the height of the booms, in 1929 and in 1937, there were still high levels of unemployment,much of it long-term, especially concentratedin the staple export trades.In 1929 there was still a 19 per cent rate among coal miners, about 17 per cent amongiron and steel workers, 25 per centamongshipbuildersandrepairers,13 per centamongcottonworkers. Similarly in 1937 the rateswere 16 per cent for coalminers,about 11 per cent for iron and steel workers, 24 per cent for shipbuildersand repairers, 11 per cent for cotton workers. Generally,other industries which had beenafflicted at the bottomof the depressionshad recovered much betterduring the booms (19). These figures reveal that cyclical unemploymentwas not the only causeof high rates of unemploymentbetweenthe wars. At the height of economicrecoverycyclical unemploymentwould be relievedand unemploymentrates should have dropped to the 2 or 3 per cent levels experiencedin boomsbeforethe First World War. This did not happen. Instead unemployment rates levelled out in years of recovery (1929 and 1937) at ratesrathersimilar to thoserecordedin the worst yearsof depressionbefore the war. What this suggestsis that there had been a permanentfall in the demandfor certain industrial productsover and above that created by cyclical fluctuations. Such a change revealed weaknessesin the structureof the British economy,causeddrasticcontractions in the demandfor labour in certain industries,and therefore producedstructuralunemployment.

Structuralunemployment The industrieswhich faced this permanentdecline in demandfor their products were coal, cotton, shipbuilding and, to a lesserextent, iron and steel. They were the great growth industries of the nineteenth century, the sectorswhich dominatedexports before 1914 and which had made Britain for a time the workshop of the world. In 1913 the peak output of the coal industry in the United Kingdom was achieved: 287 million tons. Even in the best years betweenthe wars, production was about 60 million tons lower. Cotton production similarly fell, the output of cloth in the boom year 1937 being nearly half the quantity made in 1912. Before the First World War British shipyardshad dominated the world, but this was never the casebetweenthe wars and the tonnage of ships built was generally much less. The iron and steel industry had a chequeredexperience.Total output did increaseand a permanentdecline in the industry was avoided,but this was largely due 9

The Background

to a slow expansionof steel production which balanced afall in pigiron production. The problem in the iron and steel industry was the existenceof excessunusedcapacity.Inadequatedemandfor products left equipment,and labour,unemployed.If excesscapacitytroubledan industry which actually expandedtotal output,the extentof that problem in the declining coal, cotton and shipbuilding industries may be imagined.It was especiallyunfortunatethat during the war and in the short postwar boom heavy investmentin iron and steel plants, shipyards and cotton factories had boosted capacity above prewar levels. Much of that investmenthad beenmadeon the assumptionthat demand would increasein the future. In fact demandstagnatedor actually fell (2,9, 10). In part, reduced demand for British products reflected changing consumerneedsand tastesat homeand overseas.World consumptionof coal grew at 'a much lower rate after the war than before,partly due to more efficient usesof fuel in homesand by industry and partly because of changesto alternative sourcesof power: oil, gas and, principally, electricity. Whereasthe world's prewar mercantilemarine consistedof steamshipsusing coal, by 1939 over half thesefleets were oil-powered. Similarly, traditional cotton textiles had to competewith new manmade fibres like rayon, while a notorious 1920srevolution in women's fashions raised eyebrows but lowered demand for cloth. Technical progresshad improved the speedand carrying capacityof shippingand thereforefewer shipswere required,and in any casethe decline in world trade in the 1930s discouragedcompaniesfrom ordering new vessels. As alreadymentioned,demandfor pig-iron fell whenmore usewas made of steel (2). These changesin world demandinevitably affected an economyheavily committedto producingsuchproducts. Demandfor British productswas also disturbedby the emergenceof serious competition from producersoverseas.This challengefrom the United States,Western Europe and Japanwas discernibleeven before the First World War. In 1850 Britain's shareof total world industrial output was about 30 per cent. Already by 1910 it had shrunkto 13 per cent. Newly industrialisednations almost inevitably producedthe relatively simple commodities which formed Britain's staple exports. Manufacturing for themselvesthey had less need for British products. Long before 1914 British exportershad found rapidly expandingmarkets only in the more distant non-industrialisedregions of America, Asia and Africa. The First World War acceleratedthese ominous de velopments.When the British economywas concentratingon the production of essentialwar materials,overseascustomerscould not be so easily supplied. Overseasindustrialists facing less competition from 10

EconomicCauses Britain expandedtheir production. After the war more mature and efficient rivals had emerged. By 1930 Britain's share of total world industrial output had declined still further to 10.5 per cent (5). Competition was particularly felt in the staple export industries.Shortages of British coal exports during the war had encouragedthe openingor expansionof minesin Germany,Poland,the Netherlands,Spainand the Far East. Major textile industries grew during the war in Japanand India, importantBritish marketsbefore1914.Rival shipyardshadopened in the United States,Japan,Holland and Scandinavia.World iron and steel-makingcapacity also expandedduring the war, especiallyin the United States,and challengedBritish companieslater (2, 9,12). With such increasesin the world's capacity to produce staple industrial products,competitionbetweenthe wars was boundto be fierce. Price, quality and speedof delivery were not, however, to be the sole determining factors in such a struggle. The most serious additional factor was governmentinterferencein the market. The international free trade world had worked to Britain's advantagein the nineteenth century,but it was being erodedtowards the close.The interwar years then saw the imposition of evenhigher tariff barriersby foreign governments'especiallyin the 1930s,to preservetheir home marketsfor their own producers. Currency devaluationsand exchangecontrols additionally underminedfree competition.Many foreign governmentssubsidised their own shipbuildersto help them competefor foreign orders. In the struggle for national economicself-sufficiencyworld trade was inevitably choked and an economy like Britain's, heavily committed to exports, suffered in consequence.The sort of retaliatory measures taken by the British government,such as the introduction of tariffs, could do little to undo the damage. It was not, however, truethat the problemsof the stapleindustries were entirely due to factors outside British control. War and postwar inflation and wage rises had increasedthe comparativecosts of British products. Governmentpolicy, particularly the return to the gold standard at the prewar parity in 1925, possibly compoundedthe problem and left British goods overpriced on international markets.But more serious was the inefficiency of many British firms. This may be a factor explainingdecliningBritish coalexportsbetweenthe wars. Especially in the 1920stherewere many small companiesin operationwithout the resourcesto invest in more efficient methodsof productionand distribution. Output per man was down on prewar rates in the 1920sand picked up only with the spreadof mechanisationin the 1930s.It remained for the most part a high-cost industry at a time when static world demandand expandingworld production led to fierce competi11

The Background

tion. The inefficiency of the cotton industry is even more apparent. The industry had been slow to convert to ring-spinning, automatic looms and electric power before the war, and the severity of falling sales betweenthe wars discouragednew investmentin more efficient techniques.British shipyards were also tending to become obsolete. Technicaladvanceswere slow to spreadand the industry was backward ill switching from steam to diesel engines. Reorganisationand new investmentwas difficult to carry out when demandwas low. Similarly the iron and steelindustry remaineda high cost producer,slow to adopt new techniquesand to shift from acid to basic steel production in responseto changesin world requirements(2, 9,12). Thus handicapped,it is not surprising that these industries could not overcomethe adversetrading conditionsand stiff competition of the interwar years.Productswere squeezedout of the homemarketsof rival producers,and struggledto competewith the export drives of those rivals in non-industrialisedmarkets.The prewar Europeanmarket for British goodshad been large though slow-growing; it declinedbetween the wars. The United Stateshad been a huge if static market before 1914 but salesdroppedsharplyin the 1930s.The marketsof Southand Central America and Asia (including India) had been growing rapidly until the war but they withered after it. Only the Africa market expanded consistently from small prewar beginnings. British salesmen were forced to retreat into the more sympathetic markets of the Empire, but this could not halt the decline in the volume of British overseastrade(14, 63). This decline was exposedin the export figures of the large staple industries.Apart from 1923 when the Frenchoccupationof the Ruhr causedthe closure of German coal mines and a remarkableboost to British coal exports, sales were well down on prewar levels. Similarly there were savagereductionsin cotton exportsfrom just under 7,000 million squareyards in 1913 to under 3,800 million squareyards in 1929 and to 2,000 million squareyards even at the peak of the next trade cycle in 1937. The decline then continued.While at the end of the 1920sshipbuilding orders from overseasrose slightly aboveprewar levels, they dropped badly in the 1930s. Iron and steel exports did reasonablywell in the late 1920s but after the disastersof the early 1930srecoverywas slight. In the best year, 1937, exports were barely over half prewarlevels (2, 9, 10) [docs 3,4] . Such figures give some indication of the squeezingout of British productsfrom overseasmarketswhich they had previouslydominated. It was even more galling, and additional proof of the lack of competitiveness of some British industries, that even the home market was 12

EconomicCauses being invaded by foreign products.In the past British manufacturers had for the most part launchedexports from the secureplatform of a monopoly of their home market. Betweenthe wars,mainly becauseof lower costs,higher efficiency or governmentsubsidies,foreign manufacturersbeganto challengehomeproducers.The coal industry did not suffer this embarrassment, but Lancashireshudderedwhen nineteenth century trade patterns were ironically reversed and India began to export cotton goods to Britain. Japaneseproducts were to follow. British shipping companies were buying vessels overseas: in 1936 imports totalled nearly 15 per cent of the tonnagedeliveredto British owners,and in that year imports exceededexports.Imports of iron and steel also rose sharply in the later yearsof the 1920s.This invasionwas checkedin the 1930sonly when the British governmentgavein to the repeateddemandsof the Iron and SteelFederationand imposedheavy dutieson imports (2, 7, 9, 10). It was clear that Britain was no longer the workshopof the world. A relative decline in Britain's predominancewas inevitable once other nationsindustrialised.This erosionhad beentaking placesincethe last quarter of the nineteenthcentury. But the stagnationor absolutedecline in output and exportsby the big staple industriesof the country are an indication of more profound changes.Partly they suggestthe lack of competitivenessof British products.But largely they reflect the structural imbalancein the economy.Britain's heavy commitmentto the production of coal, cotton goods, ships and iron and steel was bound to cause problemswhen the world's capacity to producethese goods had increasedand greatly exceededdemand.Britain's investing of more and more capital in these industries before, during and immediately after the First World War may have seemedsensibleby shortterm calculations. But the need to diversify the economy, to shift resourcesinto new industries,was in retrospectapparent.The consequencesof overcommitmentwere the economicdifficulties of the staple industries between the wars and the tragedy of large-scalestructural unemployment. Overwhelmingly the dole queues were peopled by miners, cotton operatives, shipbuilders and iron and steel workers [doc. 6] . The plight of the workers was in a very real sensemore seriousthan the troublesof the economy.In somerespectseventhe batteredstaple industries had a good record. Although by internationalcomparisons they remainedfor the most part uncompetitive, attemptswere madeto increase efficiency through the twenty years of the depression.The annual rate of growth of output per man between1920 and 1938 was 2.5 per cent in mining, 1.6 per cent in textiles, 1.9 per cent in ship13

The Background

building and 3.s per cent in iron and steel. With the exceptionof this last, these performanceswere below the 2.8 per cent averageof all industries but productivity was improving. Coal output per man went up largely becauseof more mechanisation.Therewere other,if smaller, technicaladvancesin the cotton industry and in shipbuildingand some important innovationsin iron and steel industry equipment(2, 9, 10). The improvementsin these industries were not sufficient to enable them to regain lost ground in internationalmarkets,but productivity improvementsdo contrastfavourably with the total output recordsof these industries which either stagnated or fell between 1920 and 1938. The apparent contradiction between increasesin productivity and stagnantor declining industrial output is explainedby seriousreductionsin the workforce of theseindustries. It is this factor which justifies emphasison the special plight of victims of structuralunemployment.Percentageratesof unemployment for the staple industries disguise the fact that many workers had in addition been driven out of their accustomedtradesentirely and were no longer classified as miners, cotton operatives,shipbuildersor iron and steelworkers.They soughtemploymentin otherindustries.Labour reductionswere in part the consequenceof those technical improvements which increasedproductivity; without significantly increasing total output fewer workers were required. But many workers were shed, especiallyin the 1930s,when deliberateattemptswere made by employers' organisationsto cut out surplus capacity and therefore reduce competition and maintain or raise prices. The numberof coal mines operating was reduced and production concentratedin larger pits. Rationalisationschemeswere organisedby the LancashireCotton Corporationfrom 1929 and the SpindlesBoard, set up by government legislation in 1936, bought up and scrappedsurplus spindlesin the spinning section. The number of looms was also reduced.A similar processin the shipbuilding industry had by 1937 put out of operation twenty-eight shipyardswith a total capacity of over one million tons [doc. 24] . Similarly, excesscapacityin the steelindustrywaseliminated and plant reallocatedaroundthe country.Thesemanagementdecisions causedmassive redundancies.A reductionin the size of the stapleindustries was a necessarypart of the restructuring of the economy. But the process was painful becausethe labour dislodged was only partially absorbedby other industries(2, 12). Much attention has been rightly devoted in recent years to the considerabletotal growth of the British economy betweenthe wars, especiallyin the 1930s.Gross domesticproductper headin the United Kingdom grew at an averageof 1.8 per cent per annumbetween1924 14

EconomicCauses

and 1937. This is better than the 1.1 per cent of 1855-1900and the 0.7 per cent of 1900-14. Growth rates betweenthe wars in Britain comparedwell internationally: the United Statesregisteredan average of 1.7 per cent between 1921 and 1937, Germany2.2 per cent from 1928 to 1937 and France recordedan actual decline of 0.3 per cent between 1924 and 1937. Britain's growth partly reflected the productivity improvements in the staple industries but mainly the boom in building in the 1930s,and the expansionof new electricalengineering, motor-car,chemicaland consumergoodsindustriescateringfor a home market which, mainly outside the depressedareas,showedmany signs of prosperity (3, 7). But the expansionwas often in capital intensive industries which employed comparativelylittle labour or which were insufficiently large to absorb more than a proportion of the labour which structural unemployment had made available. Indeed, one observed effect of structural unemploymentwas the drift of labour into other industries and the creation of pools of unemployment aroundthem. Industrieswhich had high ratesof growth could not soak them up evenin the middle of a boom year like 1937.At that time there were over 17,000 car workers unemployed,15,000workers from the chemical industry, 16,000gas, water and electricity workers, 114,000 transport workers, 165,000 from the distributive trades. Unemployment in the building industry was high throughoutthe interwar years, largely becausemuch unskilled labour was required and so entry into the industry was easy (17, 19). Structural unemploymentcausedby the problems of the depressedstaple industries therefore damaged employmentprospectsin other trades. This is one reasonwhy accuratesegregationand quantificationofthe types of unemploymentis not possible.Calculationsvary and what follows are rough estimates.It seemsreasonableto supposethat personal, seasonal and frictional unemployment accounted for about 2 per cent of interwar unemploymentrates.This was aboutthe average level of unemploymentin the 1950s and 1960s when cyclical and structural problems had been mainly overcome. In those years personal, seasonaland frictional unemploymentremained,as betweenthe wars, close to an irreducible minimum. At the height of the interwar booms, when cyclical unemployment must have been eliminated, total unemploymentratesof around10 per centwere recorded.Allowing for personal, frictional and seasonalunemploymentthis suggestsa figure of about 8 per cent for structural unemployment,much of it by the 1930s of a serious long-term character.On top there rested in most years fluctuating figures for cyclical unemploymentreaching about 7 per cent in the depressionof 1921 and about 12 per cent in 15

The Background

1932. These lifted totals to those grim peaks of nearly 17 per cent and over 22 per cent. If we are to measureeconomicsuccessby nationalratesof economic growth then the interwar years were a period of achievement.If,one criterion of a successfuleconomyis the provisionof work for the labour force then the tragedy of theseyearsis apparent.Britain's unplanned and largely unmanagedmarket economy failed to overcome the unemployment problem it faced. Full employment was not reached again until the outbreak of war increaseddemandfor iron and steel, armaments,ships and other products.Two grim memoriesof the interwar years persist: unemploymentand the approachingmenaceof the SecondWorld War. It is ironic that the arrival of the latter provided relief for the former.

16

Part Two: The Effects of Economic Depression 3

Social Consequences

One indication of the severity of the interwar economicdepressionis the number of contemporary investigations of the unemployment problem that it provoked.Governmentdepartmentsand official commissionsinvestigatedthe extentof unemployment,examinedthe working of the unemploymentinsurance schemeand studied the effect of unemploymenton the health of its victims. But often more useful to the historian were the investigationscarried out by private individuals or organisations.To a remarkableextent the depressedareasremained unknown to many of the British people. But especiallyin the 1930s they were regionsfrom which distressingreportsemanatedandto which writers, journalistsand social scientiststravelled, often with something of the self-consciousbravery of African explorers. Was the economic depression causing a major social disaster? Which places in Britain suffered most and what effect did unemploymenthave on the community? Who were the principal victims and how did it affect their living standardsand health?Was the impactsevereenoughto undermine establishedpatterns of working-class behaviour? Were families being broken up, was there a collapseof law and order and was the depres· sion generatingpolitical militancy? How effectively were government policies and voluntary servicesmeeting the needsof the unemployed? Thesewere questionscontemporariesoften asked.

The geographyof unemploymentand migration In the 1920s and 1930sthe threat of unemploymenthung over most workers in Britain irrespective of where they lived. Unemployment was a problemin seeminglythe mostunlikely places.When J.B. Priestley toured England in the autumn of 1933 he saw a crowd of unemployed workers around the labour exchangeeven in a small cathedraltown like Salisbury(5 1)." In the sameyear the LlandudnoAdvertiserrecorded the formation of an Unemployed Welfare Committee [doc. 17]. Personal misfortune, individual decisions to change jobs and small local industrialchangescreatedunemploymenteverywhere.More seriously, cyclical depressionsaffected most areasof the country. In August 17

The EffectsofEconomicDepression

1922 near the bottom of the slump unemploymentwas highest in Northern Ireland (25%) and in Scotland (21%). But it was also well above prewar averagesin the North West (16%), North East (18%), Midlands (18%), South West (15%), South East (12%), London (13%) and Wales (12%) (30). Again, at the bottom of the severedepressionin 1932 the annual rate was high in all regions, ranging from 13.5% in London to 36.5% in Wales (17). Few jobs were securewhen overseas and home demandfell so far and workers were laid off in a wide range of industries.Even in the most prosperousregions at the most prosperoustimes unemploymentremainedabnormallyhigh, swollenin part by the migration of the unemployedworkers from the more depressed regionsand industries.In 1936whenthe Pilgrim Trust beganits detailed study of unemploymentin Britain it selectedfor examinationthe towns of Deptford, Leicester, Crook (Co. Durham), Blackburn, Liverpool and Rhondda(SO). Unemploymentwasa blight on all areasof Britain. Neverthelessvulnerability to unemploymentand the severity of its effect dependeda good deal on the industrial characterof the areain which a worker lived. The regional distribution of industries createda regional pattern of unemployment.It was a pattern most starkly revealed at the peaks of industrial recovery. In 1929 the Ministry of Labour recordedunemploymentratesabovethe nationalaveragein the North East (13.7%), North West (13.3%), Scotland(12.1%),and Wales (19.3%). Below the average were the Midlands (9.3%), South West (8.1%), SouthEast (5.6%) and London (5.6%). The division wasexactly repeatedin 1937 with high ratesin the North East (11%), North West (14%), North (17.9%), Scotland(15.9%) and Wales (22.3%) and lower rates in the Midlands (7.2%), South West (7.8%), South East (6.7%) and London (6.3%) (17). Such industrial recovery as took placein the late 1920s and late 1930sdivided the country roughly into two parts contrasting depressedareas in the North and Wales with regions of comparativeaffluencein the Midlands,the Southand the East. The explanation of this division was evident to a traveller like J.B. Priestley. He saw the contrastingfaces of old and new industrial areas [doc. 2] . The high unemploymentin the North of England,in Scotland and in Wales reflected the concentrationin thesedepressed areasof the staple industries of coal, cotton, iron and steel and shipbuilding. In the North East were coal mines,iron and steel works and shipbuilding firms [doc. 4] . In the North West were the cotton towns as well as considerablecoalfields, some iron and steel companiesand shipbuilding firms [doc. 3]. Shipbuilding, coal and iron and steel dominatedsouthernScotland,and South Wales relied on coal and iron and steel. These industries had developedin the nineteenthcentury 18

SocialConsequences and had attractedlarge populations,heavily dependenton them.When markets were lost at home and overseas,high structural as well as cyclical unemploymentwas unavoidable.By contrastin the Midlands and especiallyin the Southand Eastotherindustriesexpanded,survived the cyclical depressionsand.createda new and more affluent Britain. In thesefavoured areasfactoriesproduceda rangeof modernconsumer goodslike electrical equipmentand motor cars in newer cleanerbuildings, using electrical power, not coal and steam,and drawing round themsuburbsof newhousing.Employmentprospectsherewere brighter: nearly half the new factoriesopenedin great Britain between1932 and 1937 were in GreaterLondonalone(53) [doc. 5] . It followed from the structural nature of their industrial problems that long-term unemployment,which createdespeciallyserioussocial problems,was largely concentratedin the depressedareas.In the summer of 1937 the long-term unemployedformed 25 per cent of the un~ent in employed in the North West, 33 per cent in Scotland,39 per cent Wales and 40 per cent in the North. They made up only 8 per cent of the total in London, 10 per cent in the South East and 12 per cent in the SouthWest (17). Regional ratesof unemploymentdisguisedvariationsbetweentowns in the same region. Workers were more liable to unemploymentand especiallyto long-term unemploymentif their town was heavily dependent on a single industry whosemarketswere severelyreduced.A more diversified local economy with alternative occupationsor a local industry whose products remained popular offered more favourable employment prospects.This could create prosperoustowns even in depressedareas:in 1937 Halifax's machinetool trade kept unemployment down to 6 per cent and Consett'suniquely flourishing iron and steel industry in Co. Durham held local rates down to 5.4 per cent. But where circumstanceswere particularly unfavourable unemployment in a town could be well above regional norms. The tin and engineering industry declined in Redruth to leave unemployment at 29 per cent in 1937, high above the averagefor Cornwall (2, 17). In a generally depressedregion some single industry towns were left virtually derelict. In August 1922 the shipbuilding town of Barrow-inFurnesshad an unemploymentrate of 49 per cent. Palmer'sshipyard closedat Jarrowin the summerof 1934: 72.9 per centof the workforce was unemployed in September1935 [doc. 24]. In Blackburn where 60 per cent of jobs were in the cotton industry, the slump in 1931 left 46.8 per cent of workersunemployed.The SouthWalescoal mineshad producedmainly for exports: lost markets created61.9 per cent unemployment in Merthyr Tydfil in 1934 (2, 11,30,58).In such black19

The EffectsofEconomicDepression

spots long-tennunemploymentwas a naturalcorollary.It wasextremely bad in some towns. In Crook, where the coal industry had collapsed, 71 per cent of the unemployedin November 1936 had been out of work for over five years. In Rhondda urban district they formed 45 per cent of the total (50). Townsin which unemploymentwas high usuallysufferedfrom other consequencesof economic depression.Workers still employed might not be employed for a full week: short-time working reducedtheir earnings.Wage rateswere also lowered in industrieshit by depression. Together with unemploymentthese factors substantially reducedthe income of people living in the town. The effect on other local industrie.s, shops and services may be imagined. Depressionspread.Many small businessescateringfor the local market could not survive. Moreover, a town in which consumershad low purchasingpower hardly encouragedfirms in the areato expand.It also discouragednew companies from moving in. Higher average incomes and more affluent customersnaturally attracted businessmeninto the South and East insteadof the North and Wales (2,53). Furthermore,severeeconomic depression created serious social problems and attempts by local authoritiesto raise revenueto deal with theseproblemsincreasedlocal rates.In the late 1920sratesin Merthyr Tydfil were 27s6din the pound. In spite of governmentattemptsfrom 1929 to relieve industry of the burden, high ratesmay well have been anothereconomicdeterrentto new investmentin depressedareas(11,40). Businessmanagersandtheir families could alsothink of non-economic reasonsfor siting their companiesand their homes in, for example, the new suburbsof GreaterLondon rather than in the blighted valleys of South Wales. The areasof heavy industry had never been notedfor their visual charm. Unadornedby the prospect of adequateprofits they looked even less attractive to the investor.Their ageingfaceswere ravagedby the detritus of industrial depression.Observerscommented on the physical remainsof industrial collapse.'Silent rusting shipyards are not an inspiring spectacle'(51). The failure of small businesses was recordedin the closed and boardedup shopsconspicuousin town centres.Priestley estimatedthat one out of every two shopsin Jarrow was closed. In Wigan Orwell saw 'no very obvious signs of poverty except the number of empty shops' (47). Hutt countedtwenty-three closedshopsin Tonypandy,a small mining town in the Rhondda.The signs of disrepair,of peeling paint and broken slates,were other symptoms of industrial decay.Uncongenialsurroundingsdiscouragedinvestment (38). High unemploymentand urban decay inevitably also encouraged 20

SocialConsequences some people to leave. Between1921 and 1938 the distribution of the population around the regions of Great Britain changedconsiderably. The areasof rapid populationgrowth were the regionsof new industrial expansion:populationin the South East increasedby 18.1 per cent,in the Midlands by 11.6 per cent. The old industrial regions,fast growing in the nineteenthcentury,were checked.The West Riding grew by only 6 per cent, Lancashireand Cheshireby 3.5 per cent and Scotlandby 2.1 per cent. The populationof Northumberlandand Durhamactually fell by 1 per cent and South Wales lost 8.1 per cent of its inhabitants. Some people escapedfrom the depressedareasby leaving Britain and emigrating, mainly to Empire countries. But in the 1920s total net emigration from Britain was only about 130,000 a year and in the 1930s when depressionaffected most of the world many of them retumed; more people enteredBritain than left in the 1930s(12). The different rates of regionalpopulationgrowth are thereforemostly to be explained by the movement of people from one area of Britain to another. Some workers expressedtheir feelings about employment prospectsand the quality of life in the industrial areasof the North West, North East, Scotland and South Wales by leaving for the Midlands, South East,SouthWest and especiallyfor London and the Home Counties.Some were to find work in the motor industry in Oxford or Luton; many joined the ranks of the unskilled in London;minersfrom the depressedareashelped develop the more profitable coalfields of Kent. Not only might the migrantsbetterthemselvesbut they may have easedthe competitionfor jobs in their old homes. Other effects of the movementwere less satisfactory.Too many of the newcomerscould not find jobs to suit their skills and were forced to seekunskilled work. Competitionfor unskilledjobs even in the more prosperousareas was always high; at times of cyclical depressionany increase in the local labour force was unwelcome: migration merely spread unemployment into other areas.This surplus labour possibly depressedwage rates; it could increasepressureon local welfare services, intensify the demandfor housing and exacerbateproblems of overcrowding. Inevitably some local inhabitants resented the new immigrants;anti-Welshfeeling wascommon.Suchhostility and difficulty in finding jobs, coupled to understandablehomesickness,persuaded many escapeesto return to the grim if familiar depressedareas.From 1928 the government had assistedthe transfer of workers from depressedareas [doc. 25] but by June 1937 35 per cent of the juveniles and 27 per cent of the adults they helped had gone home. Nor were contemporariesentirely happy about the effect of such migration on depressedareasthemselves.It was obviously most difficult for the 21

The EffectsofEconomicDepression

married man with family ties and financial commitmentsto leavehome and it was extremely difficult for the elderly to find jobs if they did leave. Most people who left were therefore young, unmarried men. Would this processdenudetowns in the depressedareasof the young and the enterprising, those who might have helped create renewed prosperity at home,whose skills would be neededif investmentwas to be encouraged?Would their absencetend to leavean ageingpopulation drawing disproportionatelyon local welfare services?A vicious spiral of economic and cultural decay would follow. What must the quality of life be in the Rhonddaafter 28 per cent of its population,47,000 people,were lost from the urbandistrict between1921 and 1935 (49)? Undoubtedly migration took away somethingof the vitality from the worst;hit places,but the remarkablefeature of communitiesin the depressedareasseemsto have been their resilience.It is surprisinghow many people chose to stay. The experienceof unemploymentwas not so bad that peoplewere forced out in desperation:welfare servicesprovided some assistance,and the unemployedusually still had homesand personalpossessionswhich they were reluctant to leave. But there was also a marked unwillingnessto break out of the tight-knit cultural and social environment built up by the industrial working class in the nineteenth century and which now controlled and sustainedthem. Chapel,club and trade union did survive. Organisationsto help the unemployedgrew from local roots. If anything,especiallyin small towns, the more severe the depressionthe closer the community grew; unemploymentwas a sharedexperienceandthe financial andmoral support of family, friends and local institutions persuadedmany to stay. These were the ties which dissuadedmost peoplefrom risking greaterdistress by leaving.

Who were the unemployed? Losing and finding employmentdependedon other factorsbesidesthe areain which a man lived. A good deal was mere chance.Being on bad terms with a foreman was a disadvantagewhen work forceswere being reduced.Being at the right gate at the right time or knowing someone who could pull strings or leak inside information was to be lucky when workers were being recruited. Since at best only one-third of the men who found work in the 1930s got their places through the official employment exchanges,such factors must have been important. It took Sam Grundy's influence at the city bus depot to rescue Harry Hardcastleand his father from unemployment(17, 35). 22

SocialConsequences Liability to unemploymentalso reflected personalcharacteristics. When the demandfor labour fell it was inevitable that many of those who lost their jobs first and found new openingslast suffered from disabilities. Their unemploymentwas personal,though it was cyclical depressionor structural changewhich revealedhow marginal was their membershipof the labour market. The Pilgrim Trust investigatorsdiscovered a number of physically disabled long-term unemployedwho of accidents(50). suffered from industrial diseasesor the consequences It was also found in other studies that many long-term unemployed were physically out of condition or were at leastassumedby employers to be unfit. Employers preferred to recruit new workers from those just out of work, believingthat they would not havelost their healthor skills (31). The less physically strong a man was the less likely he was to be re-employed,and the longer he remainedunemployedthe more his chancesof being given a job dwindled. The long-term unemployed suffered additionally since personal appearancecounted for a good deal when workers were selected.The longer a man was unemployed the more shabby his appearancebecameand frequently the more dispirited his manner.For similar reasonsthe mentally handicappedwere barely membersof the labour market in theseyears (50), and workers without any educationalqualificationsfound themselvesmore vulnerable to unemployment(33). Men were more proneto unemploymentthan women.Therewere of course far more male unemployedworkers than female since the great majority of the work-force was male. But the rate of unemployment among male workers was also higher. In 1931 14.7 per cent of male workers were out of a job comparedto 9.4 per cent of female workers. Since wage rates for women were substantiallylower than those for men, employerssometimespreferredin a time of economicdepression to jettison male employeesratherthan female onesif it was practicable. This often meant that a wife, a sisteror a daughtermight be employed when a husband,a brother or a father might be left unemployedat home. However, the problemsfaced by women were greaterthan this might suggest.Unemploymentamong married women was high: such workers were often the first to be dismissedin depression.Moreover women resembled, in one sense only, the physically and mentally handicapped: except in areas like Lancashire,where women traditionally worked in the textile industry, they tendedto be only marginally membersof the labour force. Social customencouragedwomen to work only when single.Whe)1 job opportunitiesshrankin the depression many women simply droppedout of the labour market and ceasedto register at labour exchanges.Furthermore government legislation in

23

The EffectsofEconomicDepression

1931 deprived married women of entitlement to unemployment benefit and so they often ceasedto registeras unemployed.The figures for female unemploymenttherefore underestimatethe real effects of the depressionon women'semployment(1, 7). Age was another factor which crucially affected vulnerability: unemploymentwas at its lowest among juveniles but numbersrose rapidly betweenthe agesof eigh1:eenand twenty-four. The misfortune of many young men was to have embarkedas juveniles on dead-end jobs: there were many unskilled jobs in which a boy could earn a fair wage but which led to dismissalat eighteenor twenty-one.In addition many boys seekingbetter careerssignedup as apprenticesbetweenthe wars, for example as engineers,to find not only that becauseof mechanisationthey were no longer learning a particularly skilled trade but that when they finished their apprenticeshipat the age of eighteen or twenty-one and could henceforthclaim adult wages,their reward was dismissal. Cost-consciousemployerspreferred the cheapjuvenile labour of apprenticesof which therewas a plentiful supply. Like Harry Hardcastle,the newly qualified engineerwas very often an unemployed one (35). Employment prospectsdid not deterioratemuch more between the agesof twenty-five and forty-four, but then camea new and more alarming danger. After the age of forty-five, the risk of a man losing his job did not increasethe older he became,but the older he became,the less was his chanceof finding anotherjob should he become unemployed.Inevitably the amount of unemploymentamong ,older workers was higher: in 1931 when unemploymentwas around 13 per cent for men agedtwenty-five to forty-four it was 22.6 per cent for men agedfifty -five to sixty-four. And of coursethe elderly man was most liable to long-term unemployment.Theytoo had becomemarginal labour, disqualified by age from re-employment.Much of the bitterness and distress caused by unemploymentwas felt by men who knew themselvesto be prematurelyconsignedto unrewardingandcompulsory retirement.The only consolationwas that many elderly workerstended not to have children still dependenton their support and that distress might have been much worse if younger men with families had been equally liable to high andlong-termunemployment(1,17,50,66). Vulnerability also varied according to type of employment.As we have seen, the workers most affected were those in the old staple industries: miners, cotton operatives,shipbuilders andiron and steel workers. There were also large numbersof dock labourersand building workers. In the boom year 1937 thesegroupshad unemployment rates of from 10 to 27 per cent, all above the national average.Unemploymentwas less a danger for workers employedon trams,buses 24

Social Consequences

and the railways, for those providing gas, water, electricity and distributive services, for printers and engineersand chemical workers, and for those making a rangeof consumergoods;here rateswere below the national average.The long-term unemployedwere distributed in similar fashion: in 1936 coalminers, shipbuilders, cotton workers, seamenand iron and steel workers headedthe list with much lower rates recorded for other trades, including, it should be noted, dock labourers and building workers whose high unemploymentrate was createdby casualand seasonalfactors and not by the structural problems mainly responsiblefor long-termunemployment(7,50) [doc. 6] . One important feature of this pattern of unemploymentwas the critical situation for workers in the stapleindustries,many of whom in the nineteenth century had formed an aristocracy of skilled labour, for the most part well organisedin trade unions, enjoying reasonable wages and security. Their fall was far and frightening, and this had important social consequences.However, an analysis of occupations affected by unemploymentshows that unskilled workers were much more liable to become unemployedthan those who were skilled. In 1931 30.5 per cent of unskilled manual workers in England and Wales were unemployed whereas only 14.4 per cent of skilled and semiskilled manual workers were out of a job. Similarly an analysisof the long-term unemployedshows that unskilled workers had three times the unemploymentrate of skilled and semi-skilled workers (31, 50). It is true that one effect of the depressionhad undoubtedlybeen the flooding of the unskilled labour market. Some former skilled workers finding no openingsfor their trade scrambledfor jobs at lower levels and registered if necessary as merely general labourers; this artificially pushed up the totals of unemployed unskilled workers (31). Neverthelessin consideringthe further social effectsof unemployment we need to remember that those out of work were predominantly unskilled. It is also evident that white-collar workers such as clerks and shop assistantswere much more securein their jobs, with ratesof unemploymentin 1931 of 5 to 8 per cent; managers,farmers and owners of shopsand businesseswere hardly affected with figures of ~ to 2 per cent (7). Poverty Contemporarieswere anxious to discover not merely which workers were liable to unemploymentand why, but wantedto trace the effects of unemploymenton them. To what extent did the loss of a job plunge working-classfamilies into poverty?Building on prewar studies,investi25

The EffectsofEconomicDepression

gators in the 1920sand 1930scalculateda poverty line as the minimum income neededto meet essentialfamily expenditureafter the payment of rent. This involved calculatingthe cost of heating,lighting, clothing, householdequipment,some additional running costs and the food required to meetbasicnutritional needs.Familiesnot havingthis minimum income were classedas living in poverty. Conclusionsnaturally varied accordingto estimatesof essentialneeds,the areastudiedand the year of the survey. But all surveys agreed that in spite of improvements since before the war poverty was widespreadevenby the most exacting of standards.The most completestudy was that carried out by Rowntree in York in 1936. He found that 31.1 per cent of working-class families lived in poverty.Applying Rowntree'sstandardsto the evidence producedby other surveys of Merseyside,Southampton,London and Bristol in the late 1920s and the 1930s, we find between15 and 30 per cent of working-classfamilies in thesetownswithout an incometo meet minimum needs.It ·should be noted that none of these interwar surveysexaminedthe extentof poverty in the most seriouslydepressed areas,and it is likely that conditionsthere were worse (15, 52, 57). How far was unemploymentresponsiblefor the poverty discovered? Prewar studies had identified low wagesas by far the most important single causeof distressand unemploymenthad not beena pre-eminent problem. The interwar surveys agreed that although low wages still causedmuch poverty, unemploymenthad becomevery serious.Rowntree concludedthat 32.8 per cent of the poverty of York in 1936 was due to low wagesand that 28.6 per cent was causedby unemployment; in London in 1928,casualwork and low wagescausedabout 14 per cent of the poverty in the city but about35 per cent wasdue to unemployment; in prosperousBristol in 1937 21.3 per cent of poor families suffered becauseof low wagesand 32.1 per cent becauseof unemployment (15,52,57).There is also some evidenceto show that especially in the badly stricken areas,high unemploymentlevels depressedwage rates or encouragedshort-time working to spreadthe work available. This reducedearnings.Unemploymentmay be regardedas one cause of low wages and therefore indirectly as well as directly a cause of poverty (2). The samegrim link betweenunemploymentandpovertywasrevealed by examiningthe standardof living of unemployedfamilies. Rowntree found that 72.6 per cent of unemployed workers lived below his poverty line. Even by the more spartan standardsadoptedin the Pilgrim Trust report,30 per centoffamilieshit by long-termunemployment were below the poverty line and a further 14 per cent existed on it, and another study of Sheffield in the winter of 1931-2 found 42.8 per 26

SocialConsequences

cent of the families of unemployedworkers lived in poverty. It should be emphasised that these calculations assumed the most rigorous housekeeping,the most careful expenditure of income by the unemployed, no waste, no entertainments,no travel: a standardof existence not a standard of living. The numbersbreaking the rules and suffering the consequencesin poorer diet or shabbierclothing must havebeenconsiderable(48, SO, 52). For most workers unemploymentbrought a serious fall in family income. A survey of about 800 families in Stockton-on-Teesin the early 1930s revealed that the average income of families where the wage earnerwas unemployedwas 29s 2Yzd(£1.46) a week; where there was no unemploymentit was SIs 6d (£2.S7Yz).The Pilgrim Trust investigatorscalculatedthe averageunemploymentassistanceallowances given by the governmentto the long-term unemployedand compared them with the previousaverageearningsof theseworkers. They found that allowanceswere between45 and 66 per cent of previouswages, varying according to age. The drop in income was confirmed in a Ministry of Labour study in 1937 which showed that the average weekly unemployment insurance benefits paid to adult men was 24s 6d (£I.22Yz),whereasthe medianwage ratesof thesemen when last employedwas 55s 6d (£2.77Yz)(41, S0, 56). Observersnoticed that the longer unemploymentlasted the sooner of a drop in income savingswere usedup and the more the consequences were exposed.Severehouseholdeconomiesfollowed: less usewas made of coal, gas or electricity for cooking, heating or light; furniture was sometimessold, pots and panswore out and were not replaced;clothing sufferednext - the shabbinessof unemployedfamilies was conspicuous, and secondhandclotheshad to be acquired [doc. 7] . Familiesran into debt and piled up arrearsof rent. Some were evicted; others moved into houseswith lower rents, often sharingwith other families. Lower incomes involved changes in diet: meat, milk: and fresh vegetables were cut down or out; more potatoes,breadand margarinewere eaten, stodgy foods which poorer families traditionally ate to stave off the feeling of hunger (30,31,46, SO). These were the most striking signs of falling living standards, but to them can be added the sight of unemployed workers trying to supplement their meagre incomes. They might be seenbeggingfor the most casualof jobs, carrying bags at railway stations for example. For many people in the South East the most direct evidenceof the distressof the depressedareaswas the appearanceof unemployedWelsh minerssinging for coppersin London streets[doc. 8] . Some contemporarycommentatorsconcludedthat national welfare 27

The EffectsofEconomicDepression

serviceswere inadequatesincethey did not preventunemployedpeople from dropping below the poverty line. Charities distributing clothing and food could not deal with mass unemployment.Local authorities provided more valuable help: in some towns poor children were given free meals through the schools,and the poor law administeredin the 1920s by Boards of Guardiansand in the 1930sby Public Assistance Committees gave some financial help to unemployed families. But these measuresvaried from areato areaand were not designedto cope with persistent depression.The principal cause of the poverty of so many unemployedfamilies seemedto lie in the inadequacyof the staterun unemploymentinsurancescheme. The original Act of 1911 was greatly extendedin the early 1920s to cover most manual workers, to extend the period of benefit and to provide allowances for dependent wives and children. The major criticism made of the schemewas that the level of benefits was too low. Benefits paid between the wars were higher than before 1914 and their real value rose in the 1920sand early 1930swhen prices fell, but the state made no attempt to guaranteethat the level of benefits was sufficient to keep the unemployedand their families out of poverty (67). Somecommentatorsbelievedthat benefitswerejust about adequate, but others like Rowntree and Tout were more critical. Unless the unemployedman had savingsor othersourcesof family income Rowntree believedhe was likely to fall into poverty. In 1936 an unemployed single man would receive 17s (85p) unemploymentinsurancemoneyor a maximum of 15s (75p) unemploymentassistancebenefit if he had exhaustedhis normal insuranceentitlement.Out of this he had to pay for his food, heating, household equipment, personal sundries and rent. Rowntreeestimatedthat suchan unemployedman needed22s 9d (£1.20) plus money for rent if he was to meet his minimum needs. A married couple, both unemployed,received 26s (£1.30) insurance benefit, or a maximum of 24s (£1.20) unemploymentassistancerelief and needed,according to Rowntree,27s 8d (£1.20) plus money for rent. A man, wife and three children would receive 35s (£1.75) insurance money, probably 37s 6d (£1.20) from the Unemployment Assistance Board, and needed 40s 5d (£2.02) plus money for rent, perhaps53s (£2.65) in all (52). It seemedobvious to Tout that many families of the unemployedwere in poverty 'becausebenefit and relief scales arebelow the surveyscaleof "needs'" (57). The Pilgrim Trust investigators had a lower standardfor poverty and suggestedthat a married couple drawing unemploymentassistance could keep on or above the poverty line, but they emphasised 28

SocialConsequences that with children such a family was likely to be in poverty.Mainly as a result they reckonedthat 41 per cent of families wholly dependent on unemploymentassistancefor their income were living in poverty (50). The more dependentworkers were on such relief for their income, the more likely they were to be in poverty. When the level of benefitswas cut in 1931 the damagingeffect on living standardscould be traced (37,55). In general many commentatorsagreed that stateprovided unemploymentrelief was often inadequateto meetminimum needs, and unemployment did therefore force many families into poverty. Distress was felt more severelyby workers whose tradeshad in the past given them comparatively high living standards:skilled men like textile workers,steel workers, coalminersand shipbuildersexperienced a particularly acute and painful drop in income. Many unskilled or semi-skilledworkershad also beenusedto relatively goodwagesbecause of reasonablerates of pay and/or long hours. For such workers unemployment for all but the shortestperiodsbroughtaharrowingexperience, life near or below the poverty line. We must remember, however, that the majority of unemployed workers were unskilled and that many unskilledjobs were poorly paid. Low pay had beenin the pastthe principal causeof poverty. Unemployment may well have affected such low-paid unskilled workers in a different way. ACGordlng to the professedprinciples lying behind the unemploymentinsurancescheme,unemploymentshould have reduced the living standardsof all workers. The nineteenthcenturydoctrine of 'less eligibility' was supposedto guide interwar welfare provision. No worker ought to enjoy a higher income while unemployedthan he had previously enjoyedwhile working. Otherwisethe incentiveto find work would be removed and disastroussocial consequenceswere expected to follow. But in practicethe levels of benefit paid underthe Unemployment InsuranceActs were for some workers more attractive than the wagesthey had previously drawn or might expectto draw. Some unskilled workers were used to casual,infrequent and lowpaid employment;not only was their income low but it was irregular. However, if they qualified for insurancebenefits or, from 1934, for unemploymentassistancetheir standardof living could actually rise; their incomewould now be regular,allowing for more economyin their expenditure,and though allowanceswere low they might well be above their previous earnings.From its investigationsof long-term unemploy· ment, the Pilgrim Trust concluded that as many as 20 per cent of families dependenton unemploymentassistancewere as well off, or better off, than they would have been if at work (SO). The wagesof

29

The EffectsofEconomicDepression

young people were notoriously low and this explains why one study in 1938 suggestedthat 20 per cent of unmarried youths received unemploymentallowancesat least as high as their last weekly wage; the samesurvey showedthat becauseof dependants'allowances50 per cent of married young men were at least as well off unemployedas employed (33). While wageswere paid on a flat rate basis,unemployment relief was adjustedto take some account of family needs. For low-paid workers of all ages the extra dependants'allowancescould make unemploymentfinancially more attractive than work. The case was even stronger for low-paid workers with children. The Pilgrim Trust investigatorsdescribedhow an unskilled man might earnas little as 2Ss (£1.25) a week and not more than 40s (£2) a week, whereasif he had a wife and family he might draw 4Ss (£2.25) a week or more. As an extreme illustration they describedthe case of one young man who had not worked since he left school but who had found the energy to be married and the father of three children by the age of twenty. If he worked he might earn at most about 20s (£1) a week; unemployed,he drew 3Ss(£1.75)(50). Such cases modify the impression derived from interwar reports that the poverty of unemployedfamilies was always causedby their loss of a job. For the majority of workers this was undoubtedlythe case, but for a substantialminority of the unemployed,poverty was the normal condition of their existence.Low wages and the burden of large families would in any casehave subjectedthem to distress.Moreover, if some of the unemployedwere better off living on unemployment relief, it shows that the state welfare system,though inadequate,did act as a low but effective safety net: it preventedunemployedworkers from falling into the dire want which had beenso cornmonamongthe low paid before 1914. In spite of the poverty to which the depression condemned so many working-class families between the wars, they found themselvesbecauseof unemploymentinsurancewith a standard of living at least a little better than that of most employedunskilled labourersbeforethe war (4).

Health Contemporaryinvestigationsinto the living standardsof the unemployed frequently raised another question. Did the health of unemployed workers and their families deteriorate?This consequencemight seem unavoidable.During the interwar years more sophisticatedknowledge was acquired of the connection between diet and health. In 1933 the British Medical Associationpublishedan analysisof the minimum 30

Social Consequences

diet which provided the calories, proteins and vitamins essentialto maintain health. Social investigators like Rowntree worked out the cost of this or similar diets and incorporatedresultsin their calculations of the minimum income which defined the poverty line. Since many, though not all, families were forced below the poverty line through unemploymentit seemedlikely that they would have to economise on food; their diets would be inadequateand their health must be in jeopardy. Analysis of the food actually eatenby the families of unemployed workers seemedto confirm this. It frequently showeda high consumption of bread, margarine,potatoes,sugar and tea and an inadequate consumptionof meat, vegetables,fruit and milk [doc. 9]. A study in Lincoln in 1936 concludedthat 17 per cent more breadwas eatenby the families of those out of work than by those employed,but that the unemployedman consumedonly 38 per cent of the amountof milk consumedby the employedworker and 77 per cent of the amount of meat. The calorie and protein content of meals was therefore often below the amount consumedby employed families and less than the required amounts setdown by nutritional experts.Many investigators noticed that the diets of wives and mothers were most seriously inadequate,priority being given to the meals of children and husbands (32,42,46,50). Yet many studies concludedthat the evidence did not show any significant deteriorationin the health of the unemployed.An enquiry into the effects of unemploymentundertakenin the autumn of 1922 concludedthat as a result of insurancebenefits, poor relief and free schools meals, 'health has beenmaintainedunimpaired'(30). A study made in Greenwich in 1931-2 agreed that there was no widespread deteriorationin health through malnutrition, and addedthat 'so far as physical condition was concerned,it would be impossible on first observation to distinguish the average unemployed person from the person at work'. An unemployed engineer told the reporter: 'Unemploymentbenefit is not enoughso's you can live like you're usedto living .... But we get enoughto keep us healthy,and you can't ask for much more, now, can you?' (31). This conclusionwas supportedby a Save the Children Fund enquiry which reportedin 1931 on the health of the children in the families of the unemployed:'It can be definitely stated that there has been no generaldeterioration'(55); nor could a study of Sheffield's unemployedtrace any marked decline in health (48). Such testimony must have beengratifying to interwar governments. They were reluctant to initiate investigationsinto the condition of the 31

The EffectsofEconomicDepression

unemployed,and were provokedinto makinginquiriesmainly by pessimistic and angry critics. A Labour Party pamphlet of 1928 entitled The Distress in South Wales: health of mothersand babiesimperilled was answeredby a Ministry of Health examinationof conditions in the area. There was evidence, it agreed, of inadequatediet, but it concludedthat at least at presentthere was no indication of a widespread deterioration in health (42) [doc. 10]. The Chief Medical Officer of the Ministry of Health took the same generally optimistic view in his annualreport in 1934. Mortality rateswere not held to be significantly higherin the depressedareasthan elsewherein the country and though infant mortality was much higher there than the national averagethis was not a new developmentattributableto the depression (34). A vigorous condemnationof this complacencyin The Times in December 1934, by an experienceddoctor in Co. Durham, was counteredby anotherMinistry of Health investigationof conditionsin the county. It admitted that there was considerablesubnormalnutrition but not a high incidenceof 'true malnutrition'. It was claimedthat analysesof the generalmortality rate, the infant mortality rate and the death rate from bronchitis, pneumonia,scarlet fever, diphtheria and measlesin the areaprovedtherewas no sign of a deteriorationin health. Unemployment hadfor the most part done no more than slow down the conquestof tuberculosis;the rare occurrencesof rickets discovered were causedby poor parentalcare and not by economiccircumstances. Finally, since 75 per cent of the populationwere in good health,the impact of unemploymentdid not appearto be serious(43). The Minister of Health relied on such judgementswhen he claimed in 1933 that 'there is at presentno availablemedicalevidenceof any generalincrease in physicalimpairment,sicknessor mortality as a result of the economic depressionor unemployment'(37). These official statementswere regardedas grossly complacentby other investigators.It was argued,for example,that there was a grim correlation betweenthe depressedareaswith high unemploymentand regions of higher than average mortality rates. The infant mortality rate in the Home Countiesin 1935 was 42 per 1000 live births but in Glamorganit was 63 and in Durham and Northumberland76, it was wiser to be born in Coulsdonand Pudeywhich had an infant mortality rate of 32 rather than in Jarrow which had a rate of 114. Maternal mortality in 1936 was 0.89 per 1,000 births in Middlesexbut 5.34 in Glamorganand 5.60 in Durham. Deathsfrom diphtheria,tuberculosis, heart disease,bronchitis and pneumoniawere all significantly higherin the North and in Wales(34, 56). 32

SocialConsequences Local medicalofficers frequently reportedon the poor healthrecord of districts in the.depressedareas,and somecritics like Hanningtonand Hutt cited thesereportsasevidenceof the damagingeffectsof unemployment (37, 38). This evidence is suggestiveof the possible effects of unemploymenton health but all it really provesis the extent of bad health in the depressedareasand it doesnot show that unemployment made people more susceptibleto illness than they would have beenif employedin those regions.The regional patternof the nation'shealth was not necessarilya consequenceof the regional distribution of high unemployment.Poorer health in the North and in Wales than in the country as a whole was a feature of the prosperousyears of the nineteenth century as well as of the period of interwar depression.It could be explainedas the consequenceof a wide rangeof social,industrial and environmentalfactors such as the greater number of slum houses,more overcrowding,air pollution and low wages.High unemployment was probablyan additionalhandicapbut its effectscannotbe deduced simply from regional mortality rates. The regional health patternwould not, and after the SecondWorld War did not, evenitself out completelyif unemploymentdisappeared. For some investigatorsthe physical condition of the unemployed was convincing evidenceof the evil effectsof the depressionon health. GeorgeOrwell was dismayedby the mereappearanceof workersin the depressedareas.'The resultsof all this', he wrote, 'are visible in a physical degeneracywhich you can studydirectly,by usingyour eyes.... The physical averagein the industrial townsis terribly low, lower eventhan in London. In Sheffield you have the feeling of walking amongtroglodytes.' He was particularly struck by the badnessof people'steeth, a sign to him of the under-nourishmentunemploymentwas causing(46). More scientifically the Pilgrim Trust investigatorsexaminedthe health of the long-term unemployedin 1936 and calculatedthat only 58 per cent were fit, while 24 per cent were out of condition and 18 per cent were unfit or had obviousphysicaldefects(50). The Ministry of Labour provided some disturbing evidence: in 1934, medical examinationof a sample of short-term unemployed (mendrawing insurancebenefits) showed that 75.5 per cent were in good physical condition, but that only 59.9 per cent of the long-term unemployed(men drawing transitional benefits)were fit. This suggestedthat prolongedunemployment causeda deteriorationin health (56). Another study in Stockton-onTees carried out by the local medical officer seemedto confirm this. Families of the unemployedwere comparedwith those of employed workers: similar in most other respects,therewas neverthelessbetween 33

The EffectsofEconomicDepression

1931 and 1934 a standardiseddeath rate of 21.01 per 1,000 for the families of the employedanda grim 29.29 per 1,000for the unemployed (41). It is difficult to shake off the feeling that this evidencepoints to unemploymentas a causeof deterioratinghealth,but there remainsan element of uncertainty.The poor physical condition and higher death rates, particularly of the long-term unemployed,leave undetermined which was cause and which was effect. Did long-term unemployment underminehealth and increasedeathrates?Or were peoplewith poorer health less likely to be re-employedand thereforemore proneto longterm unemployment?We know that employerstendedto choosenew labour from the recentlyunemployedand from thosewho looked most fit. The poorer health record of the long-term unemployedmay have been causedas much by this processof selectionas by the damaging effects of poverty and malnutrition to which many of the unemployed were undoubtedlyalso prone. What was neededwas clear evidenceto show whether or not unemployment causeda deteriorationin the health of the unemployedand their families. Therewas a strongmeasureof agreementaboutthe serious effects of mental strain on workers and their families. The failure to find work, the enforced idleness,the fall in living standardsand the death of hopecausedpsychologicalstresses;in somecasesthesewere so severeas to produceneuroticillnesses.The Chief Medical Officer of the Ministry of Health admittedin 1932 that prolongedunemploymentwas causing mental depressionbordering on neurastheniaamong some of the older men. An increasein neurotic maladieswas observedby the Ministry's investigators in Co. Durham (32,43). This was an effect noted by other independentobserversalso. An early report in 1922 concludedthat 'there is abundantevidenceof worry and mentalstrain, which is in casesaffecting health'(30) [doc. 11] ; it was evensuggested that 'the hopelessstruggle combinedwith a senseof worthlessnessand guilt may drive someto suicide' (32). The evidence also shows that the health of women did sometimes deterioratein the depressedareas.As mentioned,there was a tendency for mothers in the families of the unemployedto feed their children and husbandsfirst and to deny themselvesadequatemeals [doc. 12] . Even the Ministry of Health acknowledgedthat many women in the depressedareassuffered from languor and anaemia.There may have beenother consequences. The specialneedsof pregnantwomenfor milk, cheese,butter, eggs, liver, fish, fresh fruit and vegetableswere often too expensivefor many employedworkers,and they were far beyond the reach of the wives of the unemployed.The Ministry of Health ad34

SocialConsequences

mitted in 1937 that in South Walestherehad beenan increasein maternal mortality ratesin the industrial areassince 1928,but it deniedthat there was any correlationwith economicdepression(44). Its statistical juggling is not altogether convincing, and other investigators were certain that there was a strong link; the Pilgrim Trust, for example, saw a rise in maternalmortality as the most seriouseffect of unemployment on public health(50). The effects of unemploymenton children are less clear. There may have been some increasein infant mortality rates but the caseis not overwhelming(30, 37,55,56).More certainis an increasein the liability of children to deficiency diseasescausedby poor nutrition. The Ministry of Health admitted that malnutrition in the depressedareascaused some increasein rickets (42); the School Medical Officer for Cumberland reportedin 1933 that 'thereis evidenceof a very definite increase, almost a dramaticincrease,in the incidenceof rickets amongstchildren of school age' (37). Some observersblamedthe 10 per cent cut in unemploymentbenefits and the introduction of the family meanstest in 1931 for a deteriorationin the healthof children. The Savethe Children Fund team reportedmore malnutrition in 1932 than in 1931 and concluded that 'it is difficult not to associatethis deteriorationwith the reduction in the scale of UnemploymentBenefits' (55). The Medical Officer for Prestonwrote: Possibly at no period during the last five years has work at the Infant Welfare Centre been so difficult as during the latter part of 1932.... One cannot help thinking that the means test was the responsiblefactor. ... No one can deny that the ex-baby and the toddler were both definitely much lessrobust,much more in needof medical attention, and much more prone to rickets than was the casetwo yearsago (37). Most commentatorsalso agreed that inadequatediet and the idleness imposed on the normally active manual worker causedmany of the unemployedto complainof feeling unwell andof being out of condition (32,40,55) [doc. 10]. There was evidence of anaemia among unemployedmen in Co. Durham(43). It is significantthat the unemployed attendingGovernmentInstructional Centresin the 1930scould at first perform only light work, and that men gainedon average7 lbs (3.17 kg) in weight during their three-monthsstay (50). Poor diets did make men less fit and did induce languor,but it seemslikely that this most widespreadeffect of unemploymenton health was not permanent;a return to work raised living standardsfor most workers and their health recovered. 35

The EffectsofEconomicDepression The effects of unemploymenton health were undoubtedlyserious. Even the common minor ailments were distressingto the victims and there is some evidenceof more diseaseand a higher deathrate, at least in the worst years and in the most badly affected areas.But it should also be recognised that unemployment did not strikingly swell the mortality and morbidity rates of the nation or even of the depressed areas;death and diseasedid not savagelyscythe through the ranks of the unemployedand their families. in existing welfare Suchdamageas did occur exposedthe weaknesses services.It was clear that unemploymentinsurancewas not adequateto guaranteethe preservationof health.Moreoverwelfare servicesprovided by local authorities were often least satisfactory where most needed. Free schoolmealsandmilk for necessitouschildren were largely financed from local rates, and the depressedareas were the regions with the highest need for thesefacilities and the least resourcesto pay for them; a penny (hp) rate in Jarrow in the 1930s provided local authorities with between £350 and £450; in Holborn in London it generated £6,800. In Jarrow and in some other badly hit towns during the worst years local authoritieswere forced to make economiesin schoolmeals and milk services(55, 56, 58). Inadequateprovisionjeopardisedhealth, and in the depressedareasimprovementsin healthwere certainlychecked by the impact of unemployment.Neverthelessit is also clear that the servicesprovidedby centralandlocal authroitiespreventedany dramatic deterioration in health standards:unemploymentbenefit, poor relief, free school meals and free milk plus generalimprovementsin environmental and hospital health services between the wars preventedthe sort of social disaster which chronic depressionon the interwar scale would have causedin earlier decades.

Morale Many of those who investigated the condition of the unemployed examined what they called the effects of depressionon morale. This covereda range of topics. Most were concernedby the mental distress caused by unemployment. But many also wondered whether the experienceoflong-termandwidespreadunemploymentwaspermanently destroyingthe hard-working,socially conformist,law-abidingand politically quiescentstandardsof traditional working-classbehaviour. All commentatorsagreedthat a commonconsequence of unemployment was mental suffering. The Ministry of Health investigators in South Wales 'from the first ... were struck more by the aspectof de36

Social Consequences pressionamong the unemployedmen and their listlessnessthan by any other sign of poverty' (42). While the first week or so of unemployment could be treatedas a holiday,it was abundantlyclear that over a longer period the unemployedcame up againstthe distinction betweenleisure and idleness.Only a few found unemploymenta welcomereleasefrom work. Walter Greenwoodrecordsthat 'to me the leisure which unemIt brought a bubbling ployment providedwas anythingbut disagreeable. senseof freedom' (98). Thosewith interestsand mentalequipmentlike Greenwoodcould find constructive and fulfilling use for their leisure in reading,writing, educationalcoursesand in political activity. Others found satisfactionin the activities of unemployedmen's clubs or the cultivation of allotments (22,23). But most found idlenessa burden, the day a void to be filled. There were a few activities commonto most. There was the routine of queueingat the labour exchange,signing the register,drawing unemployment pay. The occasionhad a social as well as financial value, bringing the unemployedtogether, providing an opportunity for talk, breaking down the isolation of the man without work. In the early weeks of unemploymentthe tramp from factory to factory in search of work absorbedmuch time and energy. As hope fell, expectations dropped and the searchfor work might degenerateinto a desultory searchfor casualjobs. One principal preoccupationwas keeping warm. At home this could be expensiveon fuel;hencethe attractionof the public library, the clubs for unemployed men and the public lectures arranged by various societies and churches.In Sheffield Orwell sat through a clergyman's talk on 'Clean and dirty water': 'B. saysthat most of the membersof this brotherhoodare unemployedmen who will put up with almost anything in order to have a warm place where they can sit for a few hours' (47). Such ordealsprovided some entertainment.The searchfor anodyne escapeslike this was another major problem for the idle unemployed. Those who calculatedpoverty lines made no allowance for the unemployedman'sneedfor distractions.While the morality of using dole money for betting was debated(30), the desirefor the excitement and stimulus of gamblingreceivedlessattention.Only a few like Orwell saw that 'even people on the verge of starvationcan buy a few days' hope ("Something to live for", as they call it) by having a penny on a sweepstake'(46). The warmth and entertainmentprovidedso cheaply by the cinema explain why as many as 80 per cent of unemployed youths in Liverpool and Glasgow went to the cinema at least once a week (33) [doc. 13]. But such distractionscould not do more than 37

The EffectsofEconomicDepression

relieve temporarily what Orwell noted as the 'deadening,debilitating effect of unemployment'.Boredom was the enemy,life becameexistence. The distresscausedby idlenessunderlinedthe importanceof work to the working class.Work had three principalvalues.Most working people completely acceptedthe concept of work as a duty; skilled workers especiallywere proud of their work: employmentgavea man statusand respectability. Moreover work satisfied the social instincts of human beings: a man at work was a man with friends, a memberof a social group, part of society.And, of course,work was rewardedwith money. Without a job many workers,especiallyin the early yearsof the depression, felt acutely ashamedand humiliated. That they were out of work seemeda reflection on their character.They felt they lost status. Unemploymentbenefits seemedlike poor relief or charity handouts, and dependenceon them sappedself-respect(30, 33). Losing a job also severedthe social connectionsdevelopedat work, andwith little in the pocket to pay for drinks in the pub it was difficult to maintain old associationsout of working hours. At worst this led to the isolation of the unemployedworker. More commonlya single working-classsociety divided into two communities- the employed and the unemployed; their occupationsand life stylesdiffered andkept them apart.Observers noticed how friends could separate,how youths might drop their girlfriends, how the unemployedgatheredtogetheras a distinct social group, centredsometimesin their clubs, or on street corners,or in the dole queue (32,33). The exultant Harry Hardcastle,re.employedand with his first pay packet,stole away guiltily down a back entry rather than face his still unemployedfriend (35). The tendencywas mostmarkedin the areasof reasonableprosperity. In those regions,the long-unemployedman was a more isolatedfigure, his 'failure' more apparent to him and to others, his poverty more conspicuouswhen set againstthe affluenceof neighbours,his bitterness the greater. In the depressedareas,particularly in a small close-knit community, a South Wales mining town or a place like Jarrow, the depression was much more obviously a catastrophefor the whole community,unemploymentmore obviouslyno fault of the unemployed, and the experiencecommon in many homes. Distress was great but adjustingto life on the dole was easier(50). The signs that there was less mental distressin the most depressed towns was actually a sourceof worry to someobservers.Was thereless distressbecausethe work ethic, the will to work, had beenpermanently eroded?Would there not be frightening social consequences if the unemployed were cheerfully adopting the life of a leisured class?As the

38

Social Consequences

depressiondraggedon through the 1930sthe unemployedincreasingly acceptedpublic assistancewithout demur.'Thosewho feel that thereis an element of disgrace in receiving Unemployment Assistance are unusual', wrote the Pilgrim Trust reporters. A Rhonddaminer told them: 'I can rememberthe days when it was thought shameto accept poor relief. Now there'sso many do it that thereis nothing to it' (50). Orwell saw 'whole populationssettling down, as it were, to a lifetime on the P.A.C.'. But he was one of the few who found it 'admirable, perhaps even hopeful, ... that they have managedto do it without going spiritually to pieces' (46). The Pilgrim Trust report arguedthat 'for three and a half centuries one of the assumptionsunderlying Western individualism has been that a man was responsiblefor the maintenanceof himself and his family'. They feared that the public relief of the unemployedmight underminethis attitude(50). Someinvestigatorswereespeciallyanxiousabout the youngergeneration. Young men, they argued,did not have years of work experience behind them and missedwork less.They lackedthe work ethic of their elders. Many of them were 'work-shy'; they seemedto adapt more easily to unemployment.They were a shakyfoundationfor the nation's future. It was for them that occupationcentresand training schemes were most needed,to keepthem physically and mentally fit for work -when work came.Theseconclusionswere reachedin a large numberof contemporaryreports(30, 31, 33, 51, 55). There is, however, plenty of evidence to show that only a few workers were content to acceptrelief rather than to seekwork. Those who did were mainly unskilled workers whose work had in the past given them little satisfactionand low statusand whose presentunemployment money was about as much as their previous low pay. In general welfare services had not destroyed the will to work. 'Many workers, probably the great majority, prefer to work evenif the financial gain from it is slight', admittedthe Pilgrim Trust report (50). Bakke wrote: 'The number of semi-skilled men with large families who said they would "jump at the ch'lnce" to go back to work, evenif they received no more than their insurancebenefit, is an indication that even in a machine age there are other rewards for work than the money reward.' One worker said: 'I don't care what your job is, you feel a lot more important when you come home at night than if you had been tramping aroundthe streetsall day' (31). When work was availablethe unemployedwere willing to take it, and thereis no convincingevidence that high unemploymentbetween the wars had any permanenteffect on working-classattitudesto work. There was a fear that the strains createdby unemploymentwere 39

The EffectsofEconomicDepression

causingwidespreaddamageto family life. By tradition in most workingclass families the husband/fatherwas the master,the headof the household, but his statusresteda good dealonhispositionasthebreadwinner. The risk of long-term unemploymentincreasedwith age so that it was very often husbandsand fathers who were out of work. Only in areas like South Lancashirewhere female employmentwas common (in the textile industry) was it more tolerable to let a woman be the principal wage-earner.But generallythe loss of statusand self-respectinevitably following from unemploymentwas more galling if wives or daughters remainedin work; it was bitter enoughfor a man to be supportedby the earningsof his son. Suchdependencewas exposedmost woundingly when after 1931 unemploymentallowanceswere relatedto household earnings.Once a worker had exhaustedhis rightful claim to insurance benefit, his dole money was reducedor cut altogetherif the authorities reckonedthat the earningsof other membersof the family were sufficient to meet family needs. The enforced dependenceon wife and children for support causedas much distressas the financial loss. One South Wales miner describedhimself as 'a pauper through having to dependupon my children for a living' (32). Similarly unemployedsons, and some unemployed daughters,felt themselvesa drain on family income and resentedtheir lost independence.Occasionallythe tension was sufficient to destroy families: marriageswere broken [doc. 14] ; there were casesof elderly parentsbeing forced out of family homes becausetheir pensionsreduced their children's dole under the means test; and unemployedsons, seeking independence,sometimesmoved into lodgings. It was also sometimessaid that social norms were being underminedbecauseunemployedmen were reluctantto marry (32, 33, 37,46,50). Undoubtedlytragediesoccurredand families were parted;moreover we must imaginemany more occasionswhen enforcedidleness,poverty, loss of self-respectand the disruption of normal family roles created more than the normalamountof tensionin the confinedand often overcrowdedworking-classhouse.But it is particularly striking how resilient most homeswere in the crisis, and how normal the life their members tried to lead. There was not a striking increasein divorce ratesuntil the 1940s, and one foreign study suggeststhat marriageswhich did crumble under the strain of unemploymentwere alreadyfragile (8, 39). Family solidarity remained a source of help for most unemployed people; sometimeschildren living with their parentsonly left home in the sense that they acquired accommodationaddressesand drew their full unemploymentallowancesas headsof a separateestablishment. The Pilgrim Trust reportersfound only a handful of casesin 40

Social Consequences

which the meap.stesthadreally driven sonsout of the family home (50). Orwell was astonishedto see how little changethere was in the man's role in the home in spite of his unemployment.He might be idle but housework remained woman's work. The women, as well as the men, 'feel that a man would lose his manhoodif, merely because he was out of work, he developedinto a "Mary Ann" '. The desirefor normal family life amongthe young was also apparent:marriagemight be postponed,but it was not prohibited. Orwell commendedtheir willingness to get married on the dole: 'It annoys the old ladies of Brighton, but it is a proof of their essentialgood sense;they realise that losing your job doesnot meanthat you ceaseto be a humanbeing.' His conclusion seems sound: 'the family-system has not broken up' (40,46,48). Was unemploymentwith its attendantconsequences of bitterness,a fall into poverty and idlenessresponsiblefor the rise in crime revealed in the criminal statisticsbetweenthe wars? Some contemporarycriminologists, prison commissionersand social investigatorsbelievedthere was a connection(54). The annual report of the prison commissioners for 1922 arguedthat 'it is probably right to say that unemploymentis one of the chief contributory factors to the prison population of today' (25), and the Daily Mail headeda story in 1926 'The Deadly Dole: From Idlenessto Crime' (15). The Pilgrim Trust reportersand others came upon particular casesof unemployedworkers turning to crime (50) [doc. 15] . Impressionsof social trendscan be misleadingand the interpretation of criminal statisticsis fraught with difficulties. It seemsplausiblethat a fall in living standardsinduced some people to turn to crime. In the 1930s national figures suggestthat unemploymentand crimes by men over the age of twenty-onerose and fell together,but an examination of behaviour in particular towns showed no exact correlation. For example there was much higher unemploymentin Gatesheadthan in Norwich between1934 and 1936 but far less crime, and there was no increasein crime in Sheffield in 1931 although unemploymentnearly doubled; furthermore juvenile delinquency continued to rise in the 1930s in spite of improvementsin employmentprospectswhich suggested other influences were at work. In brief, unemploymentwas probably one incentive to crime, but other factors such as general living standardsin the area,police activity or nonconformisttraditions would encourageor restraincriminal behaviour(25). The proveneffects of unemploymenton crime were by any calculation not great: there was no conspicuousbreakdownof law and order in the depressedareas where it might be expected.On balanceit seemsproper to agreewith 41

The EffectsofEconomicDepression

those commentatorswho were struck by the law-abiding behaviourof most victims of unemployment.To such observersunemploymentinsurance,poor relief and other welfare serviceshad at least 'prevented any serious breaking down among the needy of a respect for law' (30,31,55). Did unemploymenthave a similarly negligible effect on political behaviour?Some commentators,especiallyleft-wing ones,feared that unemployedworking-menin the 1930smight be deceivedinto supporting Oswald Mosley'sBritish Union of Fascistsas the stormtrooperswho would break up the Labour movement.Conversely,others,including politicians in office, trembled at the thought of Bolshevik agitators stirring up trouble among the misguided unemployed. This fantasy inspired the plot for Sapper'snovel The Black Gang (I922) and it lay behindregular police reportsto the cabineton political activitiesamong the unemployed.However the Fascistparty remainedsmall, 40,000at most, of whom only about 10,000 were active members;it was not noticeahlymore successfulin the depressedareas,and drew few recruits from unemployed manual workers (28, 107). Membership of the Communist Party never rose above 11,000 until anti-fascismattracted new recruits in the late 1930sand even then it was lessthan 18,000in 1939; moreover,its tone was set more by leisuredmiddle-classintellectuals than by unemployedworkers(28). More successfulwas the National UnemployedWorkers Movement formed in 1921 by Wal Hannington, an unemployed Communist engineer.It organiseda large number of local demonstrationsand six impressive national hunger marchesagainst unemploymentand rates of benefit. Many of theseprotestsendedin violent clashesbetweenthe demonstratorsand the police. Government,police and press usually took an alarmist view of its work, exaggeratingits influence, its communist connectionsand its revolutionaryimplications(29). The authorities monitored its activities through a police spy establishedin its directing council (24). But the NUWM was hardly revolutionary in its behaviour.It had communistlinks but it achievedpopularsupportonly when it drew attentionto inadequaterates of unemploymentrelief. It did not even campaign vigorously for work for the unemployedlet alone social revolution. It organisedbig demonstrationsmost successfully against such tangible enemiesas the meanstest in 1931 and the policies of the new UnemploymentAssistanceBoard in 1935.Although it was more active,it did little that wasdifferent in kind from the hunge~ marchesand demonstrationsorganisedby local groups as in Jarrowor, rather belatedly,by the TUC and the LabourParty.Many unemployed workers did attend these demonstrations,but membership of the 42

Social Consequences

NUWM remained small, 50,000 at a period of peak activity in 1931 and 1932 when the unemployednumberedover 21,.2 million. Hannington was grossly exaggeratingthe strength of the movementwhen he admitted that it never recruited as much as 10 per cent of the unemployed (22,28,36). It is clear that extremist political action attractedonly a handful of the unemployed;demonstratorsasked for more liberal relief not for social revolution. Poverty and bitternesshad little political effect: unemploymentseemedto induce in most of its victims a political apathy akin to the physical languorfrom which so many suffered [doc. 16] ; it did not seem possible to get them to believe that unemploymentwas anything but an act of God against which no action was worthwhile (27). A South Wales miner admitted 'it has definitely lessenedmy interest in politics, becauseit has led me to believe that politics is a game of bluff, and that these people do not care a brassfarthing for the bottom dog; it is only power which they seek' (32). This indifference may also be ascribedto the effects of existing relief measures. The absenceof unrest was 'to be attributed to the successof the relief measuresin meetingessentialneedsfor food' (30). The plain fact appearsto be that there has beenbrought into the worker's life, even when he is unemployed,a sufficient degree of security, so that talk of undermining the social order which gives him even that small degree of security is an interesting debating opportunityratherthan a vital discussionof actualpossibilities(31). One day in Wigan, Orwell went to an NUWM social evening.He found the gatheringmade up mostly of middle-agedwomen, young girls and old men; even the singing was excruciating. 'God help us,' he wrote, 'thereis no turbulenceleft in England'(47). of unemploymentnaturally varied a great The social consequences deal according to the cause and length of unemployment,the year, the place, the sex, age and occupationof the worker, his or her personality and family circumstances.Generalisationis difficult, but one impression standsout. Working people seem to have been extraordinarily resilient, or stubborn,in the face of the depression.Communities did not breakup: there was migration but no massexodusfrom the depressedareas. Unemployment brought poverty into many homes and physical and mental suffering too often accompaniedit. But establishedpatterns of working-classlife survived; attitudes to work, roles in the family, respect for law and order and political behaviour were not substantiallyaltered.This reflected in part at least the value of existing centralandlocal governmentwelfareserviceswhich prevented

43

The EffectsofEconomicDepression

massstarvationand a savagedeteriorationin health.. This is in no way to deny that unemploymentcausedreal suffering. Liability to unemployment exacerbatedthe normal insecurity of working-class life; being out of work did cause real pain, mental at least as much as physical. These were wasted years of blighted lives. That such social distresswas toleratedfor so many yearsreflectsbadly on the operations of the British economyand on the quality of governmentbetweenthe wars.

44

4

UnemploymentPolicies

In the past, private philanthropic organisationsand local authorities played major roles in trying to tackle severesocial problemsin Britain. But already in the decadeor so before the First World War the central governmenthad tentatively accepteda responsibility to provide some help for the unemployedon a national basis.Their troubleswere to be easedby the work of Labour Exchangesestablishedin 1909, by unemploymentinsurancecover for some workersafter 1911,and by some small-scalepublic works schemesfmanced by the UnemployedWorkmen's Act of 1905 or the Development Fund set up in 1909. But unemploymentwas still thought of mainly as a short-termif recurrent social problem, and its preventionor relief were not regardedas major centralgovernmentduties(60, 65). Severe depressionbetween the wars changedthat. It is true that private philanthropy again responded to social crisis. Indeed one historian has suggestedthat 'in alleviating the suffering of thoseout of work the state'sefforts were overshadowedby those of a voluntary nature' (23). Handouts of clothes and food, educationalclasses,allotmentsand free holidayswere providedby organisationslike the National Council for Social Servicesand the Workers' EducationalAssociation. Most commonwere the voluntary occupationcentreswhere many unemployed workers found a social life, recreationalfacilities and the equipmentfor woodworking,cobbling,tailoring or other usefulhobbies. At their peakbetween1936 and 1938,thesecentresclaimeda membership of about 200,000 [doc. 17]. In addition some local authorities strained their financial resourcesto provide relief works, to distribute food and clothing and above all to give financial help under the poor law (40, 48). But valuable though these activities were, they did not eliminate the distress caused by unemployment and certainly could not remove its economic causes.The longer the depressionlasted the more seriousdid its natureseem,andthe moreunsuitabledid established methods of dealing with the problem appear.The state was pressed to extend its responsibilities.Theseyears were a time of painful education and experiment. 45

TheEffectsofEconomicDepression

1920-1925 The period stretchingfrom the onsetof depressionin 1920to the return to the gold standardin 1925 may be regardedas a unit. There were rapid changesof governmentin theseyearsbut this hadlittle effect on the characterof governmenteconomicand welfare policiesdesignedto deal with unemployment.The Coalition administrationof Lloyd George (1918-22), the Conservative,governmentsof Bonar Law (1922-3) and Baldwin (1923-4), Labour's first government under Ramsay MacDonald (1924), and Baldwin's second government (1924-9), especiallyin its early months,hadgenerallysimilar aimsand policies. All administrationsbetween 1920 and 1925 sharedthe sameinterpretationof the causesof high unemployment.Accordingto orthodox economictheory as developedby nineteenth-centuryeconomists,there could be no such thing as a permanenteconomicdepression.In a depressionsupply exceededdemand,but this, it was argued,could only be temporary, since theory comfortingly explained how on balance economic production generatedenough purchasing power as wages, salaries and profits for demand always to equal supply. As a result all factors of productiontendedto be fully occupied:labour like capital would be fully employed; unemploymentcould therefore only be temporary, due mainly to frictional problems or more seriously to the trade cycle (80). The depressionbeginning in 1920 was, it was true, exceptionally severe, but understandablyit was assumed that this was merely another temporary cyclical depressionas experiencedbeforethe war. Its severitywasexplainedby certaineconomic dislocationsat home and overseascausedby the economiceffort of the First World War and the political consequences of its settlement.Since all industrial nationswere in difficulties in the immediatepostwaryears, it was not recognisedthat Britain had a special structural economic problem involving a permanentfall in demandfor the productsof her stapleindustries. This commonexplanationof the depressionwasfollowed by ageneral agreementon the solution. Unemploymentwould disappearwhen an upturn in the trade cycle brought recovery to the export industries especiallyof coal,cotton,iron and steeland shipbuilding.Governments believed they could best help by trying to restorepre-1914conditions. That meantreviving the free marketeconomyat home,while seekingto restorethe internationalfmancial andtrading systemabroad. It may be thoughtsurprisingthat the Labourgovernmentconformed to the pattern.After all, the Labour Party had in 1918 formally committed itself for the first time to an explicit socialist programmeand

46

UnemploymentPolicies

claimed in the 1923 generalelection that only Labour had 'a positive remedy' for unemployment(84). The orthodoxyof the Labourgovernment in 1924 was not a consequenceof its minority status,dependent though it was on Liberal support for its majorities in the House of Commons.Its behaviour,like that of its successorof 1929-31,followed from the conceptionof socialismheld by the leadershipand much of the party. The trouble with capitalismlay in its distribution of profits, the inequality of sharesbetweenemployersand employees.Capitalism was immoral. But there were few who claimed that capitalism as an economic system did not work and was doomed to failure. Labour believed that socialismwould evolve out of successfulliberal capitalism, with the state gradually ensuring a fairer distribution of wealth. The party leaderstherefore had no special plans with which to construct socialism in years when capitalism was doing badly and generating such high unemployment.They were left with the ironic problem of having to restore capitalism before they could move on to socialism, and rather lamely followed the orthodox policies which the establishment claimed would lead to the recovery of the capitalist economy (71,79) [doc. 18]. Hencethe generaluniformity in theseyearsbetween the policies of all governments. It is apparentthat in the gloom of the 1920s,the yearsbefore the war acquired a roseateglow which blinded observersto the darker aspectsof Britain's earlier economicperformance:the structuralproblem from which the British economy was beginningto suffer even before 1914 was obscured.It is also clear that the governmentregardedprivate enterpriseas the main agent of economicrecovery and minimised its own role . This is the more surprisingsince the First World War had required a gigantic and not unsuccessfulexperimentin stateeconomic management.Governmentexpenditurehad soared,taxationhad risen, production,prices and labourwere subjectedto statecontrol. But after November 1918 it was widely argued that the emergencyhad passed and with it the justification for state domination of the economy. Statecontrolswere rapidly demolished(11, 16). The government'sprimary aim after 1918 was to remove those dislocations caused by the war which seemedto be hindering the 'normal' recovery of trade.At home,evenbeforethe depressionstruck, the main problem was thought to be high prices. When the war ended wholesale prices were 140 per cent above the level of July 1914 and unwise governmentaction in 1919 allowed them to rise even higher (12). When unemploymentbeganto rise the governmentbecameeven more worried by inflation. High prices reduceddemandat home and, 47

The EffectsofEconomicDepression

more seriously, were thought to price British goods out of foreign markets.Without a reduction in prices how could British exports recover and unemploymentbe relieved? In explainingthis rise in pricesmuch attentionwas focusedon wages. During the war full employmentand a rising cost of living had pushed up wage ratesconsiderably.By 1920, following more increasesduring a year of economic boom, money wage rateswere nearly three times the level of 1913. Orthodox economistsand most employersargued that the high cost of labour was greatly responsiblefor high pricesand therefore for lost markets, and that until wage levels came down, unemploymentwould stay up. Ministers publicly supportedthis argument and sat back, while in a seriesof strikes in the early] 920strade unions fought unsuccessfullyto resist wage reductions.By 1923 wage rates were on averagedown to nearly two-thirds of their 1920 level (2,11). Governmentshad more direct responsibility for another causeof high prices. Central governmentexpenditurehad beenless than £200 million in 1913-14,but in eachof the last two yearsof the war it was over £2,500 million. This expenditurewas especially inflationary becauseover the years 1914-15to 1919-20nearly two-thirds of it had been met by governmentborrowing. The total debt piled up by these unbalancedbudgetscameto over£7,000million. After the war Chancellors of the Exchequerwere obsessedby the size of this debt and they devotedmost of their time to trying to deal with it (68). They also condemnedhigh taxes as a causeof high prices. Income tax had gone up from Is 2d (6p) in the £ beforethe war to 6s (30p) in the £ by 1920-1, and this and other taxes were passedon by producersas higher prices. The trouble had beencausedmainly by the substantialincreasein the national debt broughtaboutby governmentborrowing.Annual interest paymentson this debt had been only£20 million in 1913 but by 1920 they totalled £325 million and absorbednearly one-third of the yield from taxation.Chancellorswere horrified (12, 68, 81). The solution seemedstraightforward.If prices were to be reduced and trade was to recover, governmentexpenditurewould have to be drastically cut back so that budgets would either balanceor would preferablyleavea surpluseachyear.Additional governmentdebtscould then be avoided,someof the nationaldebt could be paid off and taxes could be reduced.An 'anti-waste'campaignin thepressandin the House of Commons reinforced the advice of the Treasury and persuaded Lloyd George's government to follow this orthodox policy in its responseto unemploymentin 1921 [doc. 19] . Later administrations stuck to it. Between1920 and 1925 governmentexpenditurewas cut

48

UnemploymentPolicies

by about a quarterin real terms,budgetsgeneratedsurpluses,someof the national debt was paid off and taxeswere reduceda little; income tax for examplewas down to 4s (20p) in the £ by 1925.Unfortunately it is now apparentthat while a reductionin taxationwas a help to an economyin depression,cuts in governmentexpenditure,just like wage reductions,tendedto reducethe level of domesticdemandfor industrial goods. Far from assistingrecovery, at least in the early years of the depression,the government'sdeflationary policy was probably making unemploymentworse(2,68, 69). The policy, however,had an extra appealbecauseit seemedto offer other advantagesto industrial producers.It wasalwaysassumedby the orthodox betweenthe wars that industrial capital was scarce.It was arguedthat the money people savedwas alwaystakenup as capital for investment and that one thing which was reducing the amount of capital on the market was the high taxation which limited savings. Another limitation on the amount of capital available to industry was the extent of governmentborrowing. If governmentborrowedmoney, then less would be left for private enterprise.It followed that taxes should be kept low and governmentborrowing should be avoided. As Baldwin told his cabinet colleaguesin a memorandumhe wrote as Chancellorin 1922: 'Money taken for Governmentpurposesis money taken away from trade, and borrowing will thus tend to depresstrade and increaseunemployment'(104). This erroneousthesiswas soon to be challenged,as we shall see,by critics of governmentpolicy. The attack on high prices at home was also regardedas essentialas preparationfor the removal of what many thought to be the major obstacleto prosperity.During the war Britain and other countiieshad suspendedthe gold standardwhich hadgovernedinternationalexchanges up to 1914. After the war, wild inflation and unstableexchangerates made any return to it impossible.Britain herselfformally left the gold standardin 1919 becauseprices at home were too high in comparison with American prices to maintain the prewar parity of $4.86 to the £. However,even at the momentof departureLloyd George'sgovernment expressedits determinationto return to the gold standardat the prewar parity when circumstancespermitted.One essentialrequirementwas a substantialreductionin pricesin Britain relative to thosein the United States. Later governmentspiously accepted the need for the gold standardand for the generally deflationary policy which would make it practicable.It was acceptedas a necessarygoal by the Labour Chancellor in 1924, and Churchill received widespreadsupport when he announcedthe decision to return at the prewar parity in his budget speechin April 1925. To a considerableextent the restorationof the 49

TheEffectsofEconomicDepression

gold standardwas the dominant objective of economic policy in the 1920s. Many historianshave arguedthat the decisionto return to gold disregardedthe needsof British industry and the problem of unemployment. 'It was', writes ProfessorPollard, 'essentiallya bankers'policy, not directly concernedwith industry at all' (77). Strong pressuresfor a return, particularly at the prewar parity, undoubtedlycamefrom the City of London: such a restorationof the old order would revive the prestige of sterling and, it was hoped, the position of London as the fmancial centre of the world. The profits of the City had before 1914 beenof major importance,not just to the fmancierswho lived on them, but to the nation's balanceof payments.It may be that this factor, explainedto governmentsby the sirenvoicesof financiersand especially of Montagu Norman, the Governor of the Bank of England,strongly influencedmonetarypolicy. But ministersand their advisersfrequently coupled the fmancial argumentswith industrial ones: according to ProfessorSayers,'the gold standardpolicy was essentiallyan employment policy' (78). In the 1920sit was widely believedthat British exportshad done so well before the war becausenations were joined together by the international gold standard.This it was claimed made internationalpayments straightforwardand encouragedthe multilateraltradelinks from which British industry benefited.The destructionof the international gold standardwas thought to be greatly responsiblefor the dislocation of international trade, and therefore a major causeof the troubles of Britain's export industries and of high unemployment.The industrial advantagesof a return to gold were strongly emphasisedby Churchill's Treasuryadvisers(75) [doc. 20] . The industrial case for a return was unfortunatelynot very closely argued.It failed to see that the internationalgold standardbefore the war was largely founded on Britain's ability to lend large amountsof capital overseas,and was thereforemore a consequence than a causeof Britain's uniquely successfulexport-basedeconomy.Supportersof the gold standardassertedratherthan provedthat a returnto gold, particularly at prewar parity, would help the ailing postwarexport industries, and they failed to seethat Britain lacked the resourcesto support the system.Moreover, the emphasiswas placedon the value of restabilising links with marketsoverseasand too little attentionwas paid to the possibly damagingeffects a return would have on the marketat home. As alreadymentioned,the deflation necessaryto reduceBritish prices hurt the domestic economy.Furthermore,although partly offset by openmarketoperations,the high bankrate neededafter 1925 to attract 50

UnemploymentPolicies

foreign funds and so defend the vulnerable £ probably discouraged industrialinvestment.It is alsolikely that at $4.86 the £ was overvalued, perhapsby 10 per cent. Set againstthe substantialstructuralproblems of the British economytheseinconveniences were certainly not the burdenswhich decisively weigheddown the British economyas somecommentatorsand later historiansclaimed,but they were extra handicaps British businessescould ill afford (69,75). More seriously,committed to this ftxed exchangesystem,the governmentcould not use monetary policy in a more flexible way to stimulateeconomicrecovery,eitherby lowering the bank rate or by devaluation.But this was one attraction of the policy to decision-makersat the time; it allowed the government to shakeoff the burdell of economicmanagementby reviving what was supposedto be an automaticself-regulatinginternationalexchangesystem. In the 1920s ministerswished to avoid responsibilities,believing that internationaltradelike domesticindustry flourishedbestwhenleft free. This was clear evidenceof a desireto return to the prewardaysof the liberal free market economy,yearsin which unemploymenthad not beena major headache. A proper restoration would require a good deal of international cooperation.Much of British foreign policy in these years aimed at persuadingother nations to join in the reconstructionof the international economic system. British ministers were anxious to revive traditional British markets in Europe, especially in Germany and in Russia,much disruptedby war and revolution. What was immediately required was a settlementof the vexed questionof Allied reparations claims on Germanyand some solution to the problem of international war debts. The revival of the internationalgold standardought to be possible once national economieswere more stable, and the achievement of good international relations should help this. Few of these difficulties had been entirely solved by 1925. The Frenchoccupation of the Ruhr in 1923 seriously set back Germaneconomic recovery and the cause of international peace. At the Genoa conferencein 1922 nations pledged themselvesonly to the principle of restoring the gold standard.In 1923 Baldwin negotiateda settlementof Britain's war debt with the United States,but suchdebtscontinuedto embitter international relations and complicate trade. A trade treaty with Russia in 1921 suggesteda revival of normal relationsacrossthe great divide, but as the Labour governmentfound to its cost in 1924,AngloRussianrelationswere fraught with complications.Yet somethinghad been achieved.After hard work by MacDonald, the Dawes Plan was acceptedin 1924 as a settlementof the reparationsproblem;by 1925 Germany's economy was reviving, and a new internationalharmony 51

The EffectsofEconomicDepression

seemedto have been achievedby the Treaty of Locarno in that year (16,71,104). Nevertheless,although there was the beginning of a considerableeconomicupswingoverseas,especiallyin theUnitedStates, Britain seemedto obtainlittle benefit from it. Unemploymentstatistics stubbornlyregisteredthe failure of Britain's exportsto recover. Internationaldiplomacy was symptomaticof a governmentstrategy which aimedprimarily at theresurrectionof an economicorderin which private businessescould revive unhamperedand unguided by government interference.It followed that ministers in theseyearsgave very little direct help to industries;they were persuadedto give some assistance, especiallyto the export industries,but their aid was noticeably cheap.Immediately after the war the governmenttried to encourage British exporters by guaranteeingthe credits they gave to foreign buyers and this systemwas extendedby Acts in 1920 and 1921.With the sameaim, under the TradeFacilitiesActs of 1921,1922 and 1924, governmentguaranteesslightly cheapenedthe loansraisedby approved companies.As an extra bonusthe act of 1924 allowed the government to pay three.quartersof the interest on these loans for five years. Financially these measurescost very little and economically their effectswere not significant (2, 62).. The same reluctanceto spend can be seenin the government'srefusal to reduce unemploymentby large-scalerelief works. There were small prewar precedentsfor initiating public works as a way of relieving unemployment,but in spite of high postwar unemployment governmentsdid little to extend thepolicy. When unemploymentfirst becamea public issue in the winter of 1920-1,the governmentset up the UnemploymentGrantsCommitteebut evenby 1928it had provided direct employmentfor only about 4 per cent of the unemployed.A little additional employment was deliberately created in the early 1920s when governmentdepartments,like the Ministry of Transport, acceleratedtheir building programmes(30,68).The Labourgovernment got round to announcinga large public works policy in the middle of its life, but little had beenachievedbeforeits demise,andit is apparent that there was thin enthusiasmfor it. Snowdendisarmingly told the House of Commonswhen announcingthe plan: 'You are nevergoing to settle the unemployedproblem, you are never going to mitigate it to any extent by makingwork' (71). Given the way governmentswent about the task this was quite likely. Ministers were very unwilling to draw up public works plans themselves;they preferred to urge local authorities to provide relief works and offered to meet some of the costs. Too often the areas most in need of relief were run by financially hard-pressedauthorities, 52

UnemploymentPolicies

unable to fmd their shareof the money. Moreover in the early 1920s official thinking claimed that public works provided no permanent employment and would in effect only give jobs today at the cost of creating unemploymentin the future.. As short-term temporary palliatives public works seemedunjustifiable. In any caseneither aid for British export industries nor relief works were likely to get much cabinetsupportwhen the acceptedstrategydictatedstrict economiesin government expenditure pending the expected upswing in private industry (81). What is surprising is the distinct contrast betweenthe cheap and minimal economicpolicy governmentsfollowed while awaitingrecovery, and their more expensiveand radical welfare provisions.Without realising at the time the full implications of their actions, governments modified the unemployment insurance scheme and accepted new commitmentswhich were to havea profoundeffect on the development of British socialpolicy. In the summerof 1920,just beforethe onsetof the depression,Lloyd George'sgovernmentpassedan Unemployment InsuranceAct which considerablyextendedprewar legislationto cover most manual workers while raising the level of benefits.According to ProfessorGilbert, the inspiration was not an altruistic desire to fulfil wartime promisesto constructa land fit for heroes,but more a hurried gesture of social concern designedto defusea possiblerevolution led by discontentedworkers and ex-servicemenin a period of considerable social unrest.When depressionstruck at the end of 1920 and unemployment rose, government anxieties increased.Under the terms of the 1920 Act, workers were entitled to draw benefitsonly if they had paid into the fund the statutory number of contributions.If they had not done so they would be forced to rely on the local poor law guardians for relief. Furthermore,qualified workers could draw benefitsonly for fifteen weeks, after which they too would have to turn to the poor law. The heavy demandon local resourcescausedby high unemployment was unacceptableto the guardians,but it was also intolerable to most working people, who were repelled by the stigma of pauperism so carefully fosteredby poor law authoritiesin the nineteenthcentury. Would the discontentedmassesof the unemployednot prove a potent sourceof socialunrestandperhapsof revolution?Ministerswerealarmed. Agitation must be pacified and poor law authoritiesprotected.To do so meantamendingthe termsof the UnemploymentInsuranceAct. To begin with the number of contributionswhich entitled a worker to claim from the insurance fund was reduced, thus increasingthe numberof legitimate claimants.But moreseriouslythe numberof weeks during which an unemployedworker might claim benefit was changed. 53

The EffectsofEconomicDepression

From 1921 workers who had exhaustedtheir rightful claims could, after a while, if still unemployed,claim more weeks 'uncovenanted extended benefit'. The Labour government ended the gap between the periods of benefit. Here was a new principle, the idea not of insurance, but of indefinite maintenance.Also in 1921 another new principle was accepted,that benefits should take some account of family needs: the unemployed could claim dependants'allowances. Thesemodificationsat a time of high unemploymentput an unbearable strain on the mathematicsof insurance.The scheme introduced in 1920 was supposedto be actuarially sound;benefitsshouldbe balanced by contributions. That its authorsassumedan averageunemployment rate of 5.32 per cent was unfortunate.It hadbeendesignedto copewith temporaryshort-termcyclical unemploymentand could not, especially in its modified form, handle the burden of persistentdepression.The unemploymentinsurancefund wassoonhopelesslyin debt,and governmentsreluctantto spendmoney on economicrecovery were forced to raise loansto feed the voraciousappetiteof their welfare commitments. The statehad accepteda major responsibilitywhich later governments were to find increasinglydifficult to handle(60,65,67). Heavy expenditureon mere maintenanceand a reluctanceto provide work for the unemployedstruck some observersas bizarre priorities evenif the former was in the shortterm thoughtto be cheaper.With the depressiondragging on criticisms mounted; governmentpolicies and establishedeconomictheorieswere increasinglysubjectedto searching review. A debatebeganwhich was in time to shakethe pillars of orthodoxy. One reasonably coherent alternative strategy was put forward by peoplewho could be describedasimperialvisionaries.Organisedpressure groupsinside and outsideparliamentfound a few keenministerial allies in the early 1920s. Leo Amery was the outstandingenthusiast,as an under-secretaryand later as a memberof the cabinet.Imperial visionaries were amongthe first to criticise orthodoxpolicy becausemany of them had beenpredictingeconomicdepressionsincerallied to the cause by JosephChamberlainand the Tariff Reform Leaguebefore the First World War. They disagreedwith the official explanationof unemployment; perceptivelythey arguedthat British industry was suffering from more than a cyclical depressionand was in fact facing a permanentloss of traditional markets overseasand even at home. They attackedthe heart of orthodox liberal economic thinking, especially by denying that there was a natural harmonybetweenthe interestsof the various national economieswhich made up the internationaleconomy:instead 54

UnemploymentPolicies

there was competition, in competition there were victors, and the unemployed were the casualties. As a remedy the state should so direct private enterpriseas to weld the British Empire into a much more economically self-sufficient unit disentangledfrom the international economy.Tariff barrierswith imperial preferences,directedemigration and stateinvestmentin the empirewould developits resources,enabling it to supply the food and raw materialsneededby Britain while absorbing the bulk of Britain's industrial products. The natural harmony thought to exist between the parts of the empire would guarantee prosperityand full employmentat home. While many cabinet ministersin the early 1920spaid lip service to the idea of increasingempire trade,the visionarieshad only a limited influence over governmentpolicy. The fmancial assistancegiven by the Empire SettlementAct of 1922 steeredmany British emigrantsinto the Empire and away from the United States,and a few grantsand loans were screwed out of the Treasury to fmance colonial development schemesin Africa. However, Amery regardedsuch measuresas merely the start of a long-term strategyof empire development,whereasmost ministers saw them as short-termrelief measures,shovellingout surplus labour or giving a little help to British exportsto the colonies.The striking failure of the visionarieslay in their inability to persuadethe nation to abandonfree trade. When Baldwin did go to the polls in 1923 on a tariff reform programme he specifically excluded taxing imports of foreign food. Without such tariffs there was no chanceof binding the empire into a unit. His electoral defeat in any case confirmed the survival of free trade and the defeat of the imperial visionariesfor the rest of the decade[doc. 21] . Becausetariffs were expectedto lead to a rise in the cost of living, it was difficult to persuadethe British people and most politicians of the economicwisdom of opting out of foreign marketsand concentratingon the empire(62,63,64,93). It is significant that anothergroup of critics of orthodoxpolicy also advocated greater state activity as a solution. While most of them accepteda trade cycle explanationof the depressionand failed to see the structuralproblemsof British industry, they rejectedthe orthodox deduction that governmentsshould primarily sit back and expect inevitable recovery, like true believers awaiting the Second Coming. Drawing on some radical ideas expoundedbefore the war, heretics beganto explore those conceptsof state economicmanagementwhich havelargely governedeconomicpolicy since the SecondWorld War. The essentialidea was that the state could increaseemploymentby raising the level of demandand so push the economyinto a cyclical recovery; 55

TheEffectsofEconomicDepression in contrast with orthodoxplans,they emphasisedpolicies of reflation not deflation, and the raising of home demandnot the restorationof overseasmarkets. One school of thought took up the idea of countercyclicalpublic works. The Labour Partyhad arguedin 1918 that 'the Governmentcan, if it chooses,arrange the public works and the orders of National Departmentsand Local Authorities in such a way as to maintain the aggregatedemandfor labour in the whole kingdom (including that of capitalist employers) approximately at a uniform level from year to year'. This plan to iron out the fluctuations in the tradecycle by state activity was incorporatedin later Labour party statements(72). It was not apparentwhere the money was to come from to finance such a programme in a period of depressionwhen the government lacked surplusfunds, and this explains its rejection by Labour when in office in 1924. Rivalling it on the left of the Labour party and amongsomeradical Liberals was an underconsumptionistinterpretationof the depression. The economistJohnHobsondescribedhow capitalismput too much of its profits into new investment and distributed too little as wages: the result was low mass purchasingpower, underconsumptionof industrial products and economic depression.The answer, dear to the heartsof many progressivesin Britain, wasto raise massdemandthrough state encouragementfor trade unions, an increasein wagesand better welfare benefits(86). Another substantialand influential break with old assumptionswas made by critics who focused on the damagingeffects of the government's own monetary and fiscal policies as an explanationof the intensity and persistenceof the depressionin Britain. Although his major text, The GeneralTheoryofEmployment,InterestandMoney,was not publisheduntil 1936,JohnMaynardKeynestook somestepstowardsit in his criticisms of orthodox monetary policy in the early 1920s.In his Tract on Monetary Reform (1923) and in The Economic Consequences of Mr Churchill (1925), he claimed that the deflationary policies required by a return to the gold standardreducedwagesand businessconfidence and increasedunemployment(77, 100). Keynes was by nomeansalone in thesecriticisms, and by the mid-1920splans to expand credit and increasegovernmentexpenditureand so reflate the economyas a solutionto unemploymentbecamemore widespread. These ideas can be traced for example in the thinking of the radical wing of the Liberal party underLloyd Georgein the mid-I920s,and in the Revolution by Reasonprogrammeadvocatedin 1925 by Oswald 56

UnemploymentPolicies

Mosley and John Strachey,at that time membersof the Independent Labour Party (77,95,107). By- 1925 radical criticisms of official orthodox policy were being expressedfrom a number of angles. The division -did not necessarily follow party distinctions. Orthodoxy hadits defendersamongLiberals and Labour supporters as well as among the predominant Tories. Critics could be found as maverick groups of politicians in all parties and amongthe non-aligned.It is also clear that in 1925 most observers still acceptedthe government'scontention that unemploymentwas temporaryand that orthodox policies would soonbring release.Would sucha revival take placeand the critics be confounded?

1925-1931 In this secondperiod the critics were not silenced.During the yearsof Baldwin's government (1924-9), there was a real economic boom overseas,especiallyin the United States,but unemploymentin Britain remainedstubbornly around 10 per cent. No recoveryhad taken place before world depressionblew in from overseasand devastatedthe British economy and the second Labour government (1929-31). The earlier official contentionthat Britain was suffering from a temporary cyclical depressionsolubleby traditionalmeansseemedincreasingly untenable.To a number of observers,Britain's industrial problemsnow seemedstructural;they might evenhavebeenexacerbated by the policies of government.Radicalalternativeswere essential. During theseyearsthe imperial visionariesmaintainedtheir campaign for an imperial tariff system,Empire development andEmpire unity. As Secretaryof State for the Colonies and for the Dominionsbetween 1924 and 1929, Amery was in a position to press their case on the cabinet. In the ebullient shapeof J.H. Thomas,Labour also had a cabinet minister susceptible to the appeal of Empire. As the economic situation worseneda number of politicianssuchas Neville Chamberlain and Cunliffe-Lister campaignedmore actively for at least some of the visionaries' causes.The Empire Industries Associationwith 200 MPs among its supporterspublicised the case,and after his loss of office in 1929 Amery joined Lord Melchett,chairmanof ICI, in the formation of a researchand propagandabody called the Empire EconomicUnion (93). The most spectacularnew force was Lord Beaverbrook'scampaign for Empire Free Trade,which also beganin 1929.The crusaderknight, who still decoratesthe front page of the Daily Express,symbolized the cause.Beaverbrooklike Amery wanted to push Baldwin beyond 57

The EffectsofEconomicDepression vague sympathy for tariffs and Empire unity into a detailed pledge that the next Conservative government would introduce full tariff protection, including duties on foreign food imports. Baldwin was a heavy boulder to roll. What Amery describedas Baldwin's 'molluscous inertia' covered a careful even cunning techniqueof keeping united behind his leadershipa Conservativeparty which was still hesitantand divided on the issue.In February 1930 the frustrated Beaverbrookfor a while joined his fellow press baron, Rothermere,and launchedan independentUnited Empire Party committedto full tariff protection. The party made a reasonableshowing in by-elections,but it took the additional persuasionof Neville Chamberlain,plus probably the deteriorating economic position, to wring a pledge from Baldwin in March 1931 committing the Conservativeparty to tariffs and imperial preferences(104,109). There is a revealing contrast between the vigour of the imperial visionaries crusadeafter 1925 and the paucity of their legislative and administrativeachievementsby 1931. Most successfulhadbeenAmery's work at the Colonial and Dominions Offices. His pressureled to the creationin 1926 of the Empire Marketing Board,which was designedto encourageempire salesin Britain by research,publicity and marketing work. Emigration to Empire countries was still being assisted.Amery had helped improve the colonial services which administered and developedthe colonial empire,encouragedscientific researchinto problems of empire economic production, and squeezeda little more financial help for African colonies out of the Treasury. His main successwas to commit the governmentto supplying £1 million a year to a fund which would fmance economicdevelopmentprojectsin the colonies and thus stimulate British exports and relieve unemployment. His Bill was endorsedby the Labour governmentand passedas the Colonial DevelopmentAct in 1929.But for Amery theseyearsin office were largely wasted years; his memoirs are a record of frustration. Conflicts with Churchill, the Chancellor of the Exchequer,were frequent and bitter, and despairwith Baldwin wearying.The Conservative government ended with scant success for the imperial visionaries' cause.And then with Labourin power,evenwhen economicconditions deteriorated and the balance of trade and the strength of sterling decayed,free trade remainedenthroned(62, 63, 64,93). The basic argumentsof the imperial visionaries had altered little over the years and by 1931 they were sounding a trifle hoarsefrom repetition. The intellectual excitementin the debateprovokedby high unemploymentwas generatedby those economic radicals who advocated techniquesof state managementof the domestic economy. As 58

UnemploymentPolicies part of his attempt to revive a flagging Liberal party with intelligent practical policies, Lloyd George organised and fmanced the Liberal Industrial Inquiry (not Enquiry lest its initial letters arouseribaldry). Among its memberswas Keynes,and his influence can be detectedin the unorthodox economic and fmancial measuresproposed in its report, Britain's Industrial Future, publishedin 1928. As well as longterm plans for dealing with the structural problem from which they now saw Britain mainly suffered,the Liberalsadvocateda public works programme as a short-term emergencyscheme.This was further expoundedin perhapsthe most remarkablepolitical documentissuedto the public between the wars: a 64-page pamphlet published as the Liberal party's manifesto for the 1929 general election and boldly entitled We Can ConquerUnemployment. Although big public works programmeshad been suggestedin the past, much was new about this proposal. Most of the plans for roadbuilding, house-building,telephoneand electricity developmentand so on had beenworked out in detail, and strikingly the bulk of them were to be crammedinto two energeticyears.Calculationswere madeof the amount of employment which would be created,and a brief mention was made of what would later be defined as the multiplier effect, the additional employmentcreatedby the prosperity of re-employedworkers. But most significantly the financing of the schemewas carefully described.There was no attempt to squeezethe programmeinto the confmesof a balancedbudget.The £300 million it might cost would be borrowedby the governmentand not raisedas taxes.As well as showing that the interest on this new debt could easily be met, the plan rejected the idea that the capital requiredwas not available.The money that the state should collect and invest was at presentbeing wastedon dolesto the unemployed,or was being invested less beneficially abroad, or, most importantly, was simply lying idle. It was claimed that analysis of bank deposits showed that money was not fully employed, as orthodoxy believed, and the state could economist, ~herefore borrow and invest it without causinginflation and without taking capital from the hands of private businessmen, as orthodoxyfeared(89,95). Moreover, it seemedto Keynes and a fellow economist,Hubert Henderson,when defending the new proposalsthat theseidle savings also helped explain the cause of the depression.Unemploymentrose when demandwas low, and domesticdemandwas low becausea central assumptionof orthodox thinking was quite wrong: savings,which took demandout of the economy,were not alwaysturnedinto investments, which put demandback in the form of wagesand ordersfor industrial goods. This was not just an interesting academic observationfor it 59

TheEffectsofEconomicDepression justified and encourageda practical governmentpolicy: government borrowing and expenditurewas a way of balancingsavingsand investment and of securingfull employment.This was anotherstep towards The GeneralTheory (87) [doc. 22] . The Liberal schemesquite overshadowedthe official Labour platform. The party's manifesto of 1928, Labour and the Nation, still thoughtof public worksasessentiallycountercyclicalandlike the party's reply to Lloyd George in 1929, How to Conquer Unemployment (88), it was disturbingly vague on how a Labour governmentwould finance the big public works it proposedto sponsor.Radicalplanswere viewed suspiciouslyby the party leadership.In TheLiving Wage(1926), the IndependentLabour Party adoptedHobson'sunderconsumptionist thesisas anexplanationof unemploymentandrecommended a minimum wage standard,family allowancesand a state-controlledcredit system as a way of increasingdemand on the home market (83) [doc. 23]. The plans were condemnedby MacDonald as 'flashy futilities'. The proposalsdrawn up by Oswald Mosley in 1930 when a junior minister in the Labour government received little more sympathy from the party's leaders.Just like the Liberals, Mosley realisedthat a long-term reconstructionplan needed to be assistedby short-term emergency action to reduceunemploymentat once.He too urgeda more generous credit policy and large public works directedby the stateand financed by loans to stimulate that home market to which many economic radicals looked for recovery: a revival of exports on the old scale was not to be expected.When his plans were rejected and he resignedin May 1930, Mosley partially modified his ideas. By October 1930 he was taking a leaf from the imperial visionaries and advocating, in addition, specialeconomicrelationswith the Empire to provide Britain with a protectedmarketfor her remainingexport trade (79, 103, 107). This amendmentindicates some of the overlap betweenthe critics of establishedpolicy. The views of Ernest Bevin, GeneralSecretaryof the Transportand GeneralWorkers' Union, also show this. In 1929he was appointedto the Macmillan Committeeon Financeand Industry. This committee,which also included Keynes, subjecteddefendersof orthodox financialpolicy to many unhappyhoursof cross-examination and concludedin its report in 1931 that a managedmonetarysystem and a more flexible credit policy were neededto easethe depression (92). The investigation confirmed Beviil in his belief that orthodox policy was responsiblefor persistentunemployment.In an addendum to the report he joined Keynesin recommendinglarge public works as a way of relieving the immediate crisis, but he went on to propose,as Mosley had done earlier, the abandoningof the gold standardto allow

60

UnemploymentPolicies

for devaluation.However,Bevin was also a memberof the TUC Economic Committeewhich in 1930delightedimperial visionarieslike Amery and Beaverbrook by recommending the formation of a more selfsufficient economicbloc out of the Empire (94). Although the economicradicalsdisagreeddeeply with eachother on many points, uniting them was the conviction that governmentscould and should create employmentby intervention in the market. Many were preparedto see changesin establishedpolitical and administrative practicesto achievethoseends.Governmentsoughtto be betterequipped to handle economic affairs. This might mean altering the size of the cabinet, creating new government departmentsand appointing professional economistsand others as an economicgeneralstaff to plan, give advice and collect information. The traditional rights of local authoritiesmight have to be overridden,andevenparliamentmight have to entrust special powers to the executive.Unemploymentwas often likenedto an emergencywhich like war justified extraordinarymeasures. Little of this was acceptableto the governmentsof Baldwin and MacDonald.What is distinctive aboutthis periodis astubbornadherence to earlier policy even when its operationsfailed to bring relief and the depressionwas seento be more than temporary.In the face of persistent and then worseningunemployment,ministers deviatedlittle from the strategy pursuedup to 1925. It was symptomaticof theseyears that the unimaginativeConservativeelectionsloganin 1929 was 'Safety First'. Labour's policies were equally unexciting. The government's minority position doesnot explaintheir timidity: their Liberal allieswere preparedfor more radical action. As in 1924,Labourleaderscould see no permanentsolution to the problembut anill-defined socialismwhich could be built only on the basisof a restoredand prosperouscapitalism. Capitalist orthodoxy seemedto them to promise such a recovery. In general,ministersstill awaiteda cyclical revival of trade. This meantthey still expecteda recoveryto comeprimarily through the operations of private enterprise in the free market and not by vigorous state action. Radical plans for administrative and political reform were therefore ignored. Although Baldwin honestly believed that industrial reorganisation and peaceful industrial relations were essential for prosperity, he confessedin 1925: 'It is little that the Governmentcan do: thesereforms,theserevolutions,must come from the people themselves'(104). The head of the Civil Service told Baldwin in 1929 that to enforce the Liberal plans to solve unemployment would require a Mussolini regime,substitutingautocracyfor parliamentary government.Baldwin's governmentset up a Committee of Civil Research and MacDonald formed an Economic Advisory Council, 61

The EffectsofEconomicDepression

but apart from small-scaleinvestigationsand some agreeableacademic discussionsthesetalking shopscontributedlittle to governmentaction. In spite of MacDonald'searlierbold plansto createan economicgeneral staff, when in office he merely appointedJ.R. Thomasand three comrades, including Mosley, as ministers 'with special responsibilitiesfor unemployment'. But without effective authority over other departments,subordinatedin practice to Snowden,the Chancellor,and faced by rising unemployment,Thomas was left in frustration to fmd what solacehe could in drink (70,79,101,103). Assuming that economic recovery would be essentially cyclical, these governmentswere unable to shakeoff a preoccupationwith exports. Given that Britain neededto export in order to pay for essential imports of food and raw materialsand that the bulk of the unemployed had beenengagedin the export trades,this concernwas understandable. What was not consideredwas whether the extent of foreign competition, and after 1929 the depressionin world markets,would allow exports to recover sufficiently to provide work for all the worklessin theseindustries. Partly becauseof this concernwith overseasmarkets,governments, continued to seek a settlement of remaining international disputes. The late 1920swere optimistic years,with Germanyjoining the League of Nations, the powers agreeingto outlaw war by the Kellogg-Briand Pact, diplomatiC relations being restoredbetweenBritain and Russia and a new settlementof the reparationsproblem being made.A World Economic Conferencein 1927 passedresolutionsin favour of greater liberty of trade. This climate promised to restore the international economicsystemin which Britain's exportsmight revive. Few ministers contemplatedabandoningfree tradepolicy, and many of thosewho did were restrained by the evident electoral unpopularity of duties on food imports. The Conservativesimposed a few tariffs on a handful of lUXUry imports, and some minor but vulnerable British industries were protected by the Safeguardingof Industries Acts. But Baldwin eventually decidedagainsta plan to protect the iron and steelindustry (104), and the dogmatic free-traderSnowdenabandonedmost existing duties in 1930. Britain enteredthe whirlpool of the world depression still pledged to free trade and unprotectedagainstthe imports which collapsing foreign prices encouraged.Equally, British governments faithfully stuckto the gold standardas part of their commitmentto the international economic order. The sacrifices already made, not least by the unemployed,in restoring 'sound currency' were usedto justify restricti¥~ monetarypolicy evenwhen its expected an adherenceto this monetary fruits did not ripen (16,69,75).

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A recovery of exports was still thought to be dependenton stable or preferably reduced prices. Proposalsto reflate the economy were condemnedas likely to causedamaginginflation. Although it can now be seen that wage cuts would reduce home demand,mosi politicians and many economistsbelieved that 'wage flexibility', by which they meant reductions,would help exports. Baldwin was reportedas saying in July 1925: 'All the workers of this country have got to take reductions in wagesto help put industry on its feet' (104). Fortunatelyfor the home market and in spite of the GeneralStrike in 1926,his government could do little to enforce its beliefs and severewagesreductions were mainly confmedto the depressedexport industries.On the whole wage ratesremainedstableuntil 1931 (2). A strategywhich claimed that private enterpriseassistedby the gold standardand a regime of low prices would bring economicrecoveryto Britain continuedto affect budgetarypolicy. It is true that the savage deflationary pressuresof the early 1920swere not maintainedthroughout the decade,but it was still believedthat taxeshad to be kept down and borrowing avoided so as to reduceindustrial costs and leave more moneyin the pocketsof consumersandproducers.Chancellorsaccepted as a consequence that their annualbudgetsshouldbalance,thoughthere may have been an unreality in the balancesachievedsincethey largely ignored the mounting deficit in the separateaccountof the Unemployment Insurance Fund. Moreover Churchill's budgets balanced only by cooking the books: raiding the road fund, juggling with the sinking fund, advancingthe date for the paymentof incometax. On the whole and largely by accident,Churchill's budgetswere mildly inflationary, though still an inadequatestimulus to a depressedeconomy.But the commitment to orthodoxy remained, most vividly demonstratedby Churchill's successor,Snowden,who attacked the budget deficit bequeathedto him with all the fervour of a Puritan divine chastisingsin. His 1930 budget raised income tax and some indirect taxes,and in the crisis of 1931, whendepressioncried out for relief, worsewasto come(2). It also followed that government expenditure had to be tightly restricted. Although both administrations argued that recovery lay throughan export revival theywere reluctantto spendmoneyto achieve that end. Export credits were continued,but the Trade Facilities Act was allowed to lapse in 1927. Both governmentsfavoured assistingexports to the colonies but only a little financial encouragementwas given (62). There was one distinctive Conservativemeasure:in his 1928 budget Churchill contrived to find the money for a schemeto relieve industry of three.quartersof its rate burdenand to give block grantsto local authoritiesinstead,calculatedto give most moneyto areaswhere 63

The EffectsofEconomicDepression

unemploymentwas severe.It doesnot seemto havemadea noticeable difference to industrial costs (2,97,105). Both governmentsmade much of the accelerationof normal departmentalpublic works they authorised,building roadsandextendingelectricity suppliesfor example, and of the continuedwork of the UnemploymentGrants Committee. But the scale of the Conservativeprogrammewas small and the restrictions imposed by governmenton the operationsof the UGC virtually suppressedthe schemefor three years. Labour beganmore vigorously, announcing extra departmentalwork, reviving the UGC and creating a new developmentfund in 1929 to help finance constructionschemes on the railways, in the docks and elsewhere;but since the authorised work was to be spreadover a numberof yearsits effectson unemployment would be slight (68, 79). Substantialpublic expenditureto relieve unemploymentwas ruled out by both governments;indeed, if anything, the official attitude hardened at a time when many outsiderswere seeing more merit in large-scale public works. The fundamental objection was expressed by Churchill in his budget speechin 1929: 'It is orthodox Treasury dogma, steadfastlyheld, that whatevermight be the political or social advantages,very little additional employment can, in fact, and as a general rule be created by State borrowing and expenditure.' Few professionaleconomistswould have subscribedto this iron law, but it was the opinion which ruled Treasurythinking when condemningthe proposalsput forward by radicalssuchas Lloyd Georgein 1929 or Mosley in 1930. Baldwin instructed the Civil Service to scrutinise the Liberal plan and took the unusualstep of issuing a white paperbased on their criticisms (91). Perfectly valid points were made about the practical difficulties obstructing big emergencyconstructionschemes, but the Treasury'sobjectionswere also more fundamental.It had been argued earlier in the 1920s that public works merely provided work today which would not therefore be available tomorrow. Now the objection was that government borrowing to finance employment schemeswould merely take eqUivalent resourcesout of the handsof private industry, thus creating no net increasein employment.This miragehad alreadybeenexposedin the liberal manifestowhich pointed out that if this were true aboutgovernmentborrowing and expenditure it must be true of private borrowingand expenditure,in which caseno solution to unemploymentwas possible;in fact, a mere diversion of employmentwould only take place if all savings were fully invested. This the Treasurycontinuedto insist was the case:there were no idle savings.The only other sourcefor governmentborrowing would be to prevent loans from going abroadand this would restrict those exports 64

UnemploymentPolicies which orthodoxy believed followed them and which the official mind still viewed as the key to salvation [doc. 22] . Similar objectionswere made againstMosley's proposals:'The finance of these schemeswould not stand a moment's consideration', records Labour's Chancellor (108). Suchthinking left governmentsimpotent(68, 81). There were only a few signsthat governmentsin this periodrecognised the need to deal with the structural problem at the root of continuing unemployment.Both administrationsincluded in their plansfor an export recovery certain proposalsto revitalise the staple industries.The aim was to make them more successfulby rationalisationschemeswhich would encourageamalgamationsand the modernisationof production methodswhile reducing wasteful competition by closing the less efficient units. With Baldwin's support, the Bank of England helped create the Lancashire Cotton Corporation in 1929 which set about reducing the size and increasingthe efficiency of the industry. In the following year the Bank of England formed the Bankers' Industrial Development Corporation which provided the fmancial backing for the National ShipbuildersSecurity Ltd. to perform similar functions, buying up and closing surplus shipyards [doc. 24] . A Labour government investigationof the cotton industry reportedin 1930 in favour of more substantialreductionsin capacity, and one section of the Coal Mines Act of 1930, although abortive in practice, was supposedto encourageamalgamationsand the closure of inefficient pits. A consequence of this policy was apparenteven to its supporters.While closures and modernisationmight conceivably deal with the economic problem of falling exports, they did not help the social problem of unemploymentsinceas a result lesslabour was needed(12, 104). One governmentschemeclaimed to offer specialhelp for the unemployed in the distressedareas.The Industrial TransferenceBoard was appOinted in 1928 to help migration out of South Wales, the North East and Scotlandof workers, especiallyminers, for whom unemployment seemedpermanent.The board was simply to coordinateand encourage the activities of employmentexchanges,training centresand the OverseasSettlement Office, and to give some financial help to migrants.Though the transferenceschemewas continuedright through the 1930s, one obstacle never tackled was the pocketsof unemployment even in the more prosperousareas.Without a large expansionof employment opportunitiesin the South and East there would be no migration from the North and Wales on the scale required to solve the problem, even if such movement were socially desirable. The policy was symptomaticof the thinking of the 1920swhich assumedlabour was more mobile than capital. Workers should move to find jobs: 65

The EffectsofEconomicDepression

industry should not be compelledto move to areasof high unemployment (2, 68) [doc. 25] . While governmentswere still reluctant to spendmoney on the provision of work, their commitment to maintaining the unemployed with unemploymentinsuranceplunged them into great financial difficulties and finally into crisis. The system of providing the workless from insuredtradeswith weekly benefitsfor the whole period of their unemploymentwas confirmed in a new InsuranceAct in 1927. Workers exhausting legitimate insurance claims could still draw 'transitional benefits' to keep them off poor relief. The only qualification for this was that the applicant must show he was 'genuinely seeking work'. This generosity was based on the quite erroneousassumption that unemployment would soon decline to 6 per cent. Worsening unemploymentincreasedthe number of claims and the debt of the unemploymentinsurancefund. Thesealso rose substantiallywhen the Labour government abolishedthe 'genuinely seeking work' clause in 1930, and so made claims to transitionalbenefit a right which employment exchangescould challenge only with difficulty. But the major significance of the 1930 Act was that the whole cost of transitional benefits was taken from the accountof the unemploymentinsurance fund and made a burden on the Treasury's annual budget. In the year ending March 1931 transitionalbenefits cost the taxpayernearly £20 million. While easing a little the pressureon the unemployment insurancefund, the transferunwittingly addedto the problemswhich broughtthe Labour governmentto ruin in August 1931 (67). Two especiallygrave developmentstroubled Britain by the summer of 1931. First, there was a monetary problem. Since the First World War British governmentshad struggledto revive and support the gold standardas part of an international system in which British industry as well as British finance was expectedto flourish. But by 1930, battered by the world depression,Canada, Australia, New Zealand and six Latin American countries had already abandonedgold. During the summerof 1931 there was a decline of confidencein the poundand a drain of gold overseas,and this threatenedBritain's adherenceto the gold standard.An adversebalanceof paymentsthen causedfresh alarm but this was intensified by a banking crisis which spreadfrom Austria. Concernturned to panic when it was seenthat the forthcominggovernment budgetwould be hopelesslyunbalanced.This links with the second grave development,a rise in unemploymentto over 2~ million when British exports slumped. Seriousthough this increasewas it provoked a major crisis only becauseit increasedthe debt of the unemployment insurancefund and the burdenof transitionalbenefitson the budgetat 66

UnemploymentPolicies

a time when governmentrevenuesfrom taxationwerefalling. Thebudget would not balance. The orthodox policy which dominatedeverything was to protect the gold standard:abandonmentor devaluationwere not considered by the authorities.To createconfidencein the pound so as to protect Britain's gold reservesit was assumedthat the governmentmust prove it was creditworthy by balancing the budget.Snowdenrefusedto increasedirect taxation or suspendthe sinking fund, and this meantthat governmentexpenditurehad to be savagelycut. Searchingfor economies the governmentpassedthe AnomaliesAct, which excludedcertain workers, especially married women, from claiming unemployment benefit. It also appointed a Committee on National Expenditure under Sir George May to proposecuts in governmentspendingsufficient to balance the budget. The committee's report in July 1931 portrayedsuch a seriousimbalanceas to shatteroverseasconfidencein the pound.Foreignbankersto whom the governmentturnedfor credits requestedreductions in government expenditurebefore loans would be made.The cabinetwas obliged to discusscuts in public sectorpay, in the road-building programmeand, most importantly, in unemployment benefits. The May Committee, Snowden and foreign bankers insisted upon this last item. So too did the Conservativeleaders,busily twisting the knife in Labour'sside. It is clear that the demandfor cuts was the consensusat home and abroad. Theheretical alternativesof devaluation or revenue tariffs discussedby Keynes, the TUC and a few otherswere ignored. The cabinettoo acceptedthe needto balance the budget. However, in the end, nearly half the ministers rebelledat the proposal that a Labour governmentshould be responsiblefor a 10 per cent cut in unemploymentbenefitsand this split endedLabour's rule. On 24 August 1931 MacDonald formed a National government. Transfixed by orthodox assumptions,the Labour governmentcould only squirm helplessly. It had been unable to prevent a rise in unemployment andnow could not even protect the dolesof thoseout of work (11, 67, 69,79).

1931-1939 In comparison with its predecessorsthe National governmentunder MacDonald (1931-5), Baldwin (1935-7) and Chamberlain(1937-40) appearsdistinctly unorthodox.The crisis which sweptaway the Labour governmentseemsto have shakensome of the rigidity out of official thinking. Recentstudies,for example,have shown the developmentof closer and more sympathetic contacts between some of the radical 67

The EJlectsofEconomicDepression

economistsand the new generationof top civil servantsat the Treasury.

It is to this decadeespeciallythat we can trace back the origins of the

Keynesian revolution in official thinking and governmentpolicy (69, 70). But close examinationalso shows that before the SecondWorld War the intellectual conversion was seriously incomplete. The deadweight of orthodox ideas and policies continued to prevent more effective responsesto the persistentproblem of unemployment.It is also apparentthat someof the more radical innovationsof the National governmentwere forced on it by circumstancesbeyondits control. The orthodox instincts of the new governmentwere seenat once. It took as its first task the defenceof the poundand the gold standard. In order to raise foreign loans to protect sterling it pressedon where Labour drew back and imposedeconomiesin governmentexpenditure. To balancethe budgetin September,Snowden,still Chancellor,cut the pay of teachers,the police, the armedforcesand other public servants, and imposed the 10 per cent reduction in unemploymentbenefit. Moreover, standard benefits were henceforthto be paid for a maximum of twenty-six weeks after which additional benefits,now called 'transitional payments',would be allowed only after a family means test. To add insult to injury, the meanstest would be operatedby the same local authorities which since 1930 had been administeringthe poor law, the Public AssistanceCommittees.Ironically evenbeforethis packagewas passedthe drain on gold had turned to a flood and the governmenthad to abandonthe gold standardon 21 September.The struggle to revive and preserve the self-regulating exchangesystem which had dominatedgovernmentpolicy since 1919 was over (11, 67). This catastropheforced the dismayedauthoritiesinto the monetary managementthey had tried to avoid. In April 1932 the Exchange EqualisationAccount was formed, which by buying and selling in the foreign exchangemarket was able to maintain the reasonablystable sterling exchangerate British exports needed.At the sametime, however, it prevented movementsof foreign funds into and out of the country from upsetting the level of domestic credit. This separation of internal financial affairs from external factors had been proposed by radical monetaristslike Keynes,but it was the failure of the country to stay on the gold standardwhich forced the governmentto acceptit. Henceforththe statehad a new role as monetarymanager(2, 69). The advantagesof the new systemwere immediatelyrealisedby the more perceptive Treasury officials. So long as Britain was bound to the gold standardand neededto attract foreign funds to maintain the parity of sterling, the bank rate had stayedhigh. Now, insulatedfrom the outside world by the Exchange Equalisation Account, the rate

68

UnemploymentPolicies

could be brought down. From June 1932 until the end of the decade it was 2 per cent. It usedto be thought that this cheapmoney policy aimedsimply to deterimports of 'hot money'from abroadwhich would be attractedby a higher rate and also to help the governmentraise a huge conversionloan. A lower bank rate brought other interest rates down and enabledthe governmentto payoff a 5 per cent war loan with a loan,per cent conversionloan, so reducing annual interest payments and making it easierto balancethe budget (2,76). The government did have thesestrictly orthodox objectivesin mind but we now know they were also persuadedto reduce the bank rate by Treasury officials who saw a cheapmoneypolicy asa way of stimulatingdomestic investment.Radical thinkers had been suggestingfor some time that easier credit would encourageeconomic recovery. Freed at last from the restrictionsof the gold standardpolicy, the Treasurywas prepared to adoptthis strategy(69). Unfortunatelythe opportunitiesoffered by the new monetarypolicy were incompletely recognised.By the end of the 1920smany radicals were arguing that in a period of acute economic gloom it was not enough to enable private enterpriseto borrow money more cheaply. Valuable though this was,it was imperativethat the governmentshould also set the economyon the upturn and provide an exampleto businessmen by its own borrowing and expenditure.A reflationary fiscal policy was needed:orthodox balancedbudgetsshould be abandoned.Against such heresies as deficit-financing and large-scale public works the National government for the most part set its face. Some Treasury officials cameto seemerit in the proposals,but only whenwar threatened and rearmamentbecameunavoidablefrom 1936 did the government actually borrow and spend large amounts of money. In fact, their actions then unwittingly halted the recessionbecoming apparentlate in 1937. Otherwiseministersassumedthat a cheapmoney policy would be sufficient to encourageprivate enterpriseto lead the country along the path of naturaleconomicrecovery. Accordingly government fiscal policy did little to .help. Budgets generatedsurplusesin most yearsand tendedto be deflationaryevenin the depths of the depression.It was typical of the orthodox thinking which persistedthat unemploymentbenefit was cut in 1931 and not restoreduntil economicconditionshad improved in 1934. Only a few central governmentmeasureswere designed directly to provide work for theworkless,andthey werepiecemealandsmall in scale:guaranteeing interest paymentsfor railway constructionwork and London transport developments,providing a loan to restart constructionof the Queen Mary, abandonedhalf-built two years before, and giving more loansto 69

TheEffectsofEconomicDepression encouragetramp-shippingowners to place new orders under a 'scrap and build' scheme. The government tried to claim credit for such measuresat the generalelectionin 1935,but they did not showmuch of an advanceon governmentproposalsin the 1920s(2, 12, 84). When the governmentdid make a significant innovation in employment policy it was largely in responseto public pressure.The world depressionhit regionsin the North and Waleswith exceptionalseverity. Official and unofficial reports emphasisedthe structuralnatureof their difficulties, local MPs and The Times pressedfor action, agitation by the unemployed kept the issue before the public. The government's reluctant responsewas the SpecialAreas Act of 1934. This recognised the problems of particular districts in SouthernScotland,the North East, West Cumberlandand South Wales. However the two commissionersappointedwere empoweredto spenda mere £2 million a year, mainly helping localauthoritiescarry out amenityschemes,encouraging land settlementand trying to persuadefirms to move into the areas. After more public agitation and criticisms of the original Act, not least by one of the commissioners,its powerswere widenedby legislationin 1936 and 1937 to enable the Treasuryto give financial help to companiespreparedto invest in distressedareas,and additionalfunds were madeavailable [doc. 26] . The results remainedfairly modest.By the end of 1938 the commissioners were committed to spendingonly £17 million. A number of firms had been induced to move into the regions and a handful of gleaming new trading estateshad been built, as in Team Valley near Gateshead.For the fortunate individuals re-employed and for some local communities this special assistancewas a blessing, but in all probably less than 50,000 new jobs were createdin areaswhere over 350,000were registeredas unemployedin January1935. Nevertheless it was a more imaginative method of directly helping the unemployed. The governmentabandonedthe argumentof the Industrial Transference Board whose plans to help migration were quite evidently inadequate, and began to encouragecapital to move to labour. It admitted that unemployment had structural and therefore regional characteristics, and it acceptedthe need for a constructiveregional aid policy. Henceforth such schemeswould be part of all future governmenteconomic policies (2, 12). The recovery of British exports which the British government obviously still desiredled ministersto pressevenmore for the rationalisation o'f the staple export tradesin order to improve their international competitiveness.The Finance Act of 1935, for example,gave tax relief to industries whose plans for reorganisationwould shed excess 70

UnemploymentPolicies

capacity.But this carrot was temperedby the novel applicationof the stick: there was an extra emphasison statecompulsion.The iron and steel industry was given tariff protection only on the understanding that reorganisationtook place; similarly an Act in' 1936 forced the cotton industry to scrap excessspinning capacity,:and legislation in 1939 laid down compulsoryminimumpricesfor cotton goods.Attempts to force amalgamationsand closuresin the coal industry proved more difficu1t:a new Act in 1938 attemptedto tighten up the process. This reorganisationof the stapleindustrieswas importantin the government's plans for export recovery,but since the main effect was to reducetheir size,it inevitably createdredundanciesnot jobs (12). Since the National governmentwas dominatedby the Conservatives it was predictablethat the radical policy it embracedmost enthusiastically wasthe introductionof tariff barriersto protectthe homemarket. The crisis of 1931 provided the opportunity which zealotslike Neville Chamberlain desired. The flood of foreign imports into Britain, the adversebalanceof paymentsand the attractionof tariffs as a sourceof extra government revenue to meet budgetary needswere persuasive arguments.The electoraterespondedby returning massivenumbersof avowed protectionistsin the general election in October 1931, and most of those ministerswho had beentraditionally staunchfree traders bowed to the inevitable. The punitive duties imposedas an emergency measurein 1931 and then the Import Duties Act of 1932 endedthe era of free trade(63). Abandoning the gold standard and imposing tariff protection in 1931-2 was the Nationalgovernment'scontributionto the destruction of that international economic order whose defence previous British governmentshad held ascentralto their strategyfor economicrecovery. Little could be doneto preventthis demolition.In the world depression beginning in 1929, the national incomes of the industrial countries fell severely,unemploymentsoaredand world trade slumped.Nations sought individual survival in self-protection,by abandoningthe gold standard,by exchangecontrols and by tariff barriers. Control over large home markets or the subordination of neighbouring satellite economies enabled some industrial nations, including the United States,Russia,Germany and Japan,to abandonthe internationalsystem in favour of the more self-sufficient economic blocs they dominated.In somerespectsBritain followed suit: the governmentexercised much tighter control over the export of capital, most of the overseas investment allowed being directed into the Empire. Moreover, an Imperial conferenceat Ottawa in 1932 concluded with preferential tariff arrangementsbetweenBritain and the rest of the British Empire. 71

The EffectsofEconomicDepression

Furthermore,virtually the whole of the Empire plus a numberof other foreign countriesformed a sterling area,linlrJrrg their currenciesto the poundwhen Britain left the gold standard(12, 63). But it is apparentthat after the first shockof 1931-2,the National governmentwas not content to commit British fortunes to an Empire or sterling bloc. It soughtto revive someof its earlierinternationalties. In 1933 MacDonald presidedover a World Economic Conferencein London designed to stabilise exchange rates and liberalise trade by internationalcooperation.However,the forcesof economicnationalism preventeddelegatesfrom reachingagreement.As A.J.P.Taylor observed, the meeting was held in the Geological Museumat South Kensington where principles like free trade could be suitably preservedas fossils from the past (16). What the British governmentdid later achievewith the aim of encouragingoverseastrade were some important special arrangements:a monetary agreementwith France and the United Statesin 1936, and a total of twenty bilateral trade agreementswith foreign countriesbetween1933 and 1938 (12, 64). Another change of significance for the future was made in government welfare policy which had already seen so many radical departures since the end of the First World War. As Chancellorof the Exchequerin 1932, Chamberlainwas worried by the continuationof an unemploymentinsuranceschemewhich failed to distinguishbetween short-term and long-term unemploymentand which under the transitional paymentsschemesleft the assessment and expenditureof central governmentmoney to the discretion of local Public AssistanceCommittees. The consequentlack of uniformity upset his bureaucratic mind, especially when some committees paid 'excessive' benefits. Two authorities,Rotherhamand Co. Durhamwere found guilty of overgenerosity and were replaced by Ministry of Labour commissioners. Supportedby the findings of a Royal Commissionon Unemployment Insurance(85), Chamberlain'smusings led in time to the Unemployment Act of 1934. Part I of the Act restoredan actuarially balanced contributory insuranceschemefor the short-term unemployedto be operated by the Unemployment Insurance Statutory Committee. It prosperedso well that it was able to increasedependants'allowancesin 1936 and 1938. Part II was more novel. A central government Unemployment AssistanceBoard was formed which was to pay means-tested benefits throughits agentsin local officesto the non-insuredunemployedand to the long-term insured unemployedwho had exhaustedtheir insurance rights after claiming benefit for twenty-six weeks.The boardtherefore replacedthe systemunder which the granting of poor relief and transi72

UnemploymentPolicies

tional paymentsto the unemployedhad beenthe responsibility of the Public AssistanceCommitteesof the local authorities.Uproar among the unemployedand their sympathisersagainstthe proposedscalesof benefit delayedthe introdudion of the new schemeuntil 1937.But in spite of this inauspiciousbeginning, the Act was a model for later developmentsin social policy. Sincethe SecondWorld War, the welfare statehas combinedcontributory, nationalinsuranceschemeswith noncontributory, means-tested,state-controlled and taxpayer-financed additional help known as national assistanceor later as supplementary benefits(60, 65, 67) [doc. 27] . How far did the policies of the National governmentsatisfy the economicradicals?It might seemthat the early actionsof the National government would delight imperial visionaries like Amery. Tariffs in 1931-2 made possiblethe negotiationof preferentialagreementswith the dominionsat Ottawaand thesedid increasethe flow of tradewithin the Empire. But even in 1932, Amery regretted the failure of the government to aim at a reflationary monetary policy for the British Empire as a unit as a way of inducing trade expansionbetweenits parts.His fears that the National governmentwas not making the most of its imperial opportunities were increased,first, when the Empire Marketing Board was abolishedin 1933 as an economymeasureand, second, when the bilateral trade agreementsthe government made with foreign countriesshowedit wasstill hankeringafteraninternational ratherthan an imperial basisfor British prosperity. Imperial visionaries felt there was much work to be done. Amery was excludedfrom the Nationalgovernment,but his books,articlesand speechescontinued to flow, and with suitable homage the Empire IndustriesAssociationcelebratedthe centenaryof the birth of Joseph Chamberlain in 1936 with a new campaign (82,93). In the 1930s that flawed genius Oswald Mosley also proposed imperial unity as part of the econornic programme of his British Union of Fascists, planning for exampleto suppressIndia's textile industry to revive the fortunes of Lancashire'sailing export trade (107). At leastthis scheme had the merit of recognisingwhat the hagglingat the Ottawaconference had exposed;the lack of a natural economic harmony betweenthe parts of the British Empire. Imperial economicunity was increasingly anachronistic.India and the dominionsdefendedtheir own industries againstimports of Bdtish manufacturedgoods;evenBritish agriculture demanded protection' against some empire products. The flow of migration to the Empire was also reversedin the 1930s,andlow prices for food and raw materialsdid not encouragecolonial governmentsto develop their primary resources.Even in 1938 only 47 per cent of 73

TheEffectsofEconomicDepression British exports went to the Empire and only 39 per cent of British imports were supplied by it. The National governmentdid not, and probably could not, do much to satisfy the visions of imperial enthusiasts(63). Those who advocatedthe use of monetary and fiscal policies to stimulate the domestic market continued to expound and develop their theories in the 1930s. Indeed the range of converts distinctly widened(74). The disasterof 1931 shook the Labour party out of its intellectual torpor. Between 1931 and 1934 it drew up a new shortterm programmefor a future Labour government,which in planning to create full employmentby a reflationary monetary policy and by a state investment programme to soak up idle savings,clearly owed much to the Liberal party, Keynes and the radicals of the 1920s.Its grasp of the new economicswas still a little unsure,and the programme remained a subject of contention within the party, largely because what it offered was not full socialismbut state-managed capitalism in a mixed economy(61, 96). It is revealingof the consensusamongradicals of all parties that the Labour party's new views were very similar to the ideas expressedby Harold Macmillan, a dissident Tory, in his significantly titled book The Middle Way. This was anotherproposal for a state-managed mixed economy,eschewingboth full statecontrol and doctrinaire laissez-faire,and using monetaryand fiscal techniques plus minimum wagelegislationand generouswelfare allowancesto raise and sustainthe level of demandand thereforeof employment(90,102) [doc. 28] . Lloyd George was also still active in theseyears.Echoing Roosevelt'sinnovationsin the United States,he launchedhis New peal with appropriatetheatricalsin Bangorin January1935,brushingup his 1929 plans for a huge reflationarypublic works scheme(106). Mosley's British Union of Fascistsmanifesto,The GreaterBritain (1932), similarly containeda revised version of his earlier plans to raise employment levels (107). Although unorthodox policy proposalsand the economicthinking which lay behind them drew on many sources,many radicals acknowledged their debt to Keynes. His views developedin the early 1930s, and in 1935 he was able to declarewith characteristicimmodestythat he was writing a book which would 'largely revolutionisethe way in which the world thinks about economic problems' (100). This of course was to be The General Theory of Employment,Interest and Money (1936). In this he developedhis analysis of the forces whiclt set the level of employmentin the economy.He showedthat employment dependedon the amount of money people spentand invested. He described the factors which encouragedconsumptionand invest74

UnemploymentPolicies

ment, and explainedhow changesin the level of consumptionand investmenthad cumulative effects through the multiplier on the level of employment. He then demonstratedthat there were no automatic self-regulatingmarket forces which would ensure that the amount of spending and investmentby millions of individuals in society would necessarilybe just enough to provide work for all. This attackedthe heart of orthodox classical economics.The natural corollary was that the state should use monetaryand fiscal techniquesin order to affect the level of consumption and investment and therefore create full employment(80, 81). Those radicals who desired active state economic management approvedof some of the National government'sinnovations.Some of them like Keynes were membersof the government'sCommittee on Economic Information, which brought them as advisers into touch with Treasuryofficials. They were delightedto find a more sympathetic consideration of their views than in the past (70). They naturally welcomed the abandonmentof the gold standardand the creationof the new system of exchangecontrols,and regardedthe cheapmoney policy as a valuable measure.But on balancethe governmentwas still opento their criticisms.They werefrustratedespeciallyby the orthodoxy of the government'sfiscal policy and by its continuedexpectationof a natural economic recovery led by private investment.Lloyd George's New Deal plans, for example,were consideredby the cabinet only to be rejected.Other plans for large-5calepublic works were also ignored. The governmentseemedcomplacent,too tolerant of the slow rate of recoveryand of the remaininghigh level of unemployment. The radicals were equally annoyedby the National government's poor responseto the new enthusiasmfor state economicplanning(74, 81). Conceptuallydistinct but sometimeslinked to ideasof monetary and fiscal management, planning,it was claimed,would increaseindustrial efficiency and create full employmentby state coordinationand direction of industrial and fmancial activities. The scope of planning varied according to the proposer,but there was a consensuswhich favoured state control of key and ailing industries,state direction of investmentto desirablegoalsand the integrationof nationalisedindustries with a private sector. Severalfactors encouragedthis new vogue: the inspiration of German, Italian and Russian plans, the practical experienceby businessmenof the managementof big national companies, the seemingly unshiftable problem of the depressedregions and above all the evident failure of unguided capitalism to prevent unemployment.Where the free market had failed, stateplanningmight succeed.Such hopes were expressedby non-party organisationslike 75

The EffectsofEconomicDepression the Political and Economic Planning group formed in 1931 and the Liberal and Democratic Leadership groupwhich published a detailed scheme,The Next Five Years,in 1935. Similar ideaswere put forward by Boothby and Macmillan (102). They were especially taken up by the Labour party in a series of policy statements;special attention was paid to the revival of the depressedareasby state-plannedinvestment (61, 96). It is true that governmentsdid extendtheir controls and influence over industry and agricultureespeciallyin the 1930s:marketingarrangements for farmers were major innovations.But ministers did not plan an integratedschemeto direct national or even regional economicrecovery. There was a typical lack of connectionbetweenrationalisation schemes which reduced local employment and the slender efforts were made to encouragenew investmentin depressedareas.Businesses allowed to follow market forces with the result that most expansion took place elsewhere(2, 53). This failure of the left hand to recognise what the right hand was doingdismayedsomeobserversand was another factor making planningseemessential. The National government claimed in its manifesto in 1935 that 'under this leadershipwe have emergedfrom the depthsof depression to a condition of steadily returning prosperity' (84). Ministers were naturally inclined to take the credit for such recovery as did take place in the 1930s. Historians have been reluctant to endorsetheir claims. Recentlythe value of the cheapmoney policy in stimulating a housing boom has been stressed(69), but none of the government's other policies are regardedas really decisive,even though they sometimes deviatedfrom orthodoxtraditions.Devaluationin 1931 gaveonly a temporary boost to the economy, tariffs at best protected some industries from greater distress, and imperial preferencesdiverted rather than increasedthe flows of Britain's overseastrade. Balanced budgets may have helped businessconfidence,but until rearmament began government expenditure did little to improve overall employment prospects.Some historians insist that whatever the government did achievewas overshadowedby an unassistedexpansionof the home market. They see falling prices, smaller families and rising expectations as primarily responsiblefor the housing boom and the expansionof consumer goods industries which were the main sourcesof Britain's economicgrowth (2, 13). Even this substantialachievementleft a grim burdenof unemploymentand exposedthe continuedfailure of Britain's interwar governments.

76

Part Three: Assessment

Severalpoints may be made in defenceof governmentpolicy between the wars. The problem they faced was one of unprecedentedseverity. Basically what was happeningin thesetwenty years, especiallyin the 1930s, was the modernisationof the British economy,a substantial shift of resourcesfrom the nineteenth-centurystapletradesinto newer industries such as motor-car manufacturing, chemicals, electrical engineering and consumer goods production: these would form the basis of the country's economic growth after the SecondWorld War. The unemployedwere to a large extentthe victims of this momentous, unplanned,barely recognisedtransformation.It was not unreasonable for ministers in the early 1920s to be unawareof this and to expect the depressionto ease as earlier cyclical downturns had done. Moreover, no sooner had they begun to discern the structural troublesof the economyat the end of the decadethan crisis overseasswept Britain into the world depressionof the 1930s. Since unemploymentwas then a problem commonto most industrial nations,it seemedobvious to ministers that some general factor, like obstaclesto world trade, must be largely responsiblefor the world's trouble. Hencethe continued attention paid by ministers to the condition of Britain's export trade and the desire to resurrectthe international economy. Hence British enthusiasm for such a reconstructionduring and after the Second World War and their sympathyfor the generalidea if not the detailed practice of the World Bank, the InternationalMonetary Fund and the General Agreement on Trade and Tariffs. There was wisdom in this: Britain did need to export in order to import the essentialsfor prosperity: food and raw materials. But such a priority also meant that governmentswere less aware of Britain's special structural problems, and did far less·than was necessaryto guide the country through its pubescentagonies as it matured into a modernisedtwentieth-century economy. It is apparentthat when unemploymentdid becomea world problem, most overseasgovernmentsstumbledalong orthodoxtrails searching for solutions.There was no shining foreign model of a government dealing effectively and humanely with mass unemployment.In the 77

Assessment

eyes of British ministersthe removal of the problem in Nazi Germany and Soviet Russia involved the loss of a good deal more, including civil liberty. For all the bustling activity of Roosevelt'sNew Deal there remainedmuch that was incoherent,even contradictory,in its conceptionand operation,and with 13 million Americansout of work in 1933 and still almost8 million in the bestyear 1937,it did not seem conspicuouslysuccessful(5). More attentionmight have beenpaid to economicmanagementin Swedenalthoughhistoriansare now reluctant to claim that radical policy was decisivein promotingSwedishrecovery (2,73). It would be unwise to assumethat tM untried radical alternatives proposedat home would have been magic wandsto wave unemployment away. Imperial visionariestoo easily assumedthat the vigorously independentdominions wouldnecessarilyfall in with British plans for imperial economiccooperation.Giventhe limited resourcesand markets of the Empire it could not have been formed into an entirely selfsufficient bloc supplying all its wants and absorbingall its products as some extremists claimed. Reflationists were also slow to consider whethertheir plans would increaseimports, deter exports and damage the balance of payments.Nor is it entirely certain that the world was waiting for Keynes.The monetaryand fiscal solutionshe proposedin his 1920s writings and in The General Theory might have checked cyclical depression,but it can be arguedthat he offered no solution to the structural problem which lay at the heart of regional unemployment.Governmentaction to stimulateaggregatedemandin the economy might have soakedup the pools of unemploymentin the growing areas of the South and East,but it might have still left a severeproblem in South Wales or Tyneside unless the demandgeneratedby monetary and fiscal policies either revived existing industries in these areas (which is doubtful) or encouragedthe settlementthere of new industries. For that to happengovernmentplanning and direction of investment would probably be necessary and on this Keynes himself had little to say (18). The most practical programmesfor government action were those like Macmillan's The Middle Way, which combined state direction of industry with the supporting fmancial policies for which Keynes's mature work provided the theoretical justification. Such proposalswere not fully developeduntil the !lite 1930s.In the light of Britain's economic problems in the 1970s it can also be less easily claimed that the new economicthinking of the 1930sproduced all the answers. In the meantimethe pressureson governmentsto keepto orthodoxy were severe.The adviceof the entrenchedprofessionalsin the Treasury, 78

Assessment

in the City and from many outside commentatorsurged allegianceto the old ways, especially in the 1920s. As attemptsin 1931 to raise foreign loans to support sterling demonstrated,it was the expectation of influential overseas financiers also. In addition, orthodoxy was demandedby most MPs: the swinging of the GeddesAxe cutting government expenditure in 1921-2 followed one such 'anti-waste' campaign, the formation of the May Committee in 1931 followed another In such circumstances,a bold rejection of traditional beliefs was mademore difficult. Interwar governmentsderived some comfort from a consideration of the social consequencesof the depression.The world depression of the early 1930s was felt more seriously overseasthan in Britain. The volume of unemploymentand cuts in incomewere certainly more severe in the United States. Extensions of J3ritain's unemployment insurance scheme plus the additional assistanceof local welfare and voluntary services did prevent a huge social disasterin this country. Intolerable though the effects of the depressionon the unemployed may now seem,ministers had some grounds for feeling relieved that their policies had preventeda more grinding reduction in living standards, a more alarming deterioration in health and more dangerous outbreaksof violenceand political militancy. But when all allowanceshave been made, these years did bring exceptional hardship to many families. The improvementsin living standardsand health which nationally were taking place were checked in the worst hit areas.It is simplistic but on the whole legitimate to see Britain, especially in the 1930s, dividirig into two nations, a relatively affluent South and East where new industrieswere settling and expanding, and a more stagnant comparatively declining,North and West where old industries struggled.This was a historica:l change of some size, reversinga ninetcenth-centurypatternwhich in-the pasthad g[~ater prosbrough better employmentprospects,higher wages and unemployperity to placeslike Tyneside,Lancashire,West CumberlanJ,i,the Clyde and South Wales than to areas in the South and East. Governments showedthemselvespowerlessto.guide the interwar changesand to eliminate the social hardshipsthey brought. In the First World War, and later in the SecondWorld War, British governmentsrevealedthat they were not incapableof vigorous action to control the economywhen military necessityrequiredit. They were strangely reluctant to act with determinationin the 'normal' years betweenthe fighting. In a sense,with the importantunemployexcep~ion of the unemploymentinsurancescheme,governmentsneverhad an unemployment policy. One or two public works schemeswere tried with in· 0

79

Assessment

creasing disfavour, but essentially unemploymentwas regarded as a symp.tom and not as a problem. Instead of lancing boils, ministers attemptedto purify the bloodstream.The cure lay in creating those conditions which were thought to be most conducive to the natural flows of trade. Like mother nature, the economy was expectedto operatebest when left alone, unsullied by the muddy hand of government intervention. This 'ecological' approachto unemployment encouraged governments to assist what they believed to be normal recuperative market forces. Hence the concern shown throughout these years to leave capital to fructify in the pocketsof private enterprise. and to reduce government borrowing and expenditure. This explains the steps taken in the 1920sto restorethe gold standard.It lay behind a governmentwillingness in the 1930s to reduce interest rates for private industry while still avoiding state investment. In the 1930s the National government did intervene more consciously in the market with a managedcurrencyand tariffs, but ministerscould not shake off the remaining assumptionthat they could best help recovery and revive employmentprospectsby facilitating and then awaiting an increase in private businessactivity. A more direct cure for unemployment,such as advocatesoflarge-scalepublic works proposed, was thoughtto obstructthat naturalprocess. What seems so dismal in the conduct of interwar governmentsis their refusal to contemplateradical reflationary proposals.They could not be temptedinto experiments,although some foreign governments were prepared to try, and coherent alternative strategieshad been devised at home. That such experimentsmight not have proved completely successful in no way explains why governmentsopted for caution and refused to consider them, even when orthodoxy had beenpursuedso conscientiouslyand had failed so conspicuously. The timidity of ministerswas not due to the absenceof alternative economic theories but to a failure of political will. Ministers proved themselvesinadequateto their tasks.ProfessorMowat writes that with the end of Coalition governmentin 1922, 'the rule of the pygmies, of the "second-classbrains" began, to continue until 1940' (11). It is difficult to fault his judgement.We may notice the orthodox advice pressedby Civil Service pundits on ministers responsiblefor economic matters; what is alarming is how willing ministers were to continue accepting this advice, how unwilling they were to challengeit. It is apparent that the financial and economic difficulties held to be responsible for unemploymentwere regardedby many interwar politicians as arcane mysteriescomprehensibleonly to the initiated in the Treasuryand in the City of London. Churchill had little experienceof

80

Assessment

economic affairs before becoming Chancellor of the Exchequerin 1924, and neither Baldwin nor MacDonald could do more than mouth simple propositionsin debateson unemployment.Only a few leading politicians felt themselvesfully in commandof financial and economic arguments. Of these, some like Snowden and Neville Chamberlain acceptedthe orthodox theoriesof their advisersas indisputabletruths beyondseriousquestion.Churchill wrote that Snowdenandthe Treasury 'embracedeach other with the fervour of two long-separatedkindred lizards' (79). Speakingof credit and currency problems,Snowdentold a Labour party conferencethat 'Parliamentis not a competentbody to deal with the administrationof such highly delicate and intricate matters' (81). This tendencyto regard economicand fmancial policy as scientific answersto technical questionsin effect denied the possibility of alternative answersand attemptedto push such subjectsout of the political debate. Shackled to orthodoxy in this unquestioning fashion, ministers could only regard radical criticisms as perverse.Those who proposed alternativeshad to be denied lest,tinkering with the mechanicsof the economic system, they drop spannersin the works and make matters worse. As a consequenceof this attitudepolitical life betweenthe wars was largely concernedwith the exclusionby the orthodox of the dissentersin the wings, and the exchangeof office betweenConservative and Labour membersof an orthodoxclub. Among the victims of this policy should be ranked Lloyd George. Described by Baldwin as 'a dynamic force ... and a dynamic force is a very terrible thing' (104), Lloyd Georgehad provedhimself a ruthless executiveduring and after the war. He more than anyother party leader was not afraid of power, and by 1929 he was willing to use the state's authority to force through policies which he instinctively felt to be right. According to one study Baldwin and MacDonald, for personal and party reasons,devoted much of their time to blocking off Lloyd George'spossibleroutesback to office (95). His exclusionhelpedensure the supremacy of the mediocre and the triumph of orthodoxy. A similar fate befell Mosley, anotheroutsiderunable to break through a barrier of suspicion. After his resignationhis proposalscame close to achieving majority support within the Labour party, but the stubborn loyalty of Labour MPs to the party leadershipand its wishes ensured their final rejection(107). Baldwin and MacDonald therefore rejected the unorthodox and disturbing, and such rejectionswere on the whole meekly acceptedby their political followers. It is perhapssurprisingthat as a consequence the dissentersacrossthe political spectrumcould not unite to dethrone 81

Assessment

the establishment.One of Mosley's aims in forming the New Party in 1931 was to unite the discontentedbehind a commonprogramme.He had the sympathyof Macmillan and Boothby, of Amery and Melchett and of some of his former Labour colleagues,but as well as different emphasesin their respective radical plans, the dissenterswere still restrainedby the pull of traditional party loyalties;radicalcooperation got little further than flattering reviews of each other's books and occasionalappearances on the samespeakingplatforms. As a fmal commenton the political obstaclesto radical changeit is noticeablethat Baldwin, MacDonald and then Chamberlaincontinued to win the supportof the electoratein the 1920sand 1930s.They were tried and not apparently found wanting. lloyd George's campaign achieved poor results in the 1929 general election and still worse in 1935. Less regrettably,Mosley never tapped much support with the British Union of Fascists.Thereis no evidenceto show that the Labour party would have won a generalelectionat any time beforethe Second World War, in spite of its radically improved programmesand the stubborncontinuationof depression(28). Unemploymentbetweenthe wars did leave some important lasting consequences.Inadequatethough their responseswere, governments had beenforced by public opinion, political pressuresand unavoidable circumstancesto extend their functions. Willy-nilly, the state had increasedits responsibilities. The cover of its welfare policy had been widened by extensionsof unemploymentinsurance,especiallyby the principles of dependants'allowancesand of continuoustax-fmanced assistancefor the long-term unemployed.Its range of economicduties had grown with a managedcurrency,tariffs, sporadichelp for industry and a gesturetowards a regional aid policy. At all events,the government ha:d intervened in the free market, no matter how distasteful they found the experience.Baldwin himself confessedin 1935 that 'for good or evil the daysof non-interferenceby Governmentsare gone. We are passinginto a new era' (110). There were many commentatorswho recognised,often more clearly than ministers, the implications of these innovations. They served as precedents.In the new thinking which emergedbetween the wars, governmentwas given an increasingly predominantrole. For this, the unemploymentproblem was largely responsible.It stimulated more peopleto examinethe social conditionsof Britain and to discoverwhat baleful effects the depressionwas having on workers. They disagreed in their assessments of the latter but did reveal the extent to which poverty and ill-health from various causeswere still common. They concludedthat existing welfare serviceswere inadequate.Even before

82

Assessment the SecondWorld War therefore,proposalswere being made,not just for more extensionsof state servicesto help the unemployed,but to had unearthed. deal with ahostof other socialproblemsthat researchers The need for a national nutritional policy, improved housing, better medical care,family allowanceswere all under discussion.The Second World War then made thempartsof more extensivereconstructionplans (59) [doc. 29] . The origins of the postwarwelfare stateare to be found therefore in the discoveriesand proposalswhich interwar unemployment not exclusively but substantiallygenerated.The Beveridgereport on Social Insurance,for example,was written by a man who had been a studentof unemploymentsince before the First World War and who was made secretaryof the UnemploymentInsuranceStatutoryCommittee on its formation in 1934(99). Equally, the depressionand tentative government reactions to it inspired radical plans for stateeconomicmanagementand stateindustrial planning.It was no longer possiblefor innovatorsto seesolutions to economic problems like unemploymentwhich did not require a major contribution by the state.Indeedby the end of the 1930seven the Treasury was more sympathetic to such notions (69,70). The SecondWorld War effectively proved the value of such radical plans. Churchill made Keynes an adviser at the Treasury in 1940, and the techniqueshe recommendedthen governedthe way the economywas managedin the crisis. It was apparentthat they worked. As a result, they seemedto promisea sure way of avoiding unemploymentin the future, and wereintegratedinto plansfor the postwarworld. Keynesian methodsof economic managementwere the basisof Beveridge'sFull Employmentin a Free Society (1944), the Coalition government's white paper EmploymentPolicy (l944) and the proposalsput by all partiesto the electoratein 1945 (59,81). The distressmassunemploymenthad causedbetweenthe wars left a lastingimpressionon popularattitudes.After 1945 ministersaccepted a commitment to maintain full employment,not only becauseit now seemedpracticable, but becauseit was evidently expectedof them. Having tasted five years of full employment,albeit during the war, and no longer believing the probleminsoluble,peoplewere determined to avoid a return to the days of depression.The swing to Labour in the 1945 generalelection was partly becausethat party was thought more likely to honour its pledge to maintain employmentlevels than the Conservativeswho had dominated the now despised National government(59) [doc. 30] . Furthermore,interwar experienceprobably redoubledworking-classdeterminationto achievesome measureof job security. Even though overmanningwasand remainsa problemin some 83

Assessment

British industries and a restraint on economic growth, the overriding objective of many trade union leaders after the war was to oppose redundanciesand fight for security of employment. Once immediate postwar problems were overcome, the country enjoyed considerableprosperity. How far this was due to government policies is open to debate.Neverthelelssunemploymentin Britain remained low; not until the 1970s did numbers increasesubstantially. When they did it generatednew alarm. In part this was because,in spite of the cushion of welfare services,unemploymentremains for most workersa grim ordeal.The mentalstressesfelt by the unemployed today are much as they were betweenthe wars. Work retainsits social as well as its economic value to the worker. But those who protest against unemploymentare also angry with a governmentwhich they feel is breaking the code of practice followed since 1945 in allowing the revival of a suppressedevil. Unemploymenthas again become a politically sensitive issue. To a great extent this is another legacy from the interwar depression.For many people the memory of those years remains close and bitter, and they resent the return to a high rate of unemployment.

84

Part Four: Documents

The image of the unemployed

document 1

Greenwood'snovel presenteda bleak picture of the distresscausedby unemployment.This has proved a lasting image of Britain between the wars. It got you slowly, with the slipperedstealth of an unsuspected,malignant disease. You fell into the habit of slouching, of putting your hands into your pocketsand keeping them there; of glancing at people,furtively, ashamedof your secret,until you fancied that everybody eyed you with suspicion. You knew that your shabbinessbetrayedyou; it was apparent for all to see. You prayed for the winter eveningsand the kindly darkness.Darkness,poverty'scloak. Breechesbacksidepatched and re-patched;patcheson knees,on elbows.Jesus!All bloody patches. Gor' blimey! ... Nothing to do with time; nothing to spend;nothing to do to-morrow nor the day after; nothing to wear; can't get married. A living corpse; a unit of the spectralarmy of threemillion lost men.

Walter Greenwood,(35), pp. 224-5.

A land of contrasts

document 2

Returningfrom a tour of the country in 1933, Priestley summedup his impressionsofits variedface. Therewas,first, old England,the country of the cathedralsand minsters and manor houses and inns, of Parson and Squire; guide-book and quaint highways and byways England.... Then, I decided,thereis the nineteenth-centuryEngland,the industrial England of coal, iron, steel, 85

Documents

cotton, wool, railways; of thousandsof rows of little housesall alike, sham Gothic churches,square-facedchapels,Town Halls, Mechanics' Institutes, mills, foundries, warehouses... a cynically devastated country side, sooty dismal little towns, and still sootier grim fortresslike cities. This Englandmakesup the larger part of theMidlandsandthe North and exists everywhere;but it is not being addedto and has no new life pouredinto it. ... The third England,I concluded,was the new post-war England, belonging far more to the age itself than to this particular island. America, I supposed,was its real birth-place.This is the England of arterial and by-passroads, of filling stations and factories that look like exhibition buildings, of giant cinemasand dancehalls and cafes,bungalowswith tiny garages,cocktail bars,Woolworths, motor-coaches, wireless,hiking, factory girls looking like actresses .... J.B. Priestley,(51) pp. 397-9,401.

Lost exportsand Lancashire

document3

The problems of the staple industrieswere analysedin many contemporary publications. In this accountProfessorAllen of the University CollegeofHull describesthe troublesofthe Lancashirecotton industry. It is on the loss of foreign trade that attentionmust be concentrated,

for this has been the main causeof the deep depressionin the industry .... In the foreign markets, in spite of the developmentof an export trade in mixed fabrics, there has beenno adequatecompensation for the heavy lossessustainedin the main classesof goods.... The chief losseshad occurred in the export of cheapgoodsto India, China, the Balkans and the Near East; while the exports to countries taking high-priced products had suffered little .... Thus, Lancashire's loss has been due, first, to the opportunitiesgiven by the war to Oriental producers,and secondlyto the shifting of demandin the bulk-goods trade from the type of goods which Lancashirehas beenaccllstOlfled to supply to cheapergoods of a different kind, in the manufactureof which Oriental producershavegreateradvantages. G.C. Allen, British Industries and Their Organization, Longmans 1st edn, 1933,pp. 219-20,224.

86

Documents

Tyneside

document 4

This is an extract from one of the many regional studiesundertaken betweenthe wars. It was madefor the Bureau of Social Researchfor Tyneside. It is easy now, in the light of what has happenedsince,to realise that

the pre-War position of Tynesidewas precarious.Precariousbecauseit was so largely based upon a few great industries; precarious,also, becauseit dependedto such an extent upon the demandsof foreign countries, which might begin to supply themselves;and precarious becauseso much of the industry was due to the race in armaments which could not continue indefmitely.... During the whole time of the writing of this report Tynesidehasbeenin deepdepression,though latterly therehasbeensomeimprovement.The outlook for coal and for shipbuilding are discussedin following chapterswhere it is arguedthat at best there can be no rapid expansionfor a good many yearswhilst in each case contraction is possible. The outlook for the armament industry is, of course, worse stilL ... A restoration of the pre-War position is, therefore, almost an impossibility for Tyneside.... The necessity for broadeningagain the basis of Tyneside'slivelihood has beenforced hometo everyoneduring the depressionof trade,and there has beenmuch discussionas to possiblenew industriesand methodsof attractingmanufacturersto the area. H.A. Mess,IndustrialTyneside,Benn 1928,pp. 41-3, 48.

The regional impact

document 5

National averagesofunemployment disguisecontrastingregional economic fortunes.

Once again the south and midlands claimed the greater part of the expansion of working population.... The effect of this unequal expansion is more readily seen by taking a long-term view. Since 1923 the 'south' group has grown betweenthree and four times as fast as the 'north' group, with the result that the proportion of the country's

87

Documents workers aged 16-64 who are in the south has risen during this period from 45.7 per cent to 51 per cent.... Contraryto a widespreadimpression, the greaterexpansionof the south is not primarily causedby the wholesalemigration of workers from less prosperousareasin searchof employment:the caseis rather that new enterprisehas tendedto look favourably upon the south when determiningits location and a higher proportion of the local population has been attracted into insurable employment. The greater prosperity of the south is reflected also in the relative incidence of unemployment.In Decemberthe rate of unemployment among insured personsaged 16-64 in the country as a whole was a little below 12 per cent. On the other hand, all the northern groups were less fortunate than the national average.... Broadly speaking, the incidence of unemployment was twice as severe in the north, exceptingthe north easterndivision and three times as severein Wales as in the south. Ministry of labour, Report for the Year 1937, Cmd, 5717, 1938, ppA-5.

88

Documents

Who were the unemployed?

document6

One of the best studies of the unemployedwas carried out by the Pilgrim Trust. Here they record which groupsofworkers sufferedmost from long-term unemployment. TABLE V

Men Only

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Coal miners Ship-buildersand repairers Cottonworkers Seamen Pig-iron and Iron and Steelworkers Potteryand Earthenwareworkers Workersin Textile Bleaching,Dyeing,etc. Waitersand other workersin Hotels,Public housesand Restaurants Gas,Water and Electricity workers Boot and Shoeworkers GeneralEngineering Dock and Harbourworkers Workersin Distributive Trades Workersin Bread,Biscuits,Cakes,etc. Workersin Tailoring firms Builders and Building Labourers Furnitureworkers Printers,Bookbinders Workersin Motor Vehicles,Cycles,etc. All Workers

How many per 1000 workers were unemployed for a year or more in the summerof 1936?

123 95 67 59 57 54 37 33 33 31 31 27 27 26 25 24 21 14 10 41

The facts,for June 1936,were as shownin TableV. The majorindustries which contribute most heavily to the queuesof unemployedmen can be clearly seen from this table, and the close connexionbetweenlong unemploymentand industrial decline is obvious. Indeed... at least 40% of the long unemploymentthroughoutthe country is concentrated in the four basic and (in the post-War period) structurally declining industries,coal-mining,ship-bullding,iron andsteel,textile manufacture. The Pilgrim Trust, (SO), pp. 17-18.

89

Documents

The poverty of the unemployed

document 7

Prominent among the vehementcritics of governmentpolicy in the 1930swas Wal Hannington,leaderofthe National UnemployedWorkers Movement. Take a look at a funeral processionin SouthWalesthesedays.The custom is for the relations and friends to walk behind the hearseto the cemetery,and the miners, who in times of good trade always had a preferencefor smart blue serge suits, would turn out in their best apparel and bowler hats, and presentan exceedinglyrespectableappearance.But not so to-day. A funeral processionin the Rhondda Valley bears the mark of extremepoverty. The few sergesuits which are seencan be marked out by their cut as pre-waror immediatepostwar, becausefor yearsno new clotheshavebeenbought. Wal Hannington,(37), p. 72.

Robbing the 'dirt-train'

document 8

The techniqueswhereby the unemployedtried to supplementtheir dole money were many. Orwell came upon this methodin Wigan in February 1936. This afternoon with Paddy Grady to see the unemployed miners robbing the 'dirt-train', or, as they call it, 'scramblingfor the coal'. A most astonishingsight. We went by the usual frightful routes along the colliery railway line to Fir Tree sidings.... When we got there we found not lessthan 100 men,afew boys,waiting.... Presentlythe train hove in sight, coming round the bendat about20 m.p.h. 50 or 70 men rushed for it, seized hold of the bumpersetc. and hoisted themselves on to the trucks.... The engine ran the trucks up on to the dirt-heap, uncoupledthem and cameback for the remainingtrucks. Therewas the samewild rush and the secondtrain wasboardedin the samemanner.... As soon as the trucks had been uncoupled the men on top began shovelling the stuff out to their women and other supportersbelow, who rapidly sorted out the dirt and put all the coal (a considerable amountbut all small, in lumpsaboutthe sizeof eggs)into their sacks....

90

Documents Some of this coal that is stolen is said to be on sale in the town at Is 6d. a bag. GeorgeOrwell, (47), pp.181-3.

document 9

Diets

Rowntree,like other investigators,comparedthe diet offamilies living in poverty with the dietetic needsdefinedby nutrition experts. This family consistsof a man aged41 ,his wife aged36 and four children aged 14,6,4and 20 months.The man hasbeenout of work throughout the year and the sole sourceof income of the family is his unemployment benefit of 36s. a week, with an occasionalodd shilling earned by his wife .... MENU OF MEALS PROVIDED FRIDAY

Breakfast Breadand dripping, tea

Dinner Fish cod (1) and potatoes,breadand butterand tea

Tea Breadand butter, tomatoes, jam, tea

Supper None

SATURDAY

Bacon(2), Minced meat(3) breadand and potatoes, dripping, tea breadand butter, tea

Breadandbut- Cocoa ter, pottedmeat tea

SUNDAY

Bacon,bread Roastmeat(4) and dripping, kidney beans,potea tatoes,Yorkshire pudding

Breadand but- Cocoa ter, stewed plums andjelly, shortcakes,tea

MONDAY

Breadand Cold meatand dripping, tea potatoes,bread and butter,tea

Breadand but- Cocoa ter, shortcakes, jam, tea

TUESDAY

Meat hash,tea Breadand dripping, tea

Breadand but- Cocoa ter, shortcakes, tea

WEDNESDAY

Liver (5) and Breadand butBreadand dripping, tea onions,potatoes, ter, and beetroot, tea tea

Cocoa 91

Documents THURSDAY

Breadand Sausages (6) and dripping, tea potatoes,tea

Breadand butter,jam,tea

Cocoa

(1) 2 lbs. fish (2) 1h.lb. bacongives mealsfor two mornings (3) 1h.lb. minced beef

(4) 2 Ibs. beefis spreadover threedays

(5) 1h. lb. liver (6) 1h.lb. beefsausages

Only threehavesupper

COMMENTS ON THE DIETARY

The averageweekly expenditureon food is To feed this family adequatelyon the standarddiet would cost

s. d. 1610 2431h.

The diet showsa deficiencyin first-classprotein and caloriesof 51.2 per cent and 27.7 per cent respectively.Thereis a seriousdeficiencyin mineral saltsand of vitamins A and Bl . B.S. Rowntree,(S2),pp.188-9.

Health

document10

The effectofunemploymenton health wasvigorouslydebated.Governmentinvestigatorswere on the whole blandly reassuring. The primary object of our visit ... was to ascertainwhetheras a result of unemploymentin the coalfield the physical condition in any section of the population was such as to call for special action.... The first question to which it was obvious that we ought to direct our attention was that of any variation to be observed in the rates of mortality in South Wales and Monmouth indicating new conditions exceptionallyinjurious to health. No such indicationsare forthcoming from the general death rates. Further, there has been no unusual .... On the criterion of infant mormortality from epidemic diseases tality, ... there are no figures showing that the health of this region is suffering or need give rise to anxiety.... There has been no obvious growth in the prevalenceof [tuberculosis].... As regards what are specially termed 'deficiency diseases',there was no evidence of the 92

Documents

existence of scurvy, and the only form belonging to this category which appearedto have shown signs of increasewas rickets.... The increasenowhereaffects a large proportionof the child population.... Although apart from rickets we could find nothing to indicate an increasein any particular disease,and although there is no evidenceof obvious and widespreaddeteriorationof physique,there could be no question that in some areaswomen, especially the mothersof young children, suffer to an unusual extent from languor and anaemia.We were also not infrequently told that there is a loss of tone and persistenceof debility after illness in the older men, and that men long unemployedwho have not been actually ill find resumptionof work difficult as a merephysicaleffort. Ministry of Health,(42), pp. 3-6.

Mental health

document 11

It was widely acceptedthat mentalstrain was a commonconsequence of unemployment.Here the Pilgrim Trust record the view ofa medical officer.

His opinion was that the principal effects of prolongedunemployment on the health of the unemployedmen themselveswere a subtleundermining of the constitutionthroughlack of physicalexertion,the absence of physical stimuli, insufficiently varied diet, and worry; and the emergence of abnormal psychological conditions characterizedby disabling fears, anxieties, and sympatheticphysical conditions, functional disordersand the like. He gave a number of striking examples of local men who had beenapparentlynormal when in work, but who had 'gone to pieces' after being unemployed for several years. The following casesare a few of the many which were quoted: (i) Man, single, aged 40. In normal health until unemployed.After four years'unemploymentcomplainedof chokingand painsin the heac, but specialist reported no lesion.... Only psychologicalexplanation adequate. (ii) Man, married (with family), aged 50. In normal health until unemployed. Developed constant aches and pains in head and becamea chronic neurasthenic. (iii) Man, single, aged 22. Normal health until unemployed.Beganto 93

Documents suffer from 'vaguefears' after period of unemployment.Was admitted to hospital.Neurosisdiagnosed. Pilgrim Trust,(SO),p. 137.

Starvation

document12

Hutt admits that this story, takenfrom the Daily Worker of30 January 1933, is an extremecase, but he cites it as evidenceofthe devastating povertycausedby unemployment andgovernmentpolicy. How an unemployedman's wife literally starved herself to deathfor her children was told at an inquest on Mrs Minnie Annie Weaving, aged 37, of Elmscott-Road,Downham, S.E. George Henry Weaving, the husband,said his wife had not seena doctor since July, when she had twins. They had sevenchildren living. On Monday shecomplained of pain, but refusedto see a doctor. On Wednesdayshesaid shewould get up to bath the twins, and he went to get a doctor.On his return he found his wife dead and the children crying aroundher. Major Whitehouse (the coroner): 'Did she have enough to eat?'- 'That is the trouble with us all. 1 am out of work.' Mr Weavingsaid he was drawing the dole, 35s.3d.a week, andwas getting 5s. from the Relieving Officer. His little girl was earning 8s. a week. He had beentaken to court for arrearsof rent, and had to pay two weeksin one. He was now paying three weeks in two. Major Whitehouse: 'I should call it starving to have to feed nine people on £2.8s.a weekand pay the rent.' Dr Arthur Davies, patholOgist,of Harley-Street,W., said Mrs Weaving'sbody was much wasted.Deathwas due to pneumonia.He added:'I haveno doubt that had she had sufficient food this attack would not have proved fatal. It appearsthat she deliberately stinted herself and gave such food as cameinto the houseto the children,and so sacrificedher life.' Allen Hutt, (38), p. 153.

Escape

document13

An American investigator asked unemployedmen in Greenwich in 1931-2how they filled their dayswithout work.

94

Documents 'What attracts you to the cinema?'... 'The pictures help you live in another world for a little while. I almost feel I'm in the picture.' ... 'Pictures are my first choice,becausethey make you think for a little while that life is all right.' 'The pictures remind you that things go right for some folks, and it really makes you feel that things will go all right for you, too, becauseyou put yourself in the place of the actors.'... Numerousrepliesof this natureleavelittle doubtthat the continuous the desirefor new experienceand appealof the movie is that it a glimpse of other worlds and at times an escapefrom the present environment.This satisfactionis doubly important to the man whose world is severelylimited becauseof the smallnessof incomeor the total absenceof earnedincome becauseof unemployment.At work and at home his activity and thought must run in rather straight grooves. Very often thesegroovespassthrough somevery unpleasantterritory. But at the cinema, all of these limitations drop away and for three hours he rides the plains of Arizona, tastesthe night life of Paris or New York, makes a safe excursion into the underworld, sails the seven seasor penetratesthe African jungle. Famouscomediansmake him laugh and forget his difficulties and discouragements. It does not surprise me that the cinemasnoticed very little falling off of trade in Greenwich or in other communitiesmore subject to unemploymentduring the severestseasonsof that scourge.

satisfie~

E.W. Bakke,(31) pp. 181-3.

Family life

document 14

In a series of articles originally published in The listener in 1933, workers described theeffects of unemploymentupon them. Here the pessimisticview of the consequences for family life is 'illustrated by the misfortuneofa skilled engineer,marriedfor twentyyears. In the meantimemy wife had decidedto try andearna little moneyso that we might continueto retain our home.Sheobtaineda job as house to housesaleswoman,and wasable to earna few shillings to supplement our dole income.It was from this time that the feeling of strain which was beginning to appearin our home life becamemore marked.I felt a burdenon her.... life becamemore and more strained.Therewere constantbickeringsover money mattersusually culminating in threats 95

Documents to leave from both of us. The fmal blow camewhen the Means Test was put into operation.I realisedthat if I told the Exchangethat my wife was earninga little they might reducemy benefit.If that happened home life would become impossible. When, therefore, I was sent a form on which to give details of our total income I neglectedto fill it up. For this I was suspendedbenefit for six weeks.This was the last straw. Quarrelsbroke out anew and bitter thingswere said.Eventually, after the most heartbreakingperiod of my lfe, both my wife and my son, who had just commencedto earn a few shillings, told me to get out, as I wasliving on them and taking the food they needed. H.L. Bealesand R.S. Lambert,(32), pp. 73-4.

Crime

document15

Fro1'!l the samesourcewe havethe story ofa youngman who attributes his turning to crimeas a consequence ofunemployment. Until I reachedthe age of twenty one ... I was an apprenticedelectrician.... This life was rudely smashedwhen my firm refusedto pay me a man's wage on my reachingtwenty-one.... I gave in my notice and left the firm .... Eighteenmonthsunemploymentfound me almost friendless.... I spent most of my time wanderingaround the streets or going to. the market place to listen to the cheap-jacksselling their wares. I went so often I becamefriendly with someof them.... On one of these occasions,after my remarkingon the extraordinarylow price at which he was able to sell his goods,he told me that most of his stuff was stolen.... Within a few months I had takenpart in some of their activities. There was no questionof older menleadinga young man astray. I found my life at that time impos."ible. I had nothing to look forward to. I saw myself getting lower and lower, and I took the only chance that was open to me to live .... Some of the people I meet have beencriminal almost from birth, but I estimatethat 50 per cent have drifted into burglary through bad economic conditions. . . . Strangethough it seemsI feel I am somebody,and I certainly never felt that during my two yearsof honestidleness. H.L. Bealesand R.S. Lambert,(32), pp. 248-54.

96

Documents

Political apathy

document 16

The hunger marches and violent demonstrationswhich sporadically impressedthe general public and disturbed the governmentare wellknown. But there is evidenceto showthat lethargy and political apathy were more widespreadresponsesto unemployment.An enquiry conducted for the Carnegie U.K. Trust in Glasgow, Cardiff and Liverpool revealedthesecharacteristicsamongmanyyoungmenin 1936-9. Most of the men were 21 years of age and over and, therefore,their political right to full democraticcitizenshipwas established .... Out of a total of 1490 young unemployedmen for whom information was available,only 20 ... were attachedin membershipto one or otherof the political organisations .... At least 10 per cent of the young men did not even know the namesof the various political parties.... The overwhelmingmajority of the menhad no political convictionswhatsoever. When asked why, they invariably replied, 'What doesit matter?' ... It has, perhaps,been assumedtoo readily by some that, because men are unemployed,their natural state of want and discontentmust expressitself in somerevolutionaryattitude.It cannotbe reiteratedtoo often that unemploymentis not an active state;its keynoteis boredom -a continuoussenseof boredom.This boredomwas invariably accompaniedby a disbelief which gave rise to cynicism.... Theseyoung men (products of continuousunemploy[ment] or privileged to enjoy only casual employment),were not likely to believe that their own active participation in affairs would pennanentlyaffect an order of things that had already,in the most impressionableyearsof their lives, shown itself to be so powerful and so devastating .... It was brought home, onceagain,how yearsof idlenessbring with them acquiescence. CarnegieU.K. Trust, (33), pp. 78-9.

Voluntary services

document 17

In most parts of the country, even outsidethe major depressedareas, some facilities were provided for the unemployedby local councils and voluntary organisations. The UnemployedWelfare Committeemet in the Council Chamberon 97

Documents

Tuesdaymorning.... The Social Centre continuedto be a great boon to the men, and new bagatelletableshad beensecuredthrough Councillor R.W. Thompson. A tennis table was also being provided.... Another football match had been arranged,namely the Social Club v .... The questionof the physical culture class Llandudno Wednesday cameinto the reports of both the Social and EducationalCommittees, the Rev. H. Harris Hughes agreeingwith Mr Tipton that the response for volunteersfor the classwas very disappointing.... During the discussion,it was statedthat one reasonthe classhad not succeededwas that the heavy boots worn by the men were not suitable,and it was decided that the officials should take stepsto obtain a few pairs of gymnastic shoesfor the men joining a class.... Reportingon the industrial side of the work, Mr ThomasJonesspecially commentedon the diligence of the membersof the mat-makingclass,and againinvited orders.... The position with regard to fmding allotments for the 25 new applicationsreceivedthis year was considered.... Another matter arising out of the report of the EducationalCommittee,was that of arranging a month's course for three men at Coleg Harlech.... The unemployedfigures presentedto the Committeeshowedthat the total number(male and female)was 732. LlandudnoAdvertiser3 Feb. 1934.

The LabourGovernment

document18

The orthodoxy of the Labour governmentin 1924 contrastswith the radicalism of someof the party's earlier proposals.

We shall concentrate,not first of all on the relief of unemployment, but on the restorationof trade. We are not going to diminish industrial capital in order to provide relief. ... I wish to make it perfectly clear that the Governmenthaveno intentionof drawingoff from the normal channelsof trade large sumsfor extemporisedmeasureswhich can only be palliatives.That is the old, sound,Socialistdoctrine,andthe necessity of expenditurefor subsidisingschemesin direct relief of unemployment will be judged in relation to the greaternecessityfor maintainingundisturbed the ordinary fmancial facilities and resourcesof trade and industry.(Hon. Members:'Hear,head') The Prime Minister, Ramsay MacDonald, 12 Feb. 1924, Hansard, Houseof Commons,vol. 169,cols759-60.

98

Documents

Reducinggovernmentexpenditure

document19

The possibility of stimulatingeconomicrecoveryby governmentspending was largely ruled out betweenthe wars by orthodox theory. The Treasury regularly urged governmentdepartments to restrict their expenditure. It is, therefore,clear that very drastic steps must be taken to reduce

expenditureby 1922-3. The only alternativesto reductionof expenditureare: (a) Freshborrowing which, in addition to increasingthe chargefor interest,would meanrenewedinflation, with its attendantevils, including the depressionof the £ sterlingat homeand abroad (b) Increasedtaxation. It is certain that any increasein taxationwould seriously hamper the recovery of British industry and commerceand thus ultimately intensify the difficulty of the position and would on that accountbe most vehementlyopposedby the House of Commons and by public opinion in the country; indeedwhat is requiredin order to maintain and stimulate industry and commerce- and secure full and regular employmentin the country - is a reduction of taxation and of the burdenof the state'sindebtednessas rapidly as possible,a process which can only be achieved by a continuous reduction of expenditurethroughoutthe next few years. Treasury circular to Government Departments,13 May 1921, CAB 24/123/CP2919.

Return to the gold standard

document20

Before deciding to put Britain back on gold, Winston Churchill demandeda justification for the policy from his seniorTreasuryadvisers. The most seriousargumentagainst the return to the gold standardis the feared effect on trade and employment.No one would advocate such a return if he believed that in the long run the effect on trade would be adverse. In fact everyoneupholdsthe gold standard,becausethey believe it to be rroved by experienceto be bestfor trade.... No one believestl.it unemploymentcan be cured by the dole, and 99

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palliatives like road digging. Every party - not least Labour - has preachedthat unemploymentcan only be dealtwith by radical measures directedto the economicrestorationof trade,whetherwith Europeor with the Dominions.What could be worsefor tradethan for us to have a different standardof value to South Africa and Australia ... or to Germany and the United States- fluctuating while they are stable inter se? On a long view - and it is only such views that can produce fundamental cures- the gold standardis in direct successionto the main steps towards economic reconstruction(Brussels Resolutions: Austrian and HungarianLoans: DawesScheme)and is likely to do more for British trade than all the efforts of the Unemployment [Grants] Committee. Memo by Sir Otto Niemeyer,2 Feb. 1925, quotedin D.E. Moggridge, British Monetary Policy 1924-1931, Cambridge University Press 1972,pp. 68-9.

The imperial vision

document21

Amery was the leading spokesmanof the imperial visionary school betweenthe wars. His disappointmentat the rushedelection of 1923 and the Conservativedefeatwas compoundedafterwardsby the party's decisionto abandonthe tariff protectionpolicy.

That decision does not, however, alter the permanentfacts of the situation. Unemploymentis still there.... Sooneror later the country will have to face the problem in earnest.When it does it will realise that there can be no securityfor the employmentof our industriesand the wagesof our working populationunder the monstrouslyone-sided Free Imports now in force. Apart from immediate security to our existing industries the one assuredhope of future growth and of an improvementin the national standardof well-being lies in the developmentof the resourcesof the British Empire by mutual co-operation.That co-operationmay take many forms. But Imperial Preferenceis essentialto the successof all of them. The Free Trade obsessionbars the way to any effective extensionof Empire Preferenceand Empire Co-operation. Leo Amery to StanleyBaldwin, 11 Feb. 1924,Amery PapersBox G.82 100

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We can conquerunemployment

document22

In their defenceof the Liberal plans, KeynesandHendersor.attackeda numberofbasicassumptionsoforthodoxthinking.

The objection, which is raised more frequently, perhaps,than any other, is that money raised by the State for financing productive schemesmust diminish pro tanto the supply of capital available for ordinary industry. If this is true, a policy of nationaldevelopmentwill not really increaseemployment.It will merely substituteemployment on Stateschemesfor ordinary employment.Either that, or (so the argument often runs) it must meaninflation.... In relation to the actualfacts of to-day, this argumentis, we believe, quite without foundation. In the fust place,there is nothing in the argumentwhich limits its applicability to State-promotedundertakings.If it is valid at all, it must apply equally to a new works startedby Morris, or Courtaulds, to any new businessenterprise entailing capital expenditure.... We should have to conclude that these enterprising business-menwere merely diverting capital from other uses,and that no real gain to employment could result. Indeed we should be driven to a still more remarkableconclusion.We shouldhaveto concludethat it was virtually out of the question to absorb our unemployedworkpeople by any meanswhatsoever(other than the unthinkable inflation), and that the obstaclewhich barred the path was no other than an insufficiency of capital. This, if you please,in Great Britain, who has surplussavings which she is accustomedto lend abroad on the scale of more than a hundredmillions a year. J.M. Keynesand H.D. Henderson,(87), pp. 34-5.

Under-consumption

document23

John Hobson had been criticising orthodox economictheory sincethe 1890s. In this pamphlet,he joined other membersof the Independent Labour Party to explain why an increasein masspurchasingpowerwas neededif depressionwas to be prevented.

All of us realise that the low purchasingpower of so many millions of 101

Documents wage earnersis amongthe most potentcausesof the widespreadunemploymentwhich hascursedour country during thelastsix years.Indeed, the argumentthat any reductionof wagesmust limit the homemarket and aggravateunemployment,is continually used by every body of workersin combatingwagecuts.... Low wages meana limitation of the home market. The benefitsof mass production cannot be realised to the full, becausethe power of the massesto consumefails to keeppacewith thepowerof themachines to produce.... We produce less wealth than our technical resources would enable us to create,becausethe massof the wage-earnerslack 'effective demand'.The owning classhas misusedthe advantageof its position. Too much, proportionately, of the product of industry, has beenaccumulatedand applied to the creationof fresh instruments of production: too little, proportionately,has gonein wagesto make a market for the product of thesenew machines.... The practical conclusion from this familiar analysisof the vicesof the industrial system, as we know it in this country, is that by one expedientor anotherwe must aim at a generaland simultaneousincreasein the purchasingpower of the masses. H.N. Brailsford,et ai, (83), pp. 2, 8.

Rationalisation

document 24

Ja"ow's principal industry was destroyedas part of a rationalisation programmefor the shipbuilding industry. The plight of the town was ably publicised by the local MP, Ellen Wilkinson, and the Ja"ow HungerMarch of 1936. On February 28, 1930,the first public statementwas made regarding National Shipbuilders' Security, Ltd. Its purposewas defined as being to assist the shipbuilding industry by the purchaseof redundantor obsoleteyards. To ensurethat the productive capacityof the industry was defmitely reducedthe shipbuilding equipmentwas to be scrapped and the site. of the yard was to be restricted against further use for shipbuilding.... In the early summer of 1934 it was announcedthat Palmer'shad been sold to N.S.S. The death warrant of Palmer'swas signed. The reasonfor larrow's existencehad vanishedovernight. Why was Palmer'sYard sold? It certainly was not an obsoleteyard. 102

Documents One of the biggestfirms in the industry and one which had invariably secureda fair shareon competitive tenderscannotbe classedas obsolete. It had one of the finest sites in the country.... Financial weakness,and not technicalinefficiency, decidedthe fate of the company. The rationalizationof the shipbuildingindustryhasbeencarriedthrough in that way - with an eye on the balance sheet rather than on the .... efficiency of the particularcompanies Sold by National Shipbuilding Security [sic] to a demolition firm, work was commencedto clear the site. Oxy-acetyleneburners made short work of steel girders. Cranescrashedto the ground,the machine shops were emptied, the blast furnaces and their numerouschimneys were demolished.The familiar overhead cranes vanished. For forty years,shipbuildingis exiled from Jarrow. Ellen Wilkinson (58), pp. 149, 161-3.

Industrial transference

document25

The hardeningof official attitudesagainst the relief of unemployment by public works can be seen in the Industrial TransferenceBoards oppositionto the work of the UnemploymentGrants Committee. As an essentialcondition for the growth of the will to move, nothing should be done which might tend to anchormen to their home district by holding out an illusory prospectof employment.We thereforereject as unsoundpolicy relief works in the depressedareas.Suchschemes are temporary; at the end the situation is much as before, and the financial resourceseither of the Exchequeror of the Local Authorities have been drained to no permanentpurpose.Grants of assistancesuch as those made by the UnemploymentGrantsCommittee,which help to finance works carried out by the Local Authority in depressedareas, for the temporaryemploymentof men in thoseareas,are a negationof the policy which ought inour opinion to be pursued. Industrial TransferenceBoard,Report,Cmd 3156, 1928,p. 18.

The SpecialAreasActs

document26

In his third report in November1936 the Commissionerfor England 103

Documents and Wales reviewedprogressto date and went on to commenton the inadequacyof the commission'sexistingpower.

There is evidence that the work done and the measuresinitiated are proving helpful to the Areas and that their benefitswill in many cases be increasinglyfelt. Nevertheless,it has to be admittedthat no appreciable reductionof the numberof thoseunemployedhasbeeneffected. This, however, was not to be looked for seeingthat the SpecialAreas Act makesno direct provision for this purpose.Suchincreasedemployment as is likely to result from the operation of the many schemes initiated will prove altogetherinsufficient, in the absenceof a spontaneousgrowth of new industriesand expansionof existingindustries, to offset the releaseof labour brought about by increasedmechanisation and rationalisation.... The all-important question that arises from a study of the results obtained from its administrationis whether the time is not now ripe for a second experimentwhich, whilst continuing work already embarked upon, would make an attempt to deal more directly with the problem of unemployment.... My recommendationis that by means of State-providedinducementsa determinedattemptshouldbe made to attractindustrialiststo the SpecialAreas. Third Reportof the Commissionerfor the SpecialAreas (Englandand Wales), Cmd 5303,1936,pp. 3-4,10.

Unemploymentinsurance

document27

The UnemploymentAct of 1934 was the twenty-first Act to deal with unemploymentinsurance since 1920, an indication of the diffiCUlty administrationsexperiencedin copingwith the depression.

I regard this as one of the most comprehensiveand constructivepieces of social legislation which have been introduced into this House for many generations .... The Bill is basedon the fundamentalprinciple ... that thereshould be, on the one hand,a contributoryinsuranceschemecoveringas much of the field as possible,and that outside insurancethe State should assumea generalresponsibilityfor the relief of the able-bodiedindustrial unemployed.... First of all, let me put to the House the three broad principleson which Part 1 - insurance- is based.... 104

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1. That the scheme should be financed by contributions from the workers,employersand the state; 2. That benefit shouldbe dependent upon contributions; 3. That the schemeshould bemaintainedon a solventandself-supporting basis.... I will now deal ... with Part II of the Bill, and I will attempt... to explain the three principles which underlie it ... first, that assistance should be proportionate to need; secondly, that a worker who has beenlong unemployedmay require assistanceother than, and in addition to, cash payments,and, thirdly, that the State should accept general responsibility for all the industrial able-bodied unemployed outsideinsurance. The Minister of Labour, Sir Henry Betterton,30 Nov. 1933,Hansard, vol. 283, cols 1073, 1077-8,1087.

The middle way

document 28

Macmillan analysedthe growing intimacy betweenthestateandindustry and the nature of large modern corporations. He concludedthat full employmentand future prosperity would inevitably require stateplanning and fiscal and monetarymanagement.

The facts I have beenable to bring together... show that it is impossible to regard the real issue of today as being that of a struggle between the theories of free competition and planned production- between laissez-faire and State intervention. While political parties- like Tweedledum and Tweedledee- have been conducting the theoretical argument,the two systemshave in practice merged.Competition and planned production, State enterpriseand private enterprise,exist side by side.... I believe it to be politically wise and economically urgent for us now to devise a comprehensivesystemof national planning into which the operationsof all the separateschemesof partial planning, whether under National, Public Utility, Municipal or Private ownership and control, should be made to fit as integral parts of a coherentwhole. Harold Macmillan (90), pp. 173-4,186-7.

105

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'A Plan for Britain'

document29

Interwar ideas on state planning and managementfonned the basis of most wartime reconstructionproposals. Picture Post published 'A Plan for Britain' early in 1941, including an article by ThomasBalogh, now Lord Balogh, on the need to provide 'The first necessityin the NewBritain: work for all'. Why then were we faced in a comparativelyshort spaceof time after 1918 by a vast unemploymentproblem?The fact is that in 1918 the sufferings of four years producedan urgent desire to be rid of everything that war meant,and led to a demandfor an instant abolition of all Statecontrols,howeverwell they had functioned.... It was every man for himself, whetherhe wantedto fmd a job, or whether he wanted to invest money in the work of reconstruction which caused the postwar boom. Nobody could bother to plan the supply of labour for this work. Nobody could botherto plan the work itself on a nationalscale.... And afterwards,whenthe frenzy of speculation had exhausteditself, camethe crash.... Now, we must learn the lesson of what happenedlast time and decide firmly that it shall not happenagain.... Reconstructionmust be plannedexactly as war productionoughtto be planned. Picture Post,4 Jan.1941,pp. 10-12.

Never again

document30

After the SecondWorld War both leading political parties committed themselvesto the maintenanceoffull employment. Labour ... declares that full employment is the corner-stoneof the new society. The Labour Government has ensured full employment and fair sharesof the necessitiesof life. What a contrastwith pre-war days! In those days millions of unwantedmenekedout their lives in needof the very things they themselvescould have made in the factories thu were standingidle. Even when at work each man often feared that the next pay-day would be the last. The wife fearedthat the housekeepingmoneywould 106

Documents suddenly vanish. Often it did. Her husbandwas handedhis cards,he drew the dole, then she had to makedo with a fraction of her previous money - and despiteall her sacrificesthe children suffered.... Whatever our Party, all of us old enough to rememberare in our hearts ashamed of those years. They were unhappy years for our country and our people.They mustnevercomeagain. Labour Party manifesto, Let Us Win Through Together, 1950, repr. in F.W.S. Craig, British General Election Manifestos 1918-1966, Political ReferencePublications,1970,p. 127.

107

Bibliography GENERAL POLITICAL, SOCIAL AND ECONOMIC HISTORY

1 Abrams, M., The Condition of the British People 1911-1945, Gollancz,1946. 2 Aldcroft, D.H. The Inter-War Economy:Britain 1919-39,Batsford,1970. 3 Alford, B.W.E. Depression and Recovery? British Economic Growth 1918-1939,Macmillan, 1972. 4 Ashworth W. An Economic History of England 1870-1939, Methuen,1960. 5 Bagwell, P.S. and Mingay, G.E. Britain and America: a study of economicchange1850-1939,Routledge& KeganPaul, 1970. 6 Deane,P. and Cole, W.A. British EconomicGrowth 1688-1959, CambridgeUniversity Press,2nd edn,1967. 7 Glynn, S. and OxboITow, J.Interwar Britain: a social and economic history, Allen & Unwin, 1976. 8 Halsey,A.H., ed. Trends inBritish Societysince1900,Macmillan, 1972. 9 Mathias,P. The First Industrial Nation, Methuen,1969. 10 Mitchell, B.R. and Deane,P. Abstract ofBritish Historical Statis· tics, CambridgeUniversity Press,1971. 11 Mowat, C.L. Britain Betweenthe Wars 1918-1940,Methuen, 1955. 12 Pollard, S. The Developmentof theBritish Economy1914-1967, Arnold, 2nd edn, 1969. 13 Richardson,H.W. EconomicRecoveryin Britain 1932-9,Weidenfeld & Nicolson,1967. 14 Sayers,R.S. Economic Change in England 1880-1939,Oxford University Press,1967. 15 Stevenson,J. Social Conditions in Britain between the Wars, Penguin,1977. 16 Taylor, A.J.P. English History 1914-1945,Oxford University Press,1965. THE DEPRESSIONAND ITS SOCIAL CONSEQUENCES

17 Beveridge, W.H. Full Employmentin a Free Society,Allen & Unwin, 1944. 18 Booth, A.E. and Glynn, S. 'Unemploymentin theinterwar period: a multiple problem',Journalof ContemporaryHistory, x, 1975. 19 Department of Employment and Productivity British Labour StatisticsHistorical Abstract1886-1968,HMSO, 1971.

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20 Elliott, B.J. 'The social and economiceffects of unemployment in the coal and steel industries of Sheffield between 1925 and 1935',unpublishedthesis,University of Sheffield MA, 1969. 21 Garraty, J.A. 'Unemployment during the Great Depression', Labor History, xvii, 1976. 22 Haybum, R.H.C. 'The responsesto unemploymentin the 1930s with particular referenceto south-eastLancashire',unpublished thesis,University of Hull PhD, 1970. 23 Hayburn, R.H.C. 'The Voluntary OccupationalCentreMovement 1932-39,'Journal of ContemporaryHistory, vi, 1971. 24 Haybum, R.H.C. 'The police and the hunger marchers',InternationalReviewofSocialHistory, xvii, 1972. 25 Mannheim, H. Social Aspectsof Crime in England betweenthe Wars, Allen & Unwin, 1940. 26 Pope, R. 'The unemploymentproblem in North East Lancashire 1920-1938',unpublishedthesis,University of LancasterM Litt, 1974. 27 Runciman,W.G. Relative Deprivation and Social Justice, Routledge & KeganPaul, 1966. 28 Stevenson,J. and Cook, C. The Slump: society and politics during the Depression,Cape,1977. 29 Turnbull, M. 'Attitude of government and administration towards the hunger marchesof the 1920s and 1930s',Journal of SocialPolicy , ii, 1973. Primary sources 30 Astor, J.J. et al. The Third Winter of Unemployment,P.S.King, 1922. 31 Bakke,E.W. The UnemployedMan, Nisbet, 1933. 32 Beales, H.L. and Lambert, R.S., eds., Memoirs of the Unemployed,Gollancz,1934. 33 CarnegieU.K. Trust Disinherited Youth,Constable,1943. 34 Cole, G.D.H. and Cole, M.1. The Condition of Britain, Gollancz, 1937. 35 Greenwood,W. Loveon theDole, Cape,1933;repr.Penguin,1969. 36 Hannington,W. UnemployedStruggles1919-1936,Lawrence& Wishart, 1936;repr.1977. 37 Hannington,W. The Problem of the DistressedAreas, Left Book Club, Gollancz,1937. 38 Hutt, A. The Condition of the Working Class in Britain, Martin Lawrence,1933. 109

Bibliography 39 Jahoda,M. et al., Marienthal: the Sociographyofan unemployed community,1933,repr. Tavistock,1972. 40 Jennings,H. Brynmawr, a study of a DistressedArea, Allenson, 1934. 41 M'Gonigle, G.C.M. and Kirby, J. Poverty and Public Health, Gollancz,1936. 42 Ministry of Health Investigation in the Coalfields of South Wales,Cmd 3272,1929. 43 Ministry of Health Effects of Existing EconomicCircumstances on the Health of the Communityin Durham,Cmd 4886,1935. 44 Ministry of Health Reports on Maternal Mortality, Cmd, 5422 and 5423, 1937. 45 Ministry of Labour Reportsof Investigationsinto the IndustirfJl Conditionsin Certain DepressedAreas,Cmd 4728,1934. 46 Orwell, G. The Road to Wigan Pier, Left Book Club, Gollancz, 1937.repr. Penguin,1962. 47 Orwell, G. 'The Road to Wigan Pier Diary' in CollectedEssays, JournalismandLetters,vol. 1, Seeker& Warburg,1968. 48 Owen, A.D.K. A Report on Unemploymentin Sheffield,Sheffield Social SurveyCommittee,1932. 49 Owen,A.D.K. 'The socialconsequences of industrial transference', SociologicalReview,xxix, 1937. 50 Pilgrim Trust, Men Without Work, Cambridge University Press, 1938. 51 Priestley, J.B. English Journey, Heinemann/Gollancz 1934; repr. Penguin,1977. 52 Rowntree,B.S. Povertyand Progress,LongmansGreen1941. 53 Royal Commissionon the Distribution of the Industrial Population (Barlow Report),Cmd 6153,1940. 54 Ruck, S.K. 'The increaseof crime in England',Political Quarterly, iii,1932. 55 Save the Children Fund, Unemploymentand the Child, LongmansGreen,1933. 56 Titmuss,R.M. PovertyandPopulation,Macmillan, 1938. 57 Tout, H. The StandardofLiving in Bristol, Arrowsmith, 1938. 58 Wilkinson, E. The Town that was Murdered, Left Book Club, Gollancz,1939. ECONOMIC AND SOCIAL POLICY

59 Addison,P. The Roadto 1945,Cape,1975. 60 Bruce, M. The Coming of the Welfare State, Batsford, 4th edn, 1968. 110

Bibliography 61 Cole, G.D.H. A History of the Labour Party from 1914, Routledge& KeganPaul, 1948. 62 Constantine,S. 'The fonnulation of British policy on colonial development 1914-1929', unpublished thesis, University of Oxford D Phil, 1974. 63 Drummond,I.M. British EconomicPolicy and the Empire 19191939,Allen & Unwin, 1972. 64 Drummond,I.M. Imperial EconomicPolicy 1917-1939,All~n & Unwin,1974. 6S Fraser,D. The Evolution of the British WelfareState,Macmillan, 1973. 66 Garside, W.R. 'Juvenile unemployment and public policy', EconomicHistory Review,xxx, 1977. 67 Gilbert, B.B. British SocialPolicy 1914-1939,Batsford,1970. 68 Hancock,K.J. 'The reductionof unemploymentas a problemof public policy, 1920-1929',EconomicHistory Review,xv, 1962; repr. in (77). 69 Howson, S. DomesticMonetary Managementin Britain 19-1:938, CambridgeUniversity Press,1975. 70 Howson, S. and Winch, D. The Economic Advisory Council 1930-9,CambridgeUniversity Press,1977. 71 Lyman, R.W. The First Labour Government,Chapman& Hall, 1957. 72 MacKay, D.I. et al. 'The discussionof public works programmes, 1917-1935: some remarkson the Labour movement'scontribution', InternationalReviewofSocialHistory, xi, 1966. 73 McKibbin, R. 'The economicpolicy of the secondLabour government 1929-1931',PastandPresent, lxviii, 1975. 74 Marwick, A. 'Middle Opinion in the '30s: Planning,Progressand Political Appeasement', English Historical Review,lxxix, 1964. 7S Moggridge, D.E. British Monetary Policy 1924-1931,Cambridge University Press,1972. 76 Nevin E. 'The origins of cheapmoney, 1931-1932',Economica n.s. xx, 1953,repro in (77). 77 Pollard, S., ed. The Gold Standard and EmploymentPolicies betweenthe Wars, Methuen,1970. 78 Sayers,R.S. 'The return to gold, 1925' in Studiesin the Industrial Revolutioned. L.S. Pressnell,Athlone Press,1960; repro in (77). 79 Skidelsky,R. Politiciansand the Slump: the Labourgovernment 1929-31,Macmillan, 1967. 80 Stewart,M. Keynesand After, Penguin,1967. 81 Winch, D. EconomicsandPolicy, Hodder& Stoughton,1969. 111

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Primary sources 82 Amery, L.S. The Forward View, Bles, 1935. 83 Brailsford, H.N., Hobson, J.A., CreechJones,A. and Wise, E.F. The Living Wage,ILP, 1926. 84 Craig, F.W.S. British General Election Manifestos1918-1966, Political ReferencePublications,1970. 85 Final Report of the Royal Commissionon Unemployment1nsurance,Cmd 4185, 1932. 86 Hobson,J.A. The Economicsof Unemployment,Allen & Unwin 1922,rev.edn,1931. 87 Keynes, J.M. and Henderson,H. Can Lloyd Georgedo it?, The Nation and Athenaeum,1929. 88 Labour Party How to ConquerUnemployment,1929. 89 Liberal Party We Can ConquerUnemployment,Cassell,1929. 90 Macmillan, H. The Middle Way, Macmillan, J938. 91 Memoranda on Certain Proposals relating to Unemployment, Cmd 3331,1929. 92 Report of the Committeeon Finance and Industry (Macmillan Committee),Cmd 3897,1931. BIOGRAPHIES AND MEMOIRS

93 Amery, L.S. My Political Life, vols 2 and 3, Hutchinson 1953, 1955. 94 Bullock, A. The Life and Times of Ernest Bevin, vol. 1, Heinemann,1960. 95 Campbell,J .LloydGeorgeTheGoat in the Wilderness,Cape,1977. 96 Dalton, H. The Fateful YearsMemoirs 1931-1945,Muller, 1957. 97 Felling, K. The Life ofNeville Chamberlain,Macmillan, 1946. 98 Greenwood,W. There wasa Time, Cape,1967. 99 Harris, J. William Beveridge,Oxford University Press,1977. 100 Harrod,R. The Life ofJohn Maynard Keynes,Macmillan, 1951. 101 Jones,T. Whitehall Diary, vols 1 and 2, Oxford University Press, 1969. 102 Macmillan,H. Windsof Change1914-1939,Macmillan,1966. 103 Marquand,D. RamsayMacDonald,Cape,1977. 104 Middlemas, K. and Barnes,J. Baldwin, Weidenfeld & Nicolson, 1969. 105 Pelling, H. WinstonChurchill, Macmillan, 1974. 106 Rowland,P. Lloyd George,Barrie & Jenkins,1975. 107 Skidelsky,R. OswaldMosley,Macmillan, 1975. 112

Bibliography 108 Snowden,P. An Autobiography,vol. 2, Nicholson & Watson, 1934. 109 Taylor,AJ.P.Beaverbrook,Hamish Hamilton, 1972. 110 Young, G.M. StanleyBaldwin, Hart-Davis,1952.

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Index Acts of Parliament: AnomaliesAct, 1931, 24,67 Coal Act, 1938, 71 Coal Mines Act, 1930,65 Colonial DevelopmentAct, 1929, 58 Cotton Industry Acts, 1936 and 1939,71 Empire SettlementAct, 1922, 55, 65 Export Credits Acts, 1920 and 1921,52,63 FinanceAct, 1935, 70 Import Duties Act, 1932,71 Safeguardingof IndustriesActs, 1921,1925and 1926,62 SpecialAreas Acts, 1934, 1936 and 1937,70,103-4 Trade Facilities Acts, 1921, 1922 and 1924,52,63 UnemployedWorkmen'sAct, 1905, 45 UnemploymentInsuranceActs and Orders,1911, 1920,1921, 1924. 1927,1930,1931and 1934,2, 28-9,45,53-4,66,68,72, 104-5 Africa, 10, 12,55,58 Allotments, 37,45,98 America, Southand Central, 10, 12,66 Amery, L.S. (1873-1955),54-5, 57-8,61,73,82,100 Anti-wastecampaigns,48, 79 Apprenticeships,24, 96 Asia, 10, 12,86 Australia, 66,100 Baldwin, S. (1867-1947),46,49,51, 55,57-8,61-5,67,81-2,100 Bank of England,50, 65 Bank rate, 50-1, 68-9 Bankers'Industrial Development Corporation,65 Barrow, 19 Beaverbrook,Lord (Max Aitken, 1879-1964),57-8,61 Beveridge,W.H. (1879-1963),83 Bevin, E. (1881-1951),60-1 Bilateral tradeagreements,72-3

Blackburn, 18-19 Boothby, R. (b. 1900),76,82 Bristol, 26 British Medical Association,30 British Union of Fascists,42,73-4, 82 Budgets,48-9, 59, 63-4, 66-9,71, 76 Seealso Fiscal policy Building indust~y indust~y and workers,5, 7-8, 15,24-5,89 Canada,66 Casualwork, 5, 25-7, 29, 37, 90-1 Chamberlain,J. (1836-1914),54, 73 Chamberlain,N. (1869-1940),57-8, 67,71-2,81-2 Cheapmoney,69, 75-6 Chemicalindustry and workers, 1, 8, 15,25,77 Children, 24, 28-32, 34-5,40,92-3, 107 Churchill, W.S. (1874-1965),49-50, 56,58,63-4,80-1,83,99 Cinemas,1-2,37,95 Clothing, 23, 27,45,85,90 Coal industry and miners,6, 8-14, 18-21,24-5,29,46,65,71,85, 87,89 Colonial development,55, 58, 63, 73 Committeeof Civil Research,61 Committeeon EconomicInformation, 75 Communists,42 Conservativeparty and governments, 46,57-8,61-4,67,71,81,83 100 Consett,19 Consumergoodsindustries,1, 7, 15, 19,25,76-7 Cornwall, 19 Cotton industry and workers,6-14, 18-19,23-5,29,40,46,65,71, 73,86,89 Crime, 17,41-2,43,96 Crook, 18-20 Cumberland,35, 70, 79 Cunliffe-Lister, P. (1884-1972),57 Deflation, 49-50,56,63,69

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Dependants'allowances,28, 30, 54, 72,82 Depressedareas,2,17-22,26,32-6, 38,41-2,65,70,75-6,87-8, 103 Deptford, 18 Derating, 20,63-4 Devaluation,11,51,60-1,67,76 Developmentfund of 1909,45 Dock workers,5, 8, 24-5, 89 Durham, 18, 21, 32, 34-5, 72

1929,59,61,82 1931,71 1935,70,76,82 1945,83 1950,107 GenoaConference,51 Germany,6, 11-12,15,51,62,71,75, 78,100 Glamorgan,32 Gold standard,seeMonetaryPolicy Governmentexpenditure,47-9, 52-3, 56-7,60,63-4,67-70,80,99 Seealso Fiscal policy, Public works EconomicAdvisory Council, 61-2 Economicgrowth, 2,14-16,76-7,84 GovernmentInstructionalCentres,35 Greenwood,W. (1903-1974),37, 85 Economicplanning, 75-6, 83,105-6 Seealso Love on the Dole Electrical industry and workers, 1, 15, 19,77,89 Empire,12, 21, 55,57-8,60-1,71-4, Halifax, 19 Hannington,W. (1896-1966),33, 78, 100 42-3,90 Empire EconomicUnion, 57 Health, 2,4,17,23,30-6,43-4,79, Empire FreeTrade,57 82-3,92-3 Empire IndustriesAssociation,57,73 Henderson,H. (1890-1952),59,101 Empire Marketing Board, 58, 73 Hobson,J.A. (1858-1940),56,60, Engineeringindustry and workers,6, 101-2 8,24,89 Homemarket,7-8, 11-13,15,50,56, Europe,6-8,10,12,51,100 60,63,71,74,76,102 ExchangeEqualisationAccount, 68 Housing,1-2, 19, 21-2, 33,40,76,83 Exports,6-13, 46-8,50,52-3,55, 58,60,62-6,68,70-1,74,77-8, Hungermarches,42,97, 102 86-7 Imperial EconomicConference1932, 71,73 Families andfamily size, 1, 3, 17, 22, Imperial visionaries,54 -5, 57-8, 24,26,29-30,39-41,43,76, 60-1,73-4,78,100 95-6 First World War, 10,13,46-9,51,79 IndependentLabour Party, 57, 60,101 Fiscal policy, 56 -7, 59-60, 69, 74-5, India, 11-13, 73, 86 Industrial productivity and efficiency, 78, 105 Seealso Budgets,Government expenditure,Public works 11-15 Food and diets, 1,26-8,30-6,43-5, Industrial TransferenceBoard, 21,65, 55,58,62,73,77,83,91-2,94 70, 103 Inflation, 11,47,49,59,63,99,101 Foreign policy, 51-2, 62,72,77 France,6,12,15,51,72 InternationalMonetary Fund, 77 Free trade, 11,55,58,62,71-2,100 Investment,6-8,10,13,20,22,49, Seealso Tariffs 55-6,59-60,74-6,78,80 Seealso Governmentexpenditure, Public works Gambling, 37 Iron and steel industryand workers, Gateshead,41,70 6,8-14,16,18-19,24-5,29,46, GeneralAgreementon Tradeand 62,71,85,89 Tariffs, 77 GeneralElections: Japan,10-11,13, 71, 86 1923,47,55,100

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Jarrow,2,19-20,32,36,38,42, 102-3 Kent, 21 Keynes,J.M. (1883-1946),56,59-60, 67-8,74-5,78,83,101

Morale, 4,36-44 Mosley, O. (b. 1896),42,56-7,60, 62,64-5,73-4,81-2 Motor car industry and workers, 1, 15, 19,77,89 National Council for Social Services, 45 National debt,48-9,99 National government,67-76, 83 National ShipbuildersSecurity Ltd., 65,102-3 National UnemployedWorkers Movement,42-3,90 Netherlands,11 New Deal, 74, 78 New Party, 82 New Zealand,66 Norman,M. (1871-1950),50 Norwich,41 Northumberland,21, 32 Nutrition, seeFood

Labour exchanges,22-3, 37,45,65-6 Labour party and governments,32,42, 46-7,49,51-2,54,56-8,60-1, 64-8,74,76,81-3,98,100, 106-7 Lancashrre,13,21,23,40,73, 79,86 LancashrreCotton Corporation,14,65 Law, A. Bonar (1858-1923),46 Leicester,18 Liberal and DemocraticLeadership,76 Liberal Industrial Inquiry, 59 Liberal party. 47,56-7,59-61,64, 74,101 Lincoln, 31 Liverpool, 18 Llandudno,17, 97 -8 Lloyd George,D. (1863-1945),46, 48-9,53,56,59-60,64,74-5, 81-2 London,18-21,26-7,33,36-7,50 Love on the Dole, 22, 24, 38, 85 Luton, 21

Orthodoxeconomics,8,46-8,54,57, 61,64-5,67-9,75-8,80-1,101 Orwell, G. (1903-50),20, 33, 37-9, 41,43,90-1 OverseasSettlementOffice, 65 Oxford,21

MacDonald,J.R. (1866-1937),46,51, 61-2,67,72,81-2,98 Macmillan Committeeon Financeand Industry, 60 Macmillan, H. (b. 1894),74,76,78, 82, 105 May Committeeon National Expenditure, 67,79 Meanstest, 35,40-1,68,72-3,96 Melchett, Lord (Alfred Mond, 18681930),57,82 Mental strain,4,34,36-8,43-4, 93-4 Merseyside,26 Merthyr Tydfil, 19-20 Middlesex, 32 Migration, 18, 20-2, 55, 58, 65,70, 73,88 Monetarypolicy, 11,46,49-51,56-7, 60-3,66-9,71-5,78,80,82, 99-100,105

Pilgrim Trust, 18,23,26-30,33,35, 39-41,89,93-4 Poland,11 Political and EconomicPlanning,76 Political militancy, 17, 37,42-3,53, 79,97 Poor law, 28, 31, 36,38-9, 45, 53, 68,72 Population,distribution of, 21 Poverty, 1, 25·-31, 34,41,43,82,85, 90 Preston,35 Prices,1, 7-8,14,28,47-9,62-3, 73, 76 Priestley,J.B. (b. 1894),17-18,20, 85-6 Privateenterprise,47, 49,52,55,59, 61,63-4,69,75,80,105 Public assistance,28,39,68,72-3 Public works, 45, 52-3, 56, 59-60, 64,69,74-5,79-80,100,103

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Seealso Fiscal policy, Government expenditure

Rates,20, 36, 63 Rationalisation,14,65,70-1,76, 102-4 Rearmament,16,69,76, 87 Redruth,19 Rents,27-8 Reparations,51,62 Retail trade, 1, 15, 20, 89 Rhondda,18,20,22,39 Rotherham,72 Rothermere,Lord (H.S. Harmsworth, 1868-1940),58 Rowntree,B.S. (1871-1954),26, 28, 31,91-2 Royal Commissionon Unemployment Insurance,1932,72 Russia,51,62,71,75,78

Seealso Budgets Thomas,J.H. (1874-1949),57,62 Tradeunionsand TUC, 3, 22, 25,42, 56,61,67,84 Trading estates,70 Treasury,48,50,55,58,64,68-70, 75,78-81,83,99

Unemployed: Age of, 24 Elderly, 22, 24 Juvenile,24, 30, 39 Skills of, 25 Tradesof, 24-5 Women, 23-4,67 Unemployedclubs, 17, 37-9,45, 97-8 Unemployment: before 1914,2-5 cyclical 5, 6-9,15-17,19,21,46, 54, 78 Salisbury,17 duration of, 3 Savethe Children Fund, 31, 35 extent of, 2-3, 5, 7-8,15-16,84, Scandinavia,11 88 Schoolmealsand milk, 28, 31, 36 frictional,S, 15, 46 Seamen,8, 25, 89 long-term,4,5,9,15,19-20, SecondWorld War, 16, 77,79,83, 23-7,29,33-4,36,38,40, 106 72,82,89 Semi-skilledworkers,3, 25, 29, 39 personal,S,15, 23 Sheffield, 26, 31, 33, 37,41 regionalratesof, 17 -20, 87-8 Shipbuildingindustry and workers, seasonal,S,15, 25 2,6-14,16,18,20,24-5,29,46, structural,S,9-16,19,25,46, 65,87,89 70, 78 Short-time,20, 26 UnemploymentAssistanceBoard, 72 Skilled workers,3, 25, 29, 38 UnemploymentGrantsCommittee, Snowden,P. (1864-1937),52,62-3, 52,64,103 Unemploymentinsuranceand 65,67-8,81 South Africa, 100 assistance,2, 3, 27-31, 35-43,45, Southampton,26 53-4,63,66-9,72-3,79,82-3, 91,96, 104-5 Spain, 11 UnemploymentInsuranceStatutory SpindlesBoard, 14 Committee,72, 83 Sterling area,72 United Empire Party, 58 Stockton-on-Tees,27, 33 Strachey,J. (1901-1963),57 United States,6-8, 10-12, 15,49, 51-2,55,57,71-2,74,78-9,86, Strikes,48, 63 Suicides,34 100 Unskilled workers, 15,21,25,29-30, Sweden,78 39 Tariffs, 11,55,57-8,62,67,71,73, Voluntary services,17,28,37-9,45, 76,80,82,100 Taxation,47-9,59,63,67,99 79,97-8

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Wages,1,6,7,11,20-1,23-7,29-30,Work ethic, 38-9, 43 33,39,46,48-9,56,59-60,63, Workers'EducationalAssociation,45 World Bank, 77 68, 74,79, 102 War debts,51 World EconomicConference1927,62 Welfare services,2,4,21-2,27-8,30, World EconomicConference1933,72 36,43-4,56,74,79,82-4 Wigan, 20,43 York,26 Wilkinson, E. (1891-1947),102 Women,23-4, 31-2, 34-5,40-1,67, 93-4

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