9781804940983 by Smakprov Media AB

Sing As We Go

‘Heffer once more treats us to his vast knowledge and trenchant opinions on almost every aspect of the nation’s state, from high politics to crime and popular entertainment. It is an astonishing achievement of narrative history.’

Nigel Jones, The Spectator

‘The interwar period has not been written about in this way before, and Heffer’s mammoth, magisterial book fills an important gap. It is an extraordinary achievement.’

Jane Ridley, Literary Review

‘Heffer has created a magnificently detailed portrait of a febrile Britain, largely ignorant of the horrors about to befall it. Throughout this book lurks the spectre of the eternal return.’

Jonathan Meades, The Daily Telegraph

‘A masterful portrayal of political, social and cultural upheaval between the wars.’

Daily Mail

‘Excellent, thorough, detailed and combatively argued.’

The Sunday Times

‘An epic new history of the nation between the wars . . . [it] is essential reading for anyone who wants to understand the forces that have shaped our land since the early 19th century.’

Leo McKinstry, Daily Express

‘Heffer’s knowledge and his deep research are impressive. Certain details shine out, bringing the interwar years vividly to life . . . This is a richly persuasive portrait of interwar Britain and its politicians, reminding us just how hard it is for anyone to run a country.’

Ysenda Maxtone Graham, Daily Mail

‘It is hard to imagine anyone better qualified to tell the story of the 1920s and 1930s . . . This is a superb book, and will surely be seen as the definitive history of the pre-war years.’

A. N. Wilson, The Critic

‘A monumental chronicle of Britain . . . meticulously researched [and] dramatic.’

Geographical Magazine

‘Heffer reappraises the too-often lazy narrative of the “low, dishonest decade” and the “guilty men” with the hitherto neglected or underweighted evidence.’

The Spectator, Books of the Year

‘The fourth volume in his mighty series . . . is a monumental achievement. [Heffer] covers everything from cars and cinemas to flappers and dance halls, and is especially good on Westminster politics, narrated with dry wit and forensic detail.’

The Sunday Times, Best History Books of 2023

‘An epic study that combined ground-breaking research and stylish prose.’

Daily Express, Books of the Year

about the author

SIMON HEFFER read English at Cambridge University and then took a PhD in History there. In a long career in Fleet Street he was deputy editor of The Spectator and of The Daily Telegraph. Since 2017 he has been Professor of Modern British History in the Humanities Research Institute of the University of Buckingham and a columnist for the Daily and Sunday Telegraph. His other books include Moral Desperado: A Life of Thomas Carlyle, Like the Roman: The Life of Enoch Powell, Nor Shall My Sword: The Reinvention of England, Strictly English, and, as editor, three volumes of the diaries of Sir Henry ‘Chips’ Channon. Sing As We Go completes his tetralogy of British history from 1838 to 1939, the other three volumes being High Minds, The Age of Decadence and Staring at God.

Sing As We Go

Britain Between the Wars

s imon h effer

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memory

of my dear and irreplaceable friend

Peter Ainsworth

1956–2021

‘I loved times past –Too much? I wasn’t bland: Well, that’s my view. Over to you.’

It is a good joke which, like most good jokes, should not be repeated.

Sidney Webb, on the first Labour government, 1924

How can we help ourselves? We swirl around in a vortex of beastliness.

Nicky Lancaster in The Vortex, by Noël Coward, 1924

The failure of the General Strike shows what a sane people the British are. If only our revolutionaries would realise the hopelessness of their attempt to turn the British workman into a Russian Red and the British businessman and country gentleman into an Italian Fascist! The British are hopelessly good-natured and [full of] common sense, to which the British workman adds pigheadedness, jealousy and stupidity . . . The worst of it is that the governing class are as good-natured and stupid as the labour movement.

Beatrice Webb, Diary, 18 May 1926

I should have been surprised if it had not come, but was by no manner of means pleased. I am not keen on titles anyhow and a KG would not have been too much for what I have done . . . an ordinary knighthood is almost an insult.

John Reith, on being informed of his knighthood, 20 December 1926

The ultimate resources of this country are enormous, and there is no doubt that the present exchange diﬃculties will prove only temporary.

Treasury press notice, 20 September 1931

We cannot ignore the Writing on the Wall.

Cabinet minute justifying increased defence spending, 23 March 1932

The British people no doubt have their faults. They are slow to realise the danger and slower still to change their habits or their methods even when the necessity for a change stares them in the face. But they have one supreme virtue which you will find in every class of the community. Let them once be convinced that the country is in danger, and there is no sacrifice whether of comfort, money, health, or even life itself which they will not make. When the need arose in 1931, the sacrifices which were demanded then from our people were accepted by them cheerfully, and they have since been borne with unexampled courage and patience. Their truest reward is that they saved their country.

Neville Chamberlain, Budget speech, 17 April 1934

Take to the south and sing morning and night, I see a better day coming in sight.

Sing as we go, and let the world go by, Singing a song we’ll march along the highway. Say ‘Good-bye’ to sorrow There’s always tomorrow to think of today.

‘Sing As We Go’, by Harry Parr-Davies, 1934

Is it not positively horrible to think that the fate of hundreds of millions depends on the man and he is half mad?

Neville Chamberlain on Adolf Hitler, letter to his sister, 3 September 1938

To take offensive against Germany now would be like a man attacking a tiger before he has loaded his gun.

The Chiefs of Staff of the Armed Forces to Leslie Hore-Belisha, 24 September 1938

Mr Chamberlain descended into the thieves’ kitchen as though he were walking into the Carlton Club.

Sir Thomas Inskip, memorandum, November 1939

PREFACE

Acknowledgements xi

Introduction: The Legacy of War 1

In the four decades between the rise of political consciousness that manifested itself in Chartism, and the return of William Ewart Gladstone to Downing Street in 1880 after his Midlothian Campaign, when he sought to prove the depravity of Lord Beaconsfield’s administration by illustrating its failings in foreign policy, British life changed almost beyond recognition. Although poverty, disease, ignorance, squalor and injustice were far from eliminated, they were beaten back more in those forty or so years than at any previous time in the history of Britain. This was despite, and because of, a population growing faster than at any previous time in the country’s history. A nation that might have been overwhelmed by industrial change, rapid expansion and social upheaval instead saw the challenges of modernisation and embraced them.

part i:

FROM THE WAR TO THE STRIKE

1. A Turbulent Peace 11

2. The Old Gang 53

3. The Battle for Ireland 85

4. The Rise of Labour 139

5. A Voice for the Nation 189

6. An Inevitable Strike 215

part ii: FROM THE STRIKE TO THE SLUMP

This book is partly the social history, partly the intellectual history, and partly the political history of those years. It is not strictly a linear account of events between 1838 and 1880: it takes the great themes of that period and seeks to use them as the illustration of a spirit, or cast of mind, that transformed a wealthy country of widespread inhumanity, primitiveness and barbarism into one containing the germs, and in some measure the evidence, of widespread civilisation and democracy. A sense of earnest, disinterested moral purpose distinguished many politicians, intellectuals and citizens of mid-nineteenth-century Britain, and drove them to seek to improve the condition of the whole of society. A constant theme in the writings of one of the period’s greatest intellectuals, Matthew Arnold, and a notion shared by many educated people of the time, pervades this book. It is that even if a state of human perfection was unattainable, its pursuit was perhaps the noblest enterprise a

7. The Twenties Roar 271

8. Safety First 333

9. Crash and Slump 359 part iii: FROM THE SLUMP TO THE ABDICATION

10. Life in the Ruins 443

11. Harry Batsford’s England 511

12. The Bomber 553

13. ‘A Young Man Lands Hatless from the Air’ 633

ACKNOWLEDGEMENTS

PREFACE

Throughout the research and writing of this book I benefited greatly from conversations with a number of my colleagues and students who offered insights, guidance or materials. Chief among these was Professor David Dilks, whose understanding of the period is probably unparalleled British historians today. But I must also thank Professor John Adamson, Professor Lord Hennessy, Professor Jane Ridley, Professor Sir David Cannadine, Professor Sir Vernon Bogdanor, Professor Michael Bentley, Dr Geraint Thomas, Professor Dan Todman, Professor Jonathan Haslam, Dr Andrew Crozier, Dr John Ranelagh and Michael Kershaw, all of whom in different ways provoked me to think more deeply about how I wrote this book, and what this highly contentious period in history actually meant.

I should also like to thank several people who made suggestions or assisted and supported my research in various ways: notably Leo McKinstry, Iona McLaren, Shannon Mullen, Laura Powell and Tim Clarke. Nick Garland very kindly let me see a copy of his father’s PhD thesis.

At Churchill College, Cambridge, Andrew Riley was supremely helpful, as were Nicole Allen and Madelin Evans. I am also grateful to staff at the Cambridge University Library, the British Library and the National Archives. It was especially helpful, also, during the period of pandemic lockdown that the Birmingham University Library had digitised the Chamberlain archive and made it accessible online, without which progress on this book would have been seriously retarded. I was also conspicuously fortunate that the late Henry Channon and his sister Georgia Fanshawe asked me to edit the diaries of their grandfather, Sir

Henry ‘Chips’ Channon, before I wrote this book, giving me a unique and extensive insight into the period.

I was blessed to have once more the co-operation and support of Nigel Wilcockson, my editor, for the ninth book we have produced together. I am also grateful to a number of his colleagues at Penguin Random House who did such a superb job in the production and promotion of so substantial and therefore challenging a book: Isabelle Ralphs, Elena Roberts, Laurie Ip Fung Chun, Lynn Curtis, Jonathan Wadman (who saved me from some gruesome errors through his superb proofreading), Vicki Robinson and Amy Musgrave, who designed the magnificent dustwrapper.

In 2010 while I was on a very happy sabbatical at Corpus Christi College, Cambridge, Georgina Capel, my peerless agent, visited and suggested over a lunch that I write High Minds. It turned out not to be a stand-alone volume but the first book in a tetralogy, of which this is the culmination. I remain grateful to her not just for triggering this train of thought and work, but for her friendship, loyalty and support (and that of her staff ) throughout the four volumes.

Even more than is usually the case, I depended heavily on the support of my beloved wife, Diana, through the three years that I worked on this book: and on the tolerance of our sons, Fred and Johnnie. My debt to them, incurred not just through the research and writing of this book but of its three predecessors, is immense.

Simon Heﬀer Great Leighs

INTRODUCTION

THE LEGACY OF WAR

the capital of the British Empire on Friday 18 July 1919, as in towns and villages around the country and the world, preparations were completed for Peace Day, a jubilation scheduled for the next day to celebrate the Allied victory in the Great War. At the insistence of the King, the celebrations took place as quickly as they could be organised after the conclusion of the Versailles peace conference three weeks earlier. Starting from the Albert Gate in Hyde Park, there would be a triumphal march by Allied forces through and around inner London. General Pershing had arrived to lead the American contingent; Marshal Foch reached Victoria Station that morning from Paris, welcomed by Sir Douglas – soon to be Earl – Haig. The men who would march were under canvas in Kensington Gardens, which became a tented city. At its maximum, the military parade would be seven miles long.1

The processional route around Westminster and Whitehall, Trafalgar Square and The Mall, was festooned with flags and bunting. The commercial streets of the West End were equally festive. ‘The great shops vied with each other in magnificence, and to describe them and their glories would need a master in the style of ancient Rome,’ The Times reported.2 ‘There was Waring’s with a big golden Pax on a white ground on one side of the street and Gilbey’s blazing defiance with a hundred flags upon the other. Peter Robinson, Bourne and Hollingsworth, DH Evans, Marshall and Snelgrove, and perfect bower[s] of greenery and geraniums . . . the crowds were perhaps thickest, and the “Ohs!” and the “Lors!” and the “Well I Nevers” most audible and heartfelt outside Selfridge’s.’

Temporary statues of soldiers, sailors and airmen lined the streets. Union flags, and a smattering of French and Belgian ones, rippled in the

warm summer breeze. In Whitehall, the War Office was covered in red, white and blue. Just to the south, on a new island in Whitehall outside the Foreign Office, a tall structure stood under a giant dust-sheet. The press were told it was a ‘rectangular pylon’, thirty-three feet tall, on three broad steps.3 It had been made of wood and plaster in ten days, painted white, and was specifically for the victory parade. During 18 July it was, to quote The Times, ‘quietly and unofficially’ unveiled, as a main saluting point for soldiers in the procession, with a Union flag laid over the altar at its top. ‘Wreaths are hung on each side, and “The Glorious Dead”, lightly carved above the plinth, is the only inscription.’ So immediately did the simplicity and understatement of the Cenotaph – designed by Sir Edwin Lutyens with the inscription devised by Rudyard Kipling – capture Britain’s imagination that an identical permanent stone version was commissioned within days, following letters to newspapers and a campaign by the Northcliffe and Beaverbrook press reflecting the public mood. As Lutyens put it, ‘the human sentiment of millions’ decided ‘that the Cenotaph should be as it now is.’4

In the ensuing weeks hundreds of thousands paid their respects at this modest monument to a massive act of carnage, leaving a carpet of flowers around it: its impact was instant, unifying and unequivocal. On the anniversary of the Armistice in November, people piled mountains of flowers against the sides of the temporary structure. Most grief had hitherto been kept private, in the British way: the outpourings at the Cenotaph, mainly by people clothed in black, were the first great public displays of grief for Britain’s terrible losses. The consequences of the death toll would be obvious for years to come, and not just at home. For much of the 1920s an unprecedented exercise continued on the former battlefields of the Western Front in France and Belgium. In earlier continental conflicts the nation’s dead had had no known graves, but were buried en masse in pits. The citizens’ army raised by Kitchener was treated differently. An estimated half-million British Empire soldiers were missing, believed dead.5 From September 1914, families with means toured the Western Front hoping to find a missing son or brother – one of the many amnesiacs lying in hospitals – or tracking down those who could describe the last moments of their lost soldier, in the hope of finding a grave. Many men had been blown to pieces or buried under tons of earth lifted by explosions. The Imperial War Graves Commission had teams exhuming bodies and seeking to identify them. This work continues,

with soldiers still being identified and buried with full military honours, in the presence of descendants if any can be traced, and their names removed from monuments to the missing. Many families in 1919 hoped their fallen soldier would be found. However, until and unless he was, the Cenotaph was the focus of their grief: which was why the simple wooden structure made such an impact.

Yet, like many innovations in what war had made an intensely conservative country, the Cenotaph nearly did not happen. David Lloyd George, who had in the 1918 election campaign been happy to call himself ‘the man who won the war’, had learned that such a symbol would be constructed in Paris for the French parade, and he would not be outdone. The War Cabinet was told on 4 July that the King, however, was uneasy about it.6 The political world’s ultimate arbiter of taste, Lord Curzon, felt the monument ‘would be rather foreign to the spirit of our people, however much in harmony it might be with the Latin temperament.’7 The centuries-old post-Reformation religious divide was evoked by Sir Alfred Mond, the First Commissioner of Works, who would be responsible for ensuring such a monument was built. He felt it was ‘a purely catholic idea’ and, being Jewish, spoke with objectivity.

Paradoxically, the French cénotaphe was instantly unpopular and removed; its British counterpart embraced the national consciousness and culture. Throughout the post-war period it, the Tomb of the Unknown Warrior (established on the second anniversary of the Armistice) and war memorials throughout the kingdom became places of pilgrimage, as people absorbed the almost incomprehensible scale and impact of the slaughter. Men who walked, or even rode in cars or on buses, past the Cenotaph for years afterwards removed their hats. Those whom the monument commemorated had not merely made the ultimate sacrifice, but the collective toll incarnated that sacrifice, unprecedented in British history. The human cost of the great victory parade was over 1.1 million dead from Britain and the Empire. It was probably the largest abnormal death toll since the Black Death, 570 years earlier. The Great War would stay lodged in the British mind, and in individual memories, throughout the 1920s and 1930s, helped by practical displays of homage to the fallen. These included trips to the battlefields, though many went as tourists rather than pilgrims: Thomas Cook was quick off the mark, offering in 1919 a luxury tour for 35gns, or more modest travel and accommodation for 9½ gns.8

Those hundreds of thousands gasping with wonder at the festooned and flower-bedecked streets included many enduring various degrees of loss: widows, orphans, bereaved parents and siblings. Thousands of towns, villages and institutions such as schools and businesses were either planning, or already building, war memorials. Peace, confirmed three weeks earlier after Versailles, was real but uneasy. ‘The three greatest empires of the Continent have fallen. It will need all the statesmanship and all the labour of the associated democracies to build up the breach. The spirit of unrest broods over the earth,’ observed The Times in its leading article on the morning of the great day.9 It was either darkly appropriate or highly ironic that the altar of the temporary Cenotaph, then in the Imperial War Museum, was destroyed by a bomb in the Second World War. The conflict just concluded would not be the war to end all war.

One of the main reasons for this was the financial turbulence that beset both the victors and vanquished as a result of the Great War. At a precipitate point in one of Britain’s most drastic periods of economic decline – 10 November 1920 – the coﬃn containing the body of the Unknown Warrior arrived at Dover. It was brought to London in some state, to be buried the next day – the second anniversary of the Armistice – in Westminster Abbey. A campaign for such a tomb had been launched in September 1919 by the Daily Express ; as with the Cenotaph, there was a French inspiration – a rumour that an unknown poilu would be buried in the Pantheon in Paris. And, as with the Cenotaph, it almost did not happen. When Colonel Wilfrid Ashley, who had founded the Comrades of the Great War association, raised the idea in the Commons in October 1919, Andrew Bonar Law, leader of the Conservative and Unionist party, rejected it. A decision had been taken for a permanent Cenotaph, which better represented sacrifice. There had been a suggestion that an unknown warrior be buried under the Cenotaph itself, but then it would no longer be an ‘empty tomb’, and its symbolism would have been compromised. The matter dropped: but in 1920 David Railton, a clergyman who had served as a padre and won the Military Cross for saving two oﬃcers under fire, asked Herbert Ryle, the Dean of Westminster, to allow such a tomb in his Abbey. Railton had first suggested the idea to General Haig, the leader of the British Expeditionary Force, in 1916, but nothing came of it; Ryle was more responsive.

The Dean asked the King what he thought; the King felt that ‘a funeral

now might be regarded as belated, and almost, as it were, reopen the war wound which time is gradually healing.’10 He suggested the Dean ask Lloyd George, who was hugely in favour, and Field Marshal Sir Henry Wilson, who suggested that if the tomb were named after an ‘unknown warrior’ it would embrace the sacrifice of all three services. The decision was taken, thanks to Lloyd George, in October 1920, rejecting ideas it was ‘too late’ or ‘sensational’. The process of selecting the body of the unknown man began at once.11 It was important everyone who had lost a relation or friend on the Western Front could believe he might be the man buried in the Abbey: so the selection process was wrapped in secrecy. On 7 November four bodies of unknown soldiers were exhumed in each of the main four Western Front battlegrounds – the Aisne, the Somme, Ypres and Arras – and brought to a chapel in St-Pol-sur-Ternoise. Brigadier-General LJ Wyatt supervised the bodies’ arrival. They were set out on stretchers in the chapel, covered with Union flags. Then, blindfolded, he touched one of the stretchers, designating the Unknown Warrior. The body was placed in a coffin; the other three were taken away and buried with full military honours. The selected soldier was taken to Boulogne, and in the castle there his remains were placed in a coffin of English oak with a crusader’s-style sword fixed to its outside. Marshal Foch saluted the coffin when it reached the quay at Boulogne, before it was carried on to the destroyer HMS Verdun, being accompanied by an honour guard from various British and Empire regiments. Stations along the railway line to Victoria were packed with people, mostly women and ex-servicemen, standing silently in homage.

Six black horses drew the Unknown Warrior’s coﬃn – by this time surmounted with a trench helmet, belt and bayonet – from Victoria to Westminster Abbey on the morning of 11 November, followed by a military procession of a thousand men. Haig, Admiral of the Fleet Earl Beatty (the First Sea Lord and Jutland veteran) and Field Marshal Viscount French, Viceroy of Ireland but also Haig’s predecessor as Commander-in-Chief of the BEF, were among the pall bearers. The cortège moved off to a nineteen-gun salute, normally reserved for field marshals. The streets from Victoria to the Cenotaph were packed and fell silent as the coﬃn passed. The King met the procession at the Cenotaph, where at 11 a.m. he unveiled the stone replica of Lutyens’s wooden edifice. The original structure had been discreetly dismantled in the spring, behind high screens to avoid upsetting a public who had become attached

to it and to its symbolism, and who had adopted it as a place of pilgrimage. There was a two-minute silence, which at the King’s suggestion had been introduced for the first anniversary of the Armistice a year earlier, in which people were heard weeping; then the King and the procession moved to the Abbey for the burial service of the Unknown Warrior. Again, there was weeping throughout, and some women fainted: it was a torrential outpouring of emotion, and according to a reporter from the Leeds Mercury, one of those present said: ‘Thank God that this can never happen again.’12 The British people, in unity, had the chance to focus their grief on one dead warrior and, in doing him honour, to honour all who had fought and died. And they had decided there would be no more wars.

As the decencies of homage for the heroes of a lost world were observed – it was three days until the Unknown Warrior’s tomb was sealed, and in that time hundreds of thousands of people filed past it and past the Cenotaph – the indecencies of political and economic mismanagement continued to disfigure the new world for which they had fought and sacrificed their lives.

The process of commemorating the dead would continue for years, as town after town and village after village unveiled their war memorials, as did schools, colleges and numerous commercial concerns, from railway companies to department stores. Armistice Day – 11 November – became a day of profound national mourning. Almost everyone would have a specific man or men in mind when pausing to reflect on their sacrifice. Human sentiment, as Lutyens put it, was indeed a vital consideration between the wars, in terms of the country’s attitude to death, and to the prospect of further conflict. The spiritualist movement, composed mostly of charlatans and patronised chiefly by the gullible (one of whom was Sir Arthur Conan Doyle, creator of Sherlock Holmes), thrived for some time. Those ‘mediums’ who genuinely thought they had connected with the dead were even more deluded than the people who consulted them. The movement contrasted with the dignity and sadness of those it sought to exploit, the bereaved of the Great War. The determination to avoid further conflict had a slower burn, creating an overt pacifist movement by the early 1930s, supercharged by international unrest and the realisation that another war was feasible. It would become a matter of serious, and perilous, consequence.

Over the next decade political discourse was, inevitably, shaped by the experience of war; but so too was the national culture, notably in

literature, music and drama. Society became divided, and not always along political or class lines, between those who wanted to return to the Britain of before the war, and those who wanted to embrace a more democratic future promised, somewhat mendaciously, by Lloyd George in his campaign for the 1918 ‘coupon’ election. The beginning of the death of deference, as shown by the many men and women who chose not to return to domestic positions after spending the war in the services, and the changed attitudes in factories and on the land, made a return to Edwardianism impossible; as did female suffrage, technological change and the pressure on governments of all shades to create some sort of welfare state. Occasional glimpses of the old order – the strength of the monarchy and the brief, ill-judged return to the Gold Standard – were largely illusory. But change in Britain was gradual, and nothing like that of European countries that had experienced defeat and revolution. The Russian Revolution made a profound impression on British public life from the King and parliament downwards, and even after the 1926 General Strike seemed to have settled the country’s class tensions, there remained many people of influence who saw Bolshevism as the prime threat to a country that, despite the upheavals of 1914–18, had maintained some sense of continuity. The growth of new industries eased the economic problems caused by the decline of old ones, kept the political extremes at bay, and in many parts of Britain created the feeling of a fresh start; the nascent welfare state ensured that even mass unemployment was politically manageable, and artistic trends such as modernism and Art Deco brought cultural and visible change. From 1922 broadcasting changed the nature of relations between individuals and communities, acting as a unifying force and a medium of information. What united people above all was the sincere belief and determination that the war through which they had just lived would end all war; when this proved not to be so it was for many a crushing moral defeat.

This book is the fourth and last in a sequence covering the history of the United Kingdom from 1838 to 1939 that began with High Minds and continued with The Age of Decadence and Staring at God. It completes the story of Britain’s rise to become the world’s foremost power, its greatest economy and largest empire – backed up by military might, and notably freedom of the seas; and the beginning of its decline from that height to being in a position of grave peril from rival powers with contempt for the country’s evolving democratic and liberal values. In the new reality

of its decline, just because Britain wanted something reasonable – such as permanent peace and a settled international order – did not mean that its wishes would be granted, at least without a fight. And by 1919, when this book opens, fighting was something an overwhelming majority of the British people had determined never to do again.

PREFACE

PART I

FROM THE WAR TO THE STRIKE

A TURBULENT PEACE

PREFACE

IIn the four decades between the rise of political consciousness that manifested itself in Chartism, and the return of William Ewart Gladstone to Downing Street in 1880 after his Midlothian Campaign, when he sought to prove the depravity of Lord Beaconsfield’s administration by illustrating its failings in foreign policy, British life changed almost beyond recognition. Although poverty, disease, ignorance, squalor and injustice were far from eliminated, they were beaten back more in those forty or so years than at any previous time in the history of Britain. This was despite, and because of, a population growing faster than at any previous time in the country’s history. A nation that might have been overwhelmed by industrial change, rapid expansion and social upheaval instead saw the challenges of modernisation and embraced them.

The conclusion of the Versailles peace treaty on 28 June 1919 might have appeared to bring international calm, but the confirmation of peace did nothing to ease social disquiet in Britain. Most demobilised men found work – the House of Commons was told in May 1919 that 408,491 veterans were unemployed, but that 81 per cent of ex-servicemen were in work – usually at the price of depriving a woman of her job in a factory, on a farm, as a bus conductress or in a clerical role in an oﬃce.1 In mid1919 there were 600,000 women registered as unemployed, defying the expectation that they would return to unpaid domestic duties.2 The costs of managing the return of men to civilian life, and dislodging women from wartime jobs, remained high, creating tensions among the working class that raised the profile of the trades unions and the party. The public deplored stories of jobless ex-servicemen, which deeply embarrassed the government; however, there was free unemployment insurance for jobless veterans. On 15 August 1919 the Restoration of PreWar Practices Act, which ensured men got their jobs back, went on to the Statute Book. There was less sympathy for displaced women: the widespread view was that middle-class women should not work at all, and that if a working-class one could not find work she should go into service: an option the experience of life as independent wartime workers had made distinctly unattractive. Therefore the pre-war ‘servant problem’ returned with a vengeance, which together with rising prices and diminishing fortunes meant fully staffed households became scarce even among the aristocratic and upper classes. The country was also still

coming to terms with losing nearly 230,000 people to the Spanish Flu epidemic, further destabilising a society already suffering bereavement on a massive scale because of the war.

The country’s finances more than mirrored the hardship felt by many families. The national debt by 1919 was around £7.4 billion compared with £650 million in 1914, exemplifying the fundamental economic shift war had created.3 The main creditor was America, and wrangles over that debt would last years. Where Britain was a creditor the debts it was owed had often gone terminally bad: notably investments in Russia that had, effectively, been confiscated by the Bolsheviks. Those that had not gone bad, such as money lent to France and Italy, would take years to recover; in turn, Britain staggered its repayments to America. Arthur Balfour, the former Unionist prime minister, acting as Foreign Secretary in 1922 in Lord Curzon’s absence through illness, offered Britain’s former wartime allies a way to avoid deep hardship, asking them to repay only enough money owed to Britain to enable it to pay off its debt to the US . Even that proved impossible. An island whose economic power had rested upon being a great trading nation had lost 40 per cent of its merchant fleet.

The war had required Britain to live far beyond its means, with less than 30 per cent of additional expenditure being covered by taxes. This rose to around 45 per cent from 1919 to 1921. The burden on the working classes was reasonably light: they paid relatively little income tax while the better-off paid handsomely, and those living on dividends more handsomely still, thanks to the excess profits tax that recovered money from those who had done well out of the war. Where the state had taken over great industries it had given little thought to the needs or means of the post-war world, behaving bureaucratically and not managerially.

Expectations for the new order among those who had spent up to five years risking their lives and sacrificing their usual existences to defend the country were artificially high. Any suggestion that their sacrifice, or that of their dead comrades, was not being properly recognised and respected could quickly manifest itself in anger and protest. On Peace Day rioting ex-servicemen wrecked Luton Town Hall, in whose assembly rooms a Peace Banquet was to be held that evening. Dissatisfied with their work, the rioters returned and burned the place until only four bare walls were left standing. The local branch of the Discharged Sailors’ and Soldiers’ Association and the Comrades of the Great War (which, under Haig’s

presidency, the British Legion would succeed in May 1921) had asked to use Wardown Park, a riverside space with ornamental gardens a short walk from the town centre, to hold a drumhead memorial service for the fallen. Insensitively, the council refused permission but offered two recreation grounds. Perceiving an insult as much to themselves as to the memory of their dead comrades, local associations of the DSSA and CGW announced they would be boycotting Peace Day. Instead, to the council’s embarrassment, a protest took place and there was a march to the town hall. Henry Impey, the mayor, stood on the steps to address the marchers, but was booed and shouted down. The building was rushed, injuring a small cadre of police. DSSA oﬃcials tried to call the rioters off, but to no avail. Doors were forced; furniture was thrown on to the street; decorations torn down. Only when the safety of women and children was being endangered did the men stop, deciding to march on the mayor’s house and wreck that too: but they thought twice and returned to finish the job at the town hall instead. Police reinforcements arrived and repeatedly charged the rioters, who held them off. So many police oﬃcers were hospitalised that order could not be restored. A nearby petrol station was looted and the fuel used to burn the building to a shell. The fire brigade was pelted with bricks and bottles, and its hoses cut. Eventually, an armed contingent of soldiers in tin hats arrived from Bedford, and effectively put the town under martial law for twentyfour hours.

On police advice – and because, as he later stated, he feared for his wife’s health – the mayor and Mrs Impey fled to Norfolk until matters calmed down. The remains of the town hall were demolished. Reports suggested that the council’s ill-considered refusal to allow the ex-servicemen to use Wardown Park had been capitalised upon by ‘inflammatory agents’ – political agitators, not the looted petrol – to stir up trouble.4 A man, accompanied by a woman, was allegedly seen waving a red flag from a town hall window during the wrecking. Men in uniform, presumably aggrieved by the delay in their demobilisation, were also seen. In a country nervous about Bolshevism it was easy to put a revolutionary aspect on a riot far more likely to have been caused by a perceived insult; the recollection of years of hardship and danger, and of dead comrades.

Three days after the Luton riot another erupted in Wolverhampton, comprising an estimated 2,000 people, provoked by a police attempt to arrest two soldiers home on leave and the worse for drink. In what was

described in the magistrates’ court as ‘a reckless fit of insanity’ they then stormed the police station and tried to burn it down.5 When the superintendent bravely tried to reason with the mob, they threw a shower of bricks at him. Reinforcements were called in from neighbouring towns and the rioters eventually dispersed. Lesser disturbances occurred at Coventry and Swindon. In all cases the opportunity to loot was gratefully seized; most charged with it at Luton were women, though one male looter was an ex-soldier who had disguised himself as a clergyman.

Many of the Luton rioters were ex-soldiers, several aggrieved about their pensions; the police said it was hard to find witnesses, despite thousands having been present. Nonetheless thirty-nine people eventually appeared before Luton magistrates, with the town clerk announcing that the riot had been caused by ‘Bolshevism, anarchy, drunkenness, and criminality’, becoming worse after the public houses had closed.6 The first two reasons reflected very much the oﬃcial mood at the time. The middle and upper classes, and many in the working class too, feared excuses were being sought to overthrow the established order: and Luton was as good a place as anywhere to begin international Marxism’s work in England.

A Captain Henry Baird, appealing for funds for the Comrades of the Great War and anticipating the need for the British Legion, said the proliferation of organisations of ex-servicemen was a problem when it came to fundraising to help them and their families. But he also asserted that rivalries between two branches of different organisations in Luton had triggered the refusal to allow anyone to use Wardown Park, causing the riot. Baird claimed that ‘the bitterness and jealousy between two of these organisations opened the gates to revolutionaries who are striving night and day in all manner of insidious and underhand ways to get hold of the ex-Service man for their own destructive ends.’7 However, large sections of the public, led by the ex-servicemen, complained of ill-use, disrespect and of being taken for granted. These feelings, as Baird indicated, made the men an easy target for manipulators. Protests by members of the labour movement, whom many ministers regarded as potential Bolshevik revolutionaries, had helped end military support for the White Russians. In May 1920 London dockers would refuse to coal a ship, the Jolly George, that they believed was about to take arms to Poland, to re-equip Poles who had the Soviet forces on the run. Within three months the Russians had counter-attacked and seemed likely to take Warsaw.

When those attacks failed, and the Poles and Russians settled their dispute with the Treaty of Riga in March 1921, the threat of British intervention disappeared; but the labour movement had shown its muscle – with even moderates such as JH Thomas, leader of the National Union of Railwaymen, and Ernest Bevin of the Transport and General Workers’ Union, threatening widespread industrial action if steps were taken against the Russians. The governing class noted this power; their fear of confrontation with the workers, less than three years after the Bolshevik revolution, remained intense. In the autumn of 1920 a threatened strike by miners, with sympathy strikes by the NUR and the transport workers, was avoided thanks to government intervention ensuring a 2s a shift increase. The mines were still under wartime government control; the private owners to whom they would be restored in March 1921 might not have been so strategically minded.

Panic among the so-called respectable classes that Bolshevism would, at any moment, be unleashed in Britain did not help moderate the general sense of tension. Lord Sydenham, a former governor of Victoria, retired colonel and described as ‘an insensitive, clumsy, uncouth and infinitely boring man’, wrote to The Times that ‘I note with thankfulness that the British public is beginning to understand that, behind the prevailing industrial unrest and the strike mania, there are dark forces which, with alien inspiration, are being directed to bring about a red revolution in this country as part of a world anarchical movement.’8 He compared the Clyde Soviet Committee – the latest manifestation of ‘Red Clydeside’ – with the French revolutionaries of 1789, though conceded the Clydesiders had no intention of reducing the population through massacres. He asserted that German Spartacists and German money were destabilising Clydeside, just as the Germans had allowed Bolshevism to breed in Russia. ‘The warning is plain,’ he continued, ‘and, if we disregard it, we must be mad.’ He later became an active fascist.

A strike that may have excited Sydenham (who also described the destruction of the Bastille as more defensible than the burning of Luton Town Hall) was by police in London and Liverpool, beginning on 31 July 1919 over a fiat by Sir Nevil Macready, police commissioner of the Metropolis, that officers could not join a union. Only just over 1,000 of London’s 19,000 officers came out. They were peremptorily sacked. The strike collapsed within days. Matters were, however, more serious in Liverpool, where nearly half the city force of 2,100 officers came out. Within three

days 929 Liverpool police were on strike and 951 on duty, though there was a reserve of 850 special constables.

Over the first weekend in August over 200 arrests were made for looting. Shopkeepers boarded up their premises, but those who dawdled, including a jeweller, found their shops stripped by organised gangs, including many women. Soldiers with fixed bayonets dispersed the gangs, but the mob returned when the Army withdrew; eventually, soldiers were ordered to fire over the heads of the looters. Matters became even worse when a spirit-bottling plant was attacked, with rioting continuing until almost dawn. Two destroyers sailed up the Mersey to protect the docks. ‘Central Liverpool to-night represents a war zone,’ The Times ’s correspondent wrote on the evening of 3 August.9 ‘There has been firing and wounds. Soldiers with steel helmets and fixed bayonets patrol the streets. Vast crowds gather and gaze on the scenes of last night’s orgy of destruction, and St George’s Hall presents an impressive background to a laager containing hundreds of soldiers.’

Also that evening about 6,000 trades unionists, soldiers, sailors and women attended a rally and passed a resolution supporting the police and prison oﬃcers’ union and demanding sympathetic strikes ‘as a protest against the Government’s attack on trade unionism’. Across the Mersey in Birkenhead, 96 of the 225 police oﬃcers went on strike, prompting a similar orgy of looting. Rumour spread of ‘another Luton job’; the Riot Act was read and a double cordon of soldiers surrounded the town hall. As in London the strikers were sacked, but the high proportion of the force cashiered and the relatively small community in which they lived created a legacy of bitterness that was slow to disappear.

There was assumed to be a link between unemployment and possible revolution, and it was not only Lord Sydenham who feared this: so too did the forces of law enforcement. The head of the CID at Scotland Yard, Sir Basil Thomson, who had spent the Great War interrogating suspected spies, was appointed director of intelligence at the Home Oﬃce in 1919 and reported to the government fortnightly about possible revolutionary activity. On 9 January 1920 he wrote that ‘the most serious factor of the moment is unemployment, which is driving many more moderately minded ex-Servicemen into the revolutionary camp.’10 Thomson regarded the Labour party as a key factor in this threat, notably ‘the inclination of the lower middle class toward Labour.’ He predicted an attempt at

revolution during the coming winter because revolutionaries took the view that ‘we have got nothing at present, so we can’t lose anything and we may get some, they can’t take anything away from us.’ Thomson feared this doctrine ‘appeals to men respectable and loyal to King and Country who are out of work and brooding over the sight of wealthy people going shopping in their cars and they see big displays in all the shop windows, clothing, food and toys they would love to purchase for their wives and children but have not the means.’

Other revolutionary pressures included ‘the housing question’, with many ex-servicemen forced to live in ‘appalling’ conditions; the possibility of an alliance between Labour and Sinn Féin, to harness the power of Irish republicanism to British socialism; the failure to nationalise the mines, and the threat of a general strike.11 In case Thomson’s political masters were minded not to take his intelligence seriously, he added a section entitled ‘Extracts from Recent Violent Speeches’. His wellsourced and penetrating presentations of facts about pockets of unrest would agitate cabinet ministers increasingly over the following two years, from Lloyd George downwards, as bust followed boom and unemployment reached unprecedented levels. Realising the potential for unrest, and the great cost of it to the economy, the real value of unemployment benefit for a single man rose by 70 per cent between 1920 and 1924, and for a married man with two children by 155 per cent.12 Perhaps a more important contribution to public happiness came in the spring of 1920, when the government decided the ‘low grade’ wartime beer was becoming ‘unsaleable’, and could be replaced by beer of a higher original gravity after years of restricting its strength.13

II

Austen Chamberlain, as Chancellor, had to manage the myriad economic challenges facing Britain that followed Lloyd George’s having made rash election-winning promises to voters instead of offering them a principled strategy. It remains debatable how well equipped he was by character to deal with such low politics. He was notoriously honourable: Beaverbrook quoted Lord Birkenhead, the former FE Smith and now Lord Chancellor, saying: ‘Austen always played the game, and he always lost it.’14 Beaverbrook’s assessment is not widely disputed: ‘About him gathered glowing affections; there were no hatreds. He was trusted and respected

and he always told the truth, rare gifts for a man born to public affairs.’ That may have been an exaggeration: he disliked the rude and abrasive Christopher Addison, the energetic health minister who also had responsibility for ‘homes fit for heroes’. His and Chamberlain’s relationship was difficult because his housing programme, and the absurdity of local authorities bidding against each other when borrowing funds from the capital markets, was a main cause of economic difficulty. Chamberlain was the polar opposite of Lloyd George, to whom he nonetheless showed unflinching loyalty of an intensity matched only by his half-brother Neville’s loathing of the same man. Having first held office in 1895, Austen was one of the most experienced men at Lloyd George’s disposal; he had been Chancellor under Balfour, and his following in the Conservative party (in which he initially sat, as his late father had, as a Liberal Unionist) was sufficiently strong to make Lloyd George fear excluding him.

On 28 October 1919 the government published a White Paper with a revised statement of revenue and expenditure, which made depressing reading. Earlier, Chamberlain had forecast a £250 million deficit by March 1920; it would now be £473,645,000, thanks to revenues falling by £32.5 million and expenditure rising by £191 million.15 The slow demobilisation, caused by maintaining an Army of Occupation in the Rhineland, was a main offender: the Army estimates rose from £287 million to £405 million, mainly because of a failure to extract from Germany the cost of maintaining it. In 1919–20 the borrowing was inflationary, because of the amount of extra liquidity in the economy; the pound fell against the dollar, raising the cost of imports. The index of wholesale prices, taking July 1914 as 100, was at 249 in July 1919; by March 1920 it had reached 323.16 The government knew it would have to deal with the possibility of social and industrial unrest in areas where the old industries, whose creeping obsolescence would become more obvious and problematical, were concentrated, usually close to raw materials. The geographical spread of an economic collapse would never be uniform: it was focused instead on the central belt of Scotland, the north-east of England, south Lancashire, the West Riding of Yorkshire and South Wales. The government considered an interventionist policy based on greater welfarism more desirable than giving an excuse to Bolshevists to agitate further. The Bank of England made it clear to Chamberlain that the extravagance must end; and in December 1919 Bank Rate rose to 6 per cent. Soon, the government would have to confront the contradiction between wishing to restore the

pre-1914 economic system and delivering a promised legion of reforms tantamount to a welfare state. The Bank also said it wanted an end to excessive borrowing to allow a return to the Gold Standard, which would ensure a tight monetary policy and an end to treats for the public.

A clear sign of underlying economic weakness was a Bill introduced in the 1919–20 session, when the economy was still apparently roaring ahead, to debase the silver coinage (half-crowns, florins, shillings, sixpences and threepences) from 92.5 per cent silver to 50 per cent. By late 1919 silver was trading at 5s 4d per ounce, ‘near the point at which melting of coin would become profitable.’17 Thus every coin minted incurred a loss to the government. By the end of the year silver had reached 6s 6d an ounce and by the end of January 7s 1d: it was then that the decision was made to have what the Bank euphemistically called a ‘recoinage’. A cabinet committee considered the question on 30 January and discussed introducing nickel threepences and sixpences instead of silver ones. It was told by the Treasury that ‘the price of silver had for some time been continually rising owing to increased demands for currency and for export to China and it now stood considerably above melting point.’18 The committee discussed printing three-shilling, half-crown and even shilling notes in case the silver price rose further. Since this exigency would prove highly unpopular, it was agreed to debase the coinage instead. By not issuing nickel coins it would ‘avoid any risk of disturbing the public mind’.

At the Second Reading of the Silver Coinage Bill on 18 February 1920 Josiah Wedgwood, a former Liberal MP now taking the Labour whip, warned Chamberlain that ‘the first law in currency is that bad currency drives out good, and we ought to know how much of the good silver currency is in the country, what is the means of calling that money in before it is all hoarded, and how the Treasury intend to save themselves against loss?’19 Charles Oman, MP for Oxford University, also warned Chamberlain of the signal a debasement would send: ‘For 1,200 years, British silver currency from the time of Offa onwards has, with the exception of 14 unhappy years, always been good silver . . . there has been one unhappy interval of 14 years in the reigns of Henry VIII , Edward VI and Mary. These are the 14 unhappiest years almost in English history, and that unhappiness was to a very large extent caused by the horrible debasement of the silver currency.’20

On 8 March the Bank began taking silver out of circulation, though

the Mint continued to coin it until 7 April. There was much to withdraw: the Bank had realised during the war that the public were hoarding a large quantity of silver coin, as it was disappearing from circulation.21 Therefore in the six years from 1914 to 1919 nearly £39 million in silver coin had been put into circulation, compared with £11.39 million in the six years from 1908 to 1913.22 That huge demand had driven up the price of the metal. The moment the Silver Coinage Act became law on 31 March the minting began of new, half-silver coins. They would not be ready in sufficient quantities until 13 December, when the Bank stepped up the process of withdrawing what remained of 92.5 silver coin from circulation. It did so enthusiastically, mounting up reserves so huge that some had to be stored in the Tower of London; and indeed, the Mint could not keep up with the demand for the new coinage. To avoid a shortage the Bank had to reissue 92.5 silver it had already withdrawn. The inflation of 1919–20 prompted much agitation from organised labour, whose wages were not keeping pace with prices. In the opinion of some on the left, Labour offered only milk-and-water socialism. The demand by some for far more radical politics prompted the establishment on 31 July 1920 of the Communist Party of Great Britain. The Third International, whose first congress had been held in Moscow the previous year, had called for new national communist parties to be set up around the world: in Britain existing Marxist parties, including the Communist Unity Group of the Socialist Labour party, the British Socialist Party and the South Wales Socialist Party, merged to form the new entity. It would expand further in January 1921 by absorbing the British Section of the Third International (run by Sylvia Pankhurst, daughter of the former leading suffragette Emmeline, and known generally as the Communist party) and the Scottish Communist Labour Party. Being revolutionaries whose motivation to act independently had been prompted by Labour’s perceived moderation, the CPGB refused to cooperate with a party that engaged in parliamentary processes. This, however, was contrary to the entryist doctrines of Lenin himself, and so the party tried to affiliate. Recognising the agenda of the communists, Labour refused to let them. When thwarted in this way, some joined Labour as private individuals. Meanwhile, the CPGB did not conceal its allegiance to Moscow, which would cause it serious difficulties in 1926.

Even as crowds massed for Peace Day in July 1919 the tone of the immediate future was being set in Newcastle, where the management of

the North Eastern Railway was seeking to talk its employees out of industrial action. Some drivers had been sacked for refusing an eyesight test. Their union, the National Union of Railwaymen, had told them not to strike; but militants in depots in Yorkshire, Durham and Northumberland defied their representatives and their management. There was another new factor in industrial relations. Thanks to a provision made by Gladstone in the 1840s when President of the Board of Trade, the railways had been taken under the strategic control of the government during the war. Also as a legacy of the war, the state controlled the mines, canals, the docks and harbours, and seemed reluctant to give them up. Government involvement in disputes concerning these industries proved a further complicating factor in settling them. Partly as a consequence, management became synonymous with capitulation: a cast of mind that would persist until the General Strike in May 1926.

As the Newcastle dispute worsened, the management and union leaders were summoned to meet Sir Auckland Geddes, the then President of the Board, to try to settle the dispute. This intervention in relations between master and servant did not prevent a full-scale national strike breaking out on 26 September over wages. A shortage of revenues caused the government to order a cut in pay when inflation was rising. Indeed, Geddes’s haughty, jumped-up manner – something he shared with his equally aspirational brother Eric – may have made matters worse. Beatrice Webb, the radical Fabian thinker, wrote that ‘in our view’ – she routinely spoke for Sidney, her husband, too – ‘it [the strike] has been desired, if not engineered, by the government, engineered by the Geddes brothers, and subconsciously desired by the PM .’23 She thought Lloyd George had created a ‘stunt’ to highlight ‘the issue of Bolshevism and the dictatorship of the extremists of the manual working class.’ The government prepared for a long haul: it brought in the Army and, presaging 1926, sought to recruit ‘citizen guards’ to replace strikers. It requisitioned 25,000 lorries for an emergency road transport scheme to prevent the distribution of food and other essentials being compromised. The Defence of the Realm Act remained in force, and the state’s powers to confront the railwaymen were considerable. However, the Webbs overestimated them.

The unions fought back. JH Thomas, a former Great Western engine driver who would become a cabinet minister but was then general secretary of the National Union of Railwaymen, had a captioned film of

himself made that was shown in picture palaces and made the NUR ’s case. The strike was settled on 5 October, in Downing Street, after Lloyd George and Andrew Bonar Law, his deputy Coalition leader, had met the unions and agreed to a minimum wage of 51s a week for all adult railwaymen (compared with the 40s Geddes had said was all they could expect), enforced until 30 September 1920. Union membership rocketed, creating a highly organised extra-parliamentary opposition. A pre-war movement of 4 million people had become 6 million by 1918 and, with demobilisation, 8 million by 1920.24 However, parachuting his ministers in to settle strikes they had effectively caused through mismanagement at least allowed Lloyd George to give the impression of retaining control and to court popularity, even if it undermined his cabinet and particularly the ministers involved.

A select committee appointed by parliament in 1918 to plan post-war transport needs had declared that the railway ‘cannot be allowed to return to its pre-war position’ and, to avoid this, stated the ‘unification’ of the system was ‘desirable . . . whether the ownership be in public or private hands.’25 War had, as in the coal industry, lifted the nationalisation taboo. To ensure union co-operation, it was proposed that worker directors should sit on the new companies’ boards, but this was a step too far for the predominantly Tory cabinet. Instead, new negotiating procedures were agreed to resolve disputes over pay or conditions. However, with government control at an end, their promise of electrification of the railways was allowed to drop. Steam locomotives, however sleek and fast they became, would remain a symbol of Britain’s inability to leave the nineteenth century. The last of these would not enter service until 1960.

Given the need to squeeze spending, putting the railways back in prewar order was beyond the public purse. It was also becoming clear that roads and motor vehicles were the future, not merely of eﬃcient distribution of goods and transport of people, but in developing the vital motor industry and associated sources of prosperity and employment. In March 1920 Eric Geddes, head of the new Ministry of Transport (its creation itself indicative of the new role the post-war state saw for itself) and a former executive of the North Eastern Railway, proposed to the cabinet a reorganisation of the pre-war railway companies into six larger concerns. As Geddes had been seconded from the NER it was agreed that before he could become Minister of Transport he would have to end his connection with them: he did, but with a ‘golden handshake’ of

£50,000, which prompted questions in the Commons but which was not untypical of the rewards gained by the ‘men of push and go’ whom Lloyd George had advanced. A counter-plan, from the Association of British Chambers of Commerce, suggested a less radical consolidation into eleven companies, based on amounts of traﬃc rather than following Geddes’s regional template.26 This had no support from government or management. In talks among themselves the companies, many struggling to stay solvent, proposed a consolidation beyond what Geddes had suggested.

The cabinet wanted to increase fares when prices had started to fall, because the railways were losing £54 million a year; it was later decided that in fact the system would have to recoup £66 million to break even by the end of July 1921.27 The cabinet discussed whether workmen’s fares (third-class travel before 8 a.m.) should increase by up to 200 per cent (in some cases 2s a week), and season tickets by 50 per cent. To avoid unrest, a bureaucracy would be established to adjudicate cases of hardship among workers. Most of the additional revenue would have to come from goods traﬃc. A White Paper followed Geddes’s proposals and then the 1921 Railways Act, which amalgamated over 100 pre-war railway companies into four big private ones from 1 January 1923. This created large regional monopolies, in the hope of creating economies of scale and eliminating ‘wasteful’ competition: the London and North Eastern Railway, the Great Western Railway, the London, Midland and Scottish Railway and the Southern Railway. Many rail owners and Unionist MP s opposed the amalgamation, but others were placated by the thought that it was not nationalisation – something Geddes, who feared the poor management the state would provide, and also the politicisation of the railways, was firmly against.

The government also had to decide what to do with the other major industry it had taken under control during the war, the coalfields. As with the railways there was fierce resistance among the owners to anything other than a return to the status quo. However, the great confrontation would be with the miners, who assumed nationalisation would be the logical next step, many of them desiring it for ideological reasons. In the spring of 1919, fearing trouble, the government had asked Sir John Sankey, a High Court judge, to chair a Royal Commission into the coal industry. It was designed to convince the miners’ union that permanent nationalisation was being seriously considered. However, the Sankey

Commission failed to agree on anything and provided four separate reports, which only heightened the scope for fractiousness. This became apparent in Yorkshire – the second-biggest coalfield – in July that year when Ministry of Labour oﬃcials were locked in discussions with the Miners’ Federation of Great Britain over a dispute about piece rates. It was as if the Great Unrest – the chronic industrial strife that ran from 1911 to 1914 – had merely been interrupted by the war and was now resuming.28

The mines in the summer of 1919 employed exactly the same number of men as in 1913 – 1.11 million – but output was greatly down: 242 million tons a year compared with 287 million in 1913.29 Absenteeism had risen from 10 per cent to 13 per cent. This would wipe out £46 million of the industry’s projected £54 million profit for the year, and that was before an agreed shortening of the working day to seven hours came into effect from mid-July, when output was forecast to drop to 214–217 million tons per annum. It was not then entirely appreciated that coal would face two other serious challenges that would damage its export markets, accounting for a third of sales: first, the quest to burn coal more eﬃciently and economise on energy; and second, more merchant and naval shipping changing from being coal-fired to oil-fired. Domestically, the decline of the iron and steel industry would reduce demand for coal, but so would its improved processes; the same would be true for electricity generation and the manufacture of town gas.

During 1919 and 1920 there had been a false new dawn for the mines, caused by exceptionally high export prices for coal (115s a ton compared with the domestic price of 36s 7d) and the pooling of profits under state control to shore up unprofitable collieries.30 Unfortunately for British miners and their employers, Germany began using coal to cover its reparation payments, which drove down the export price. With the surrender of state control the pooling of profits for the purposes of subsidy ended – and the government, now in straitened circumstances, made it clear taxpayers’ money would not be used to continue that subsidy. This bore a twofold risk: first, putting many miners out of work, and increasing militancy; second, putting up the price of coal for people already struggling to feed themselves, and whose incomes were dropping. The spectre of Bolshevist-induced unrest, however, was trumped by the need not to bankrupt the country.

The four reports from the Sankey Commission appeared just before

the end of the Versailles conference and were overshadowed by that event and went largely unnoticed. The first, signed only by Sankey himself, advocated state ownership and payment of fair compensation to mine owners. The second, signed by MFGB representatives and adherents of the Labour party, agreed with Sankey, except on the point of compensating owners, whom they considered rich enough already. The third, signed by some coal owners and Balfour, offered the sort of fudge that had ended Balfour’s government in 1905; for the industry to be privately owned but the coal to belong to the state, supported by a vast bureaucracy. The fourth, signed only by Sir Arthur Duckham, a chemical engineer and businessman, supported the third report, but without the bureaucratic hindrances.

This meant that all thirteen members of the Sankey Commission favoured nationalisation, ten with compensation for the owners: the way forward appeared clear. However, Lloyd George, perhaps already feeling burdened with enough problems, maintained his long-held view that the mines should not be nationalised; and in August cited, after two months of consideration, the divisions among the Royal Commission as a reason for doing nothing except offer a cosmetic reorganisation of the management, which the union rejected. A TUC -backed ‘Mines for the Nation’ campaign, started in December 1919, came to nothing, though its ‘very serious propaganda’ rattled the government.31 The cabinet was told that the MFGB ‘were advocating a General Election on the subject during the forthcoming year, failing which they would resort to direct action.’ The unsatisfactory state of the mines was allowed to fester, with drastic results in 1926.

The view among many politicians was that the Commission had been a deliberate exercise in obfuscation. Lord Aberconway, a former Liberal MP whose portfolio of business interests included coal, said the Commission was ‘grotesque in its procedure, grotesque in its personnel and certainly grotesque in its report, which to a large extent was decided before the Commission heard any evidence at all.’32 He said it had been composed of ‘cranks and fanatics’ of ‘no influence whatever with the country, and [who] could not even obtain a seat in parliament.’ Lloyd George seemed to agree. When he spoke in a debate on the mines on 11 February 1920, called by Labour, he treated the prospect of nationalisation first as a ‘very, very serious and dangerous proposition’, but later as a laughing matter, mocking the Soviet Union as a country that had

nationalised everything but now had to conscript labour to ensure it was in the right place.33 Unfortunately, the miners’ union was the most militant and radicalised of the main groups of British organised labour, and some of their loudest voices were unduly influenced by events in Russia: others on the Commission, including Balfour, had been only too eager to appease their representatives. Anyone who studies the Sankey proceedings and reports could not be surprised that in 1926 the miners would be the last men standing.

The industrial unrest of 1920–22 shows the General Strike of 1926 did not come out of the blue. The threat of one was uttered sporadically throughout the early 1920s. Such a strike had been discussed as a colossal weapon of the working-class movement against the owners of capital during the Great Unrest, before the war. It hinged on the ‘Triple Alliance’ of miners, railwaymen and dockers who, by withdrawing their labour, could paralyse the country. By the autumn of 1919 the phrase was being bandied about again, not least because extremists in the organised working class had seen what true revolutionaries could do. The Daily Herald hardly helped by claiming on 25 March 1920 that the War Oﬃce planned to throw a cordon of soldiers around the coalfields, to starve the miners into submission; the cabinet briefly considered prosecuting the paper under the Defence of the Realm Act but thought better of it.34 On advice from the Directorate of Intelligence a cabinet committee had agreed in February 1920 ‘on the need for passing special legislation to protect the country from the effect of Bolshevik propaganda of a seditious character’, which would punish those encouraging the overthrow of the government, those circulating Bolshevik propaganda and, perhaps most interestingly, those who received money from a foreign state for these purposes.35

With his customary ruthlessness, Lloyd George used the Coalition’s huge majority to have parliament pass an Emergency Powers Act that allowed the King to declare a state of emergency by proclamation, under which the prime minister could rule by Order in Council, or without further recourse to parliament. If there was a precedent for this in peacetime the nearest was probably Lord Liverpool’s Six Acts passed a century earlier, in a world where universal suffrage was not even a pipe dream. The new Act was modelled on the Defence of the Realm Acts but criminalised those who sought to deprive the public of ‘the essentials of life’ – fuel, power, food and water and public transport. Thus the leaders, national

and local, of unions who allied themselves to close down the country could be fined or imprisoned, or both. These powers would first be invoked the following spring and would continue to be used until 1974.

The threat of a general strike had more force in October 1920, when the agreement with the miners had expired and they demanded higher wages, though the cabinet had been told they were struggling to raise funds for a long strike.36 A government award of slightly higher wages was made after a strike of twelve days’ duration, and production was interrupted throughout the winter. The collieries would revert to their owners on 31 March 1921 – a transfer of responsibility made more urgent by the need to save public money, and thus brought forward from 31 August – and there would be no attempt at an eﬃcient restructuring such as in the de-controlled and un-nationalised rail industry.

From 1 April 1921 there were no longer standard rates of pay, and in the absence of economies of scale that might have come from a reorganisation by coalfield, the cutting of wages was the only means by which owners could keep their businesses going. Marxist historians call this a period of crisis of capitalism; it was in fact the normal mechanisms of capitalism, notably the law of supply and demand, lowering output prices to retain customers.37 Wages per shift fell by between 10 and 25 per cent in Nottinghamshire, but rose in South Yorkshire because of its impressive productivity. However, in South Wales wages per shift plummeted by between 40 and 49 per cent, because of higher extraction costs. This provoked militancy among miners demanding national wage levels, reactivating the Triple Alliance and attempting to politicise the problem until the government was forced to intervene. The moment the owners regained control, and announced their terms of employment, the miners objected, provoking a lockout from 1 April 1921. They wanted a showdown not so much with management as with the government, and so refused talks. The most immediate consequence was coal rationing, which started on 3 April. The railway and transport unions met on 8 April, professed solidarity, and promised a general strike from 12 April. The government declared a state of emergency under the Emergency Powers Act and mobilised the Armed Forces, but then made a U-turn and held tripartite talks with the owners and the miners, offering a limited subsidy to cushion the worst pay cuts. This chaos, born of lack of preparation, was a self-inflicted wound for the government; and given there were only twenty-eight battalions in Great Britain at the time (fifty-one

were tied down in Ireland), if matters had become grave, that wound could have turned lethal.38 A further two battalions were ordered home from Malta.

Such intervention would have been unthinkable before the Great Unrest; but such now was the loss of deference among the working class, not least as a result of the Russian Revolution, that the government felt it had no choice. With the economy in a tailspin, lacking the coal to transport those goods that were still being produced to point of sale or for export risked turning a bad situation into a catastrophe. The intervention caused the strike to be postponed. Frank Hodges, secretary of the MFGB , in response to a question told a meeting of Coalition MP s in the House of Commons on 14 April that his union would consider any reasonable offer. Austen Chamberlain, just elected leader of the Conservative party, argued for a central pool of profits from which a uniform wage could be paid, but his colleagues thought this unworkable; Lloyd George sought ‘national negotiations’ rather than dealing with the problem district by district.39

However, dangerously for the government and fatally for Hodges’s credibility, Herbert Smith, president of the MFGB , wanted a fight. Most of his executive seemed prepared to take militancy to the point of revolution, and refused to allow further negotiations with the government unless a national wages board and a national profits pool were conceded. So the strike was on again, this time for 15 April. Lloyd George, sensing how the government could profit by exposing splits in the labour movement, was determined to stick to his policy, and in no hurry to relieve the strikers of what he rightly presumed would be their embarrassment. Hodges – ‘whose attitude indicated extremist leanings’, according to the cabinet minutes – had stated that there was not enough money in the industry to meet his members’ demands, which implied he wanted it to receive a public subsidy. That was out of the question.

Yet the labour movement was split. The Daily Herald (embarrassed by revelations that it had asked Lenin for money to stay solvent) had, according to Edward Shortt, the Home Secretary, ‘been sailing very close to the wind for some days’ and now ‘contemplated issuing at midnight tonight special editions in London and Manchester advocating revolution in very violent terms.’40 Shortt had the police on standby to seize the paper and make arrests, if warranted: but the cabinet decided nothing should happen, as such action by the Herald would be counter-productive and

confirm the public’s view of the evils of Bolshevism. Fortunately for the government, the Herald did not speak for all the labour movement. The Labour party’s leadership and almost all union leaders repudiated Bolshevism, partly out of simple patriotism (Ernest Bevin was the shining example of this), but also because it was believed to be a means of persuading the electorate to trust a Labour government. The Bolshevists, however, had the loudest and most intimidating voices.

The miners’ militancy was such that it also prompted the transport union, led by Bevin, and the rail union, led by Thomas, to withdraw support hours before the strike was due to start. They were furious with Smith for squandering the chance to sit down with the government. As well as being nonplussed by the MFGB ’s obstinacy, they realised they would now have no leverage over the government if they called their men out, and that strike action would merely impoverish their members. Also, they might fall foul of the Emergency Powers Act: reservists were being called up, and London’s parks were becoming armed camps for soldiers and sailors, with ships recalled to port everywhere. Private vehicles were requisitioned to distribute food; a civilian defence force of military-trained volunteers aged between 18 and 40 was announced, for which 75,000 people volunteered over ten days. This took longer than the government had expected because of what Churchill told the cabinet was ‘the false impression given by the Press that the crisis had passed.’41 Volunteers were told they would not be asked to interfere in an industrial dispute, but to protect essential workers. While Smith had told his members the government was bluﬃng, it had been clear to his more level-headed comrades, such as Bevin and Thomas, that it meant business and that the public were not necessarily behind the miners. Thus their tactical withdrawal made long-term sense.

This non-event of a proposed general strike became known as ‘Black Friday’ and was an early, significant betrayal of what were deemed to be Labour principles. The list of such iniquities would become longer. Mrs Webb called the outcome ‘catastrophic’ and ‘a wasteful futility’.42 She added that ‘the manual workers, organised as producers, cannot find men of suﬃcient character and intellect to lead them in the higher ranges of statesmanship.’ On the morning of 15 April Lloyd George convened a meeting at the Board of Trade of the owners and the MFGB , but the miners boycotted it. Hodges replied later that without a national profits pool (which the government could face) and a national wages board

(which it could not), ‘no good purpose would be served’ by the meeting.43 A consequence of these events was that the TUC replaced its parliamentary committee with a General Council, which became its executive body, and could speak (and act) with greater authority on behalf of the movement. In a move successfully to distance himself from the Bolsheviks of British communism, Thomas sued one of the sect’s papers, the Communist, for libel for accusing him of betraying the miners’ interests. He won.

While the rest of Britain carried on working, the miners went on strike until 1 July, when they finally admitted defeat. The government imported tens of thousands of tons of coal to keep the country moving. Businesses were believed to have 204,000 tons in reserve, and 75,000 tons could be moved from pit-heads in Yorkshire alone.44 The terms on which they returned to work were worse than had they not gone on strike. In 1921 around 86 million working days were lost to strikes. In 1922 it dropped to 20 million.45 Over the next year threats of industrial action, or actual strikes, achieved nothing in the face of economic reality: shipworkers, engineers, cotton operatives, dock and rail workers were forced to take cuts in pay. The trade unions’ membership shrank in the years before the General Strike, thanks partly to this image of ineffectiveness, from a shade over 8 million (42 per cent of the labour force) in 1920 to just over 5 million, or 27 per cent of workers, in 1926. By the depths of the Slump, in 1933, it would stand at just over 4 million, or about 23 per cent of workers.46

The pay cuts reflected the fall in the cost of living; but a rise in unemployment brought a new militancy into British politics. The cabinet was first warned about this trend in August 1920 by the Ministers of Health and of Labour, who said it ‘might constitute a serious danger’ and advised a state scheme to provide work during the coming winter: an estimated 200,000 unskilled ex-servicemen were idle and there were ‘ominous warnings’ that a reduction in orders would swell their numbers greatly.47 A committee was instituted to discuss whether infrastructure projects, notably for housing, might be developed through state funding to local authorities. One of the CPGB ’s luminaries, Walter ‘Wal’ Hannington, a 25-year-old toolmaker and Amalgamated Engineering Union shop steward from Camden Town, formed the National Unemployed Workers’ Committee Movement. The end of the post-war boom was a clear example to Hannington and his comrades of the inevitable failure of

capitalism; and the NUWM (as it became known after 1929, dropping the ‘committee’) would agitate until the Second World War solved the unemployment problem. Hannington shaped the movement after attending a meeting of unemployed ex-servicemen in St Pancras late in 1920. Feelings ran high; in October hundreds of unemployed men arrived in Whitehall to cheer on a deputation of Labour mayors that had gone to see Lloyd George to discuss unemployment and been treated to a baton charge by the Metropolitan Police. There would be numerous less wellreported demonstrations during the ensuing winter. Following an April 1920 rise in Bank Rate, unemployment rose to 2.4 million, or 22 per cent of all insured workers, by the middle of 1921, becoming an acute political problem.

Hannington first became organiser of the London Council of the Unemployed, which campaigned against the Poor Law, demanding full maintenance for men who could not find work. Both the Labour party and the TUC disliked its tone and kept it at arm’s length, not least when it called for a general strike. On ‘Black Friday’, on Hannington’s initiative, the LCU hosted in Hoxton a national conference of delegates from organisations of the unemployed all over Britain, which led to the formation of the national movement. He organised a vast demonstration in London on 11 July that passed off peacefully, but another on 4 October ended in a pitched battle in Trafalgar Square. Outbreaks of unrest occurred across the country during the autumn and winter. That November Hannington was appointed the national organiser. In early 1922 the movement opened local branches and gained wider support. It also became more voluble, its fortnightly newspaper Out of Work building up a circulation of 60,000.48

The attachment to the Communist party and its ideals was made explicit in the organisation’s aims: ‘Work or full maintenance at TradeUnion rates of wages’ and, more to the point, ‘to never cease from active strife against this system until capitalism is abolished and our country and all its resources truly belong to the people.’49 Lenin’s victory had not passed unnoticed. The labour movement, however, remained unmoved and kept the NUWCM estranged from it. The Labour party feared such an association driving away voters; the TUC was aggrieved that the Communists wished to set up rival unions. In 1922 the NUWCM organised its first hunger march, where contingents totalling 2,000 people walked to London and met ministers. The march was peaceful, but that

did not stop the police warning businesses and shops in central London to board up their premises in case a riot broke out. Apart from a demonstration by unemployed Welsh miners in 1927 – conducted in the teeth of opposition from the TUC and notably its rather conservative General Secretary, Walter Citrine – there would be no more such marches until after the 1929 crash, but they would then become regular features of the left’s activities.

Industrial action compounded the diﬃculties facing the British economy. It meant the improvements in productivity that, notably, the Americans enjoyed because of better industrial relations and more thoughtful investment in innovation, did not happen in Britain. Also, the country lagged behind other advanced economies in developing new industries connected with motoring and increased demand for electrical goods, chemicals and synthetic materials, again a fault of those who owned capital. As prices fell, many postponed or deferred consumption, preferring to wait until goods became even cheaper. While there were serious managerial misjudgements about production and investment in the immediate post-war period, it was a crisis of confidence among the domestic and international customers of Britain’s industries that fed the problem. At least the industrial strife eased greatly: strikes fell from 85 million days lost in 1921 to 10 million in 1923; and those working became better off, because real incomes fell more slowly than prices. A more potent sign of the economy’s health, or lack of it, was that sterling stubbornly remained 10 per cent below its pre-war level with the dollar.

III

Between the early spring and late summer of 1920 the heat left the British economy as from a hothouse with its door wedged open on a freezing day. The last hope of implementing Lloyd George’s expensive post-war social reform programme – always stronger on rhetoric than on reality – went with it. The sudden economic downturn ended a discussion the cabinet held throughout the spring and summer about what it euphemistically termed ‘a levy on war wealth’, an excess tax on profiteers.50 The bankers were against this even before the boom turned to bust, with an Excess Profits Duty already soaking the supposedly rich quite suﬃciently. It was argued that to impose a new tax could put many firms out of business, and their workers out of jobs. The cabinet agreed and buried the

matter on 4 June, the only dissentient being Churchill. There was a dread of higher unemployment: Thomson reported to the cabinet on 2 September that many ex-servicemen were already ‘in an ugly mood’ and that ‘unless something can be done to reduce unemployment it may become serious. It must be remembered that in the event of rioting, for the first time in history, the rioters will be better trained than the troops.’51 He added that ‘the Communist party are gaining many recruits’ and that Communist speeches ‘are all directed towards exciting class hatred’, urging an uprising without further delay.

A huge unemployment march descended on London on 18 October 1920, and effectively signalled a shift in the nation’s political priorities. There could be no pretence of a post-war boom. The day the Unemployment Insurance Act came into force on 8 November 1920, creating the dole and promising fifteen weeks of benefits to the insured working population, there were an estimated 1.5 million people out of work: so many it was beyond the forecasts of those who framed the Act. Such numbers threatened to break the system before it had even started.52 The sudden collapse in trade meant many men who should have qualified for benefit had not fulfilled the requirement to work for each of the four weeks preceding their claim. Shortly before Christmas the cabinet waived this rule, at an annual cost of around £1 million, on condition there was enough in the fund to meet this burden.53 It was announced the following day during an otherwise acrimonious Commons debate on unemployment.

In the winter of 1920–21 demand collapsed not only at home, but in Britain’s usual export markets, notably Europe, precipitating a wave of closures among manufacturers. There was soon huge oversupply, which caused prices to crash even further than the Bank would have expected after raising interest rates. The price of a quartern loaf had risen from 9½d to 1s 4d in October 1919; by 1922 it was back at its original price, even though the bread subsidy was removed in 1920, without any announcement.54 A quart of milk went from 5d to 11d and back to 5d from early 1920 to late 1921. As unemployment rose, political conflict increased. The government knew that with tax revenues falling it had to cut public spending. With Bank Rate so high a borrowing spree was impossible and a loose monetary policy would have driven down sterling.

Despite the downturn in Britain’s staple industries, Montagu Norman, recently installed as Governor of the Bank of England, would not be

shifted from what he regarded as his entirely necessary policy of deflation: necessary because he could not persuade the government to control the supply of money by returning to the pre-war Gold Standard that pegged the price of the currency to gold. When Reginald McKenna, Asquith’s Chancellor, asked him in December 1920 whether he would cut Bank Rate, Norman said such a policy would be ‘unwise if not dangerous.’55 He hoped to stabilise the economy by using high interest rates to drive ineﬃciencies out of the system, forcing businesses that would normally have borrowed money to find savings to prevent their having to do so. Unemployment soared because the most obvious place for such economies was their payrolls. Businesses with no cushion of savings and no surplus payroll simply went under.

Lloyd George established a cabinet committee to examine ways of dealing with the unemployment problem, his nerves rattled by jobless ex-servicemen and by the continued flow of memoranda from Thomson warning him about the potential for revolution. Anticipating Keynesian doctrines, the cabinet advocated making £4 million available to local authorities to fund the construction of arterial roads, in order to provide work for labourers: half would be spent in and around London and the other half in the provinces.56 An Act of Parliament was passed in December 1920 to acquire land for this programme. The initiative was but a pinprick: by February 1921, when the government had expected 11,700 men to be working on arterial roads in and around London alone, only 774 were.57 This was partly because the counties that then formed Greater London had their own plans for roads outside those areas, for which their local and not London’s unemployed would be recruited, and because there was not enough money. A bureaucratic battle ensued between central and local government about how to make the road-building scheme work.

Between December 1920 and June 1921 unemployment doubled from 1 to 2 million. By the end of the year it was 2.5 million, the job losses concentrated in the heavily industrialised north.58 The Unemployment Insurance Act was insuﬃcient: other measures soon proved essential. A dole of £1 a week – another Addison initiative – had been paid to exservicemen, but was due to stop at the end of 1920. With 300,000 such men still idle it was extended until 31 March 1921, after which it was promised they could claim unemployment benefit. This was rapidly raised to £1 a week so the ex-servicemen would not suffer financially if still

jobless; the cabinet had been warned in February 1921 of a ‘grave situation’ that would arise within weeks when, unless the government acted, the unemployed would be reliant solely upon private charity.59 After Addison had requested such a dole be paid, the Treasury said the furthest it could go was 14s a week. He replied that if he told men returning from France that they could survive on 14s a week they would hang him, and he would deserve it.60 Emergency measures were brought in, but loopholes and anomalies remained, such as men refusing to work short-time – which the government encouraged to keep as many people in the workforce as possible – when they could ‘earn’ more on the dole.

A typical story of the fate of unemployed ex-servicemen was that of George Daniel McGowan, thirty-six, who on 9 November 1920 appeared before City of London magistrates for stealing a bicycle. He had volunteered in 1914, was twice gassed, had an excellent reference from the Army, and had won three medals. McGowan told the bench he could not find work and had stolen the cycle ‘because he was starving and had a wife and two children.’61 The police, on visiting his house, ‘found there was no food, and the wife had not even a penny to put in the gas meter.’ The magistrate remanded him for a week: but asked the probation oﬃcer to find him a job and gave Mrs McGowan £2 from the poor box.

Those who worked found their wages falling. Benefits were soon cut too, from £1 to 12s a week in July 1921, but rose again in November with a 5s benefit for a spouse and a shilling a week per child. These panic measures made a mockery of the insurance principle; but ministers reckoned that was better than the revolution Thomson promised would otherwise happen. Unemployment would fall briefly to 7 per cent in 1924, rise to 10 per cent in 1925–26 and then fall to around 8 per cent in the two years before the Wall Street Crash. It would not return to single digits until the Second World War.

The economic crash was not confined to the old industries. Over 3 million acres of land had been brought back into production during the war, to feed Britain. In October 1919 Lloyd George had said the country should never again risk being short of food, and that the state would guarantee farmers the cost of producing cereals if they maintained a high output, even if it could not be sold. This promise was enshrined in the 1920 Agricultural Act. However, the price of wheat almost halved between 1920 and 1923; the immediate post-war shortages, caused by Russia no longer selling wheat into western European markets, had caused not only a rise

in prices but also for production to be shifted into cereal crops, causing oversupply and a price crash.

In the general climate of parsimony the government could not afford its guarantee to farmers. It repealed the 1920 Act in 1921. The immediate effect was the slashing of farm labourers’ wages, from around 42s a week to in some cases 30s. When, in March 1923, farm labourers in Norfolk were offered 24s for a 50-hour week, matters turned ugly. The men, members of the National Union of Agricultural Workers, demanded 26s. An attempt to secure more from the government, either by way of subsidy or the introduction of tariffs on imports, failed. The Norfolk men, feeling the thin end of a national wedge, went on strike. Ramsay MacDonald, the Leader of the Opposition, mediated and settled the dispute at 25s a week. Conditions were redolent of the great agricultural depression of the 1890s, in which the Eastern Counties had been hit exceptionally hard.

During Labour’s brief spell in oﬃce in 1924 MacDonald oversaw a new Agricultural Wages Act that instituted county boards with the right to set wages. By the mid-1920s they had crept back up to 30s a week, though less than 40 per cent of the nation’s food was home-grown. Predictably, the arable estate shrank dramatically throughout the decade, and much that survived did so through the growing of sugar beet, with factories to process it appearing on rural skylines, notably in the east. The mechanisation of farms begun during the war continued but slowed down; by 1935 there would still be almost 875,000 horses working the land. The conditions in which many agricultural labourers and their families lived remained primitive, and those living furthest from centres of population were also the last to be connected to mains drainage or the National Grid. Paradoxically, their living conditions in the ancient and often beautiful cottages they inhabited were nothing like so comfortable as those of families in the row of council houses almost every hamlet had acquired by about 1930; but then the government’s line of credit was sounder than that of many struggling farmers.

The greatest diﬃculty remained how to provide for those whose unemployment ran beyond the time limit covered by their insurance. Once their fifteen weeks were up they were thrown on the mercy of the

parish, or the local Poor Law Guardians. In areas of high unemployment, the burden on local ratepayers was immense. As a result, some on the left called on the Treasury to bear the costs, something it was extremely reluctant to do. On 1 September 1920 one east London council came to embody the fight. George Lansbury, who called himself ‘a pacifist and out and out socialist’, and who since November 1919 had been Labour mayor of the Borough of Poplar, led a rates rebellion over the problems poor boroughs faced in funding the unemployed. Lansbury had been a Labour MP before the war; he was a veteran of the Social Democratic Federation from the 1880s, a former suffragist and now editor of the left’s newspaper, the Daily Herald.

Earlier in 1920 Lansbury had visited Moscow, and at a council meeting after his return gave a glowing account of the work of the Moscow Soviet, which earned him a reputation as a Bolshevik. Labour was advancing in London and had won majorities on the councils of twelve of its twenty-eight boroughs at local elections in 1919. In Poplar it won thirtynine of the forty-two seats. The disappointment felt by returning servicemen and their wives about unkept promises on housing and the general standard of living, played into Labour’s hands. Lansbury’s borough, dominated by docklands, was one of London’s poorest. It contained extensive slum housing, factories, marshalling yards, gasworks and warehouses. Between a quarter and a third of its male population worked – irregularly – in the docks. In 1928 a survey would find 24 per cent of them living in poverty, the highest rate in London.62 Poplar had had some support from central government: under the 1893 Equalisation of Rates Act, a fund to help the poorest boroughs had given Poplar £50,000 a year to feed and house paupers. There was no prospect of more.63

Lansbury had sought to raise living standards and help women when in 1920 Poplar raised the minimum wage for council workers to £4 a week, irrespective of gender. The recession of 1920–21 drove some not employed by the council into hardship: work in the docks became scarcer, and by mid-1921 half Poplar’s registered dockers were idle on any given day. Local manufacturers laid men and women off. Requests for relief began to inundate the local Board of Guardians. This happened despite the council’s £31,000 public works scheme. Poplar hoped for a government grant to defray some or all of the cost, sending deputations to Whitehall. Before any money came, in December 1920, the council

employed 300 men on its scheme. The next month, however, the government said a grant would be made only where preference had been given to ex-servicemen; Poplar had favoured men with the most mouths to feed, only half of whom were veterans.

The government said that no exceptions could be made. This inflamed feelings among Labour councillors, some of whom had been in reserved occupations, and thus been denied the chance to fight, because they had been told their work was just as important as being in the trenches. Some councillors said that only the end of capitalism would improve matters. Poplar’s rates had doubled since 1917 and would have to be increased greatly again, not just to fund those living off poor relief, but to pay for the infrastructure plan. As the government persisted in its refusal to pay for the road-mending scheme, so Poplar’s Labour councillors moved towards a direct act of defiance towards, and confrontation with, central government.

The borough contemplated refusing to make contributions from the rates to the London County Council and central authorities such as the Metropolitan Police, Metropolitan Water Board and Metropolitan Asylums Board for their services; and this attitude hardened when the LCC agreed, after the change in housing policy in 1921, to suspend a plan for a huge council estate at Dagenham, over the county border in Essex, where many of Poplar’s slum dwellers would have been rehoused. Thus on 21 March the council decided to levy a rate only for its own purposes and for the Board of Guardians, 4s 4d in the pound (22 per cent) rather than 6s 10d (34 per cent).64 Since many of the poorest in Poplar paid rates as part of their weekly rent, the effect was not merely to disoblige the government, but also to reduce the cost of living for the tenants. It meant considerable savings for local businesses too, some of which were struggling. This was illegal, but councillors felt the authorities could do their worst.

Poplar owed the Metropolitan Police £25,000; the council told the Commissioner’s oﬃce it had raised the money, but spent it on employing people instead. The council promised to pay the debt as soon as it could, and the Home Secretary, seeking to avoid confrontation, echoed this in the Commons on 6 April. When in late May the LCC sought legal advice on recovering the money Poplar owed for that quarter – £33,944 – it discovered that the law made no provision to send in, as it were, the bailiffs. The government could not suspend or sack the council; the only

possibility was that the Receiver of the Metropolitan Police could order special overseers to collect the part of the rate due; however, this was but a small percentage of the debt, and no such powers existed for other creditors.

Therefore the LCC applied on 3 June 1921 for a writ of mandamus, whereby a court may order an individual or institution to perform a function that normally accompanies its duties, to recover its £33,944. Before that case could be heard, the Metropolitan Asylums Board applied for a similar writ to recover £14,000 it was owed. Poplar’s councillors threw themselves, or rather their constituents, on the mercy of the LCC , with people having to pawn wedding rings to make ends meet, at a time when the borough council was paying £4,600 in poor relief via the Board of Guardians. (Even some who objected to Poplar’s law-breaking used it to support the case for central, and not local, government paying for poor relief; this argument would be won later in the decade.) Labour was powerful in London’s boroughs, but had just fifteen of the LCC ’s 124 councillors; Poplar’s appeals went unanswered.

The council had to play for time; it argued that the writs of mandamus should not be granted because they could be used only if no other remedy existed, and one did: under the 1852 County Rates Act the LCC could seize Poplar’s assets and sell them. The borough’s lawyers also said it had been disobliged by alterations in the system by which the Metropolitan Common Poor Fund – the means by which richer boroughs subsidised poor ones – operated; it had been changed during the war and Poplar claimed the new system had cost it £38,000 a year; it said the burden caused by the recession and its effects on unemployment had been abnormal; and that the borough had relied on promises of government grants, which had been broken. While none of this was completely untrue, it stretched the truth. The judges who heard the case were not unduly sentimental. The Lord Chief Justice, Sir Alfred Lawrence, said he could not imagine why Poplar had behaved as it had, unless for reasons of ‘popularity’. Henry Slessor KC , who was retained for the council and who later became a Labour MP, replied: ‘No, my Lord, I am afraid it is poverty.’65 Since seizure of property was not only impracticable, but the cost to the ratepayer would have been even higher, the writ of mandamus was issued. A new rate was set, even higher than previously to recoup shortfalls; but was set only to meet Poplar’s immediate needs and pay external precepts. Some councillors, concerned Poplar’s tenants would

be financially crippled, began to question the protest. Slessor tried to delay actions that could have individual councillors charged with contempt of court for non-compliance. By July 1921 the debt to the LCC was over £60,000, and its lawyers warned of the entire system imploding if payment were refused. Some in Poplar, including Lansbury and his son Edgar, who would become a communist, believed the government would have to change the equalisation system before Poplar was made to pay. This was, at best, naïve.

At the end of July the High Court was told that within a month the debt to the LCC would be £133,000. It granted an application to serve writs on obstructive councillors. Thirty-one of the forty-nine councillors were served with LCC writs, and five with writs from other bodies, with no logic as to who received one and who did not; one who had twice moved resolutions not to levy the rates was not served, whereas one who had opposed the tactic was. On 28 July, the day before proceedings were taken, LCC oﬃcials urged the Ministry of Health to have legislation rushed through parliament to allow commissioners to run the council and restore order. The matter was referred to the law oﬃcers.66 The LCC men warned that the boroughs of Shoreditch, Bethnal Green and Fulham were closely watching events, and if chaos were allowed to reign in Poplar that might only be the start. The cabinet, when consulted about sending in commissioners, thought it would cause more trouble than it would prevent.

The thirty-six councillors who received writs marched from Poplar Town Hall to the Law Courts on 29 July, led by the mayor, Sam March, in his chain of oﬃce, following a mace-bearer. They were accompanied by a column of allegedly 2,000 supporters, some with banners, on the fivemile trek. The defence tried to persuade the court, presided over again by the Lord Chief Justice, that the writ of mandamus applied only to the council and not individuals; an argument the court rejected. Lansbury asked Lawrence whether he and his comrades could speak in their defence, as otherwise they risked imprisonment without being heard; Lawrence, with reluctance but presumably wishing to avoid accusations of a miscarriage of justice or bias, agreed. Several councillors then raised the matter of Poplar’s severe unemployment problem, and how the borough council funded people who should be the state’s responsibility. Lansbury said that ‘unemployed men, like animals, become dangerous when they are not fed, so that for 15 months we have done nothing less

than keep the peace under diﬃculties.’67 Whether that was a threat of revolutionary consequences if the government stood aside is a matter of conjecture. They spoke too of the betrayal of ex-servicemen, and of starving children.

Lawrence admitted he had been affected by the descriptions of the poverty in Poplar, saying ‘we have been very much impressed by the honesty and earnestness of the men who have addressed us.’68 However, he said the equalisation of rates across the LCC was not a matter for the courts, but for politicians; and that Poplar’s conduct would lead to ‘anarchy’. The court’s business, Lawrence said, was to decide whether the councillors had done their duty, and they admitted they hadn’t. Lawrence gave them a fortnight to set a rate, or to go to prison for contempt, with the exception of that minority whose voting record showed they had already tried. One of the councillors who had asked to speak claimed the rate, if it included all the precepts to outside bodies, would now have to be 38s in the pound. The court was unmoved: Poplar had made this particular bed and must now lie on it.

Both Lawrence and the Master of the Rolls refused an appeal, but eventually the latter changed his mind. It was heard the next morning, the Saturday of the August bank holiday weekend. The decision was issued on 4 August, and while saying the councillors would still be jailed if they did not purge their contempt, the deadline for their doing so was extended until the end of the month. The Court of Appeal did this despite acknowledging an irregularity, concerning the LCC ’s procedures, which provoked the court to order the LCC to pay the costs of the case; but it argued that the irregularity was of no consequence. Lansbury drew attention to this and magnified it, arguing in a newspaper article that ‘organised labour should understand that in the Courts of law all the scales are weighted against us because all the judges administer classmade laws . . . enacted . . . not to do justice but to preserve the present social order.’69

Lansbury’s revolutionary rhetoric was wrong; the matter would have to be remedied in parliament and not the courts. The courts were not administering class justice, but the law as it stood. However, it was becoming embarrassing for the government, and two days before the Court of Appeal decision was announced Sir Alfred Mond, the Minister of Health, announced reform of the Metropolitan Common Poor Fund. He specifically told the Commons that this would benefit Poplar, and he

hoped the council would now obey the court’s order and levy a rate. However, this had no effect on the militants of Poplar. Well in advance, they set the rate for the quarter from the end of September to the end of December, to collect enough for Poplar’s immediate expenses and the costs of the Board of Guardians. This act, which looked like the naked provocation it was, alarmed mainstream Labour figures in London, notably Herbert Morrison, the secretary of the London party. Morrison was then thirty-three and would end up in the House of Lords, having been Attlee’s deputy prime minister from 1945 to 1951. The son of a policeman, he had lost the sight of one eye during infancy and became a conscientious objector during the war, working in a market garden in Letchworth. He was a reformed Marxist who worked with the system to secure change. He had just been Mayor of Hackney, and believed he knew how things should be done; which would have included Poplar’s not seeking martyrdom in this fashion, but instead consulting fellow London Labour councillors and magnificoes, not least himself, to devise a popular front to advance on common principles and not break the law. For all Morrison’s titanic self-regard, he was right.

Among his chief concerns was precedent. If Labour councils started to pick and choose which laws implemented by a Conservative-led government they would obey, then one day a Conservative council might do the same if and when Labour was in power. Morrison called a meeting of the London Labour party in Shoreditch on the day of the Court of Appeal ruling. It exposed a huge rift within the party, which those present tried unsuccessfully to keep out of the press. The rift would become bigger in the years ahead as Labour formed its first governments, and wished to be taken seriously by those who had not voted for it. It was a rift between those who believed in playing by the constitutional rules, a position embodied by the prime minister of those governments, Ramsay MacDonald, and his chosen colleagues; and those who believed in radical action, people whom even some Labour figures considered Bolsheviks. The victories of Bolshevism remained evident, at least to those who welcomed them and drew parallels between the autocracy of the late Tsar Nicholas II and the constitutional monarchy of King George V. This, too, worried Morrison, who feared Labour sacrificed credibility by Poplar’s making a stand doomed to failure. It would impel central government to assume some of the powers of local councils, wrecking a key part of Labour’s power base. The common thread linking individuals and

factions who prospered in the labour movement throughout the inter-war period was the deliberate decision to distance themselves from Bolshevism, its methods and effects, and to nurture democratic socialism.

The cabinet’s Home Affairs committee, on 17 August, noted that the lavish support Poplar gave to the poor had led to £5,000 a week being disbursed by the Board of Guardians, and had created a rate of 92.5 paupers per thousand in the borough compared with 0.2 per thousand in neighbouring Whitechapel: apparently proving the sceptics’ point that if you paid people to be unemployed you would have unemployment, by deterring people from looking for work.70 Alarmed by these ‘extravagances’, the committee took the political decision not to prevent the councillors’ imprisonment, though it was far from clear, the law having spoken, that it could have: ‘it seemed desirable to let matters take their course.’ It decided the councillors ‘were quite determined to be martyrs and only a complete concession of all their claims would change this decision.’ Additional concessions would cause other boroughs to demand similar treatment, which could collapse the whole system. Mond was pressed to act, but denied having the powers to do so. A suggestion was made that the government might pass a short Act to give him such powers; the idea was dismissed.

As prison neared, some councillors farmed their children out to relations, and others sought charity to feed families who would, for a time, lose breadwinners. Arrangements were made for the council to carry on while the prisoners were away. On 1 September the arrests began, the police having been directed to undertake them with courtesy and tact. They took several days. In all thirty councillors, five of them women, were imprisoned, the last on 8 September. The men went to Brixton and the women to Holloway. Supporters complained about the brutality with which they were treated in prison, but they were merely enduring the standard regime, designed to persuade those who experienced it not to hurry back. Several older councillors were swiftly transferred to the infirmary. Much fuss was made about how appalling the food was but, again, this was perfectly usual. Councillors used the bi-weekly visits of friends and family to channel information to the left-wing press that would, they hoped, embarrass the government. It made little impression. The Home Oﬃce issued a statement saying that the councillors’ ‘only hardship is their loss of liberty.’71

The Home Secretary was petitioned to release them, but claimed the

prerogative of mercy could not apply to contempt of court cases. One councillor, eight months pregnant, was released on health grounds to avoid political embarrassment. This was on 21 September. The next day, after votes in a number of Labour-controlled London boroughs not to copy Poplar and refuse to raise precepts for London-wide services, the neighbouring borough, Bethnal Green, did. Then on 5 October Stepney followed suit, the resolution moved by Clement Attlee, at the time an alderman in the borough. Attlee, an Old Haileyburian with a distinguished war record, was not considered an extremist. He justified his actions by arguing it was no longer fair to have local boroughs support the unemployed. He had said to a meeting of London Labour parties on 24 September: ‘I have always been a constitutionalist, but the time has come when it is necessary to kick.’72

Morrison was trying to keep the lid on the London Labour party, and not frighten the electorate. He had written to Lloyd George to ask that parliament be recalled to debate the unemployment crisis or, failing that, that central funds be made available to pay unemployment benefit. Receiving what he deemed a pusillanimous reply, Morrison took a deputation of Labour mayors by train to Inverness, and then on a seventy-mile journey across country to Gairloch, to lobby Lloyd George, on holiday in the Highlands. As he arrived, so too did a demand from Poplar’s deputy mayor for the delegation to ask for the release of the imprisoned councillors. However, neither Morrison nor Alderman Robert Gentry, the Mayor of Fulham, wanted Poplar to dominate the meeting Lloyd George had agreed to have. His hands tied by his Conservative Chancellor, Lloyd George was vague about job creation schemes and indicated that rich London boroughs subsidising poor ones would not happen because of the anger it would cause in the former – bastions of supporters of his Coalition.

According to the Daily Herald – which had an informant among the deputation – Morrison warned Lloyd George that the unemployed movement was distinct from the Labour party, and likely to come under more extreme management. Morrison said that ‘a tendency . . . to talk violence in such circumstances is exceedingly popular, while to talk law and order is a subject of laughter.’73 When Morrison eventually brought up Poplar – on which he stressed he expressed no opinion – Lloyd George said he would have no objection to Morrison’s discussing it with Mond. He did not have to go far, as Mond was staying with Lloyd George at

Gairloch. Mond agreed to Morrison’s suggestion that he should call a meeting of London local government bodies, with councillors from Poplar; but he stressed he had no power to release them. He told Morrison he would bring in a Bill to allow the LCC to levy the rates that Poplar refused to, and that any equalisation of rates would have to await the findings of a Royal Commission on Greater London, whose deliberations were yet to start. This provoked a bulletin from Brixton, in which councillors announced that ‘we will stand out until the bitter end. We believe we are fighting the fight of the poor and heavy-laden not only in East London and Poplar but throughout the world!’74 They said they would refuse to negotiate while in prison, and felt Morrison was betraying them. Matters had become deeply ideological, not least within the labour movement itself.

Four of the councillors in Brixton, and the remaining four in Holloway, were allowed out on 27 September to meet eleven London Labour mayors. This culminated in a showdown between Morrison (as Mayor of Hackney) and the councillors, the former demanding they attend the conference Mond had proposed, the latter adamantly refusing to do so unless released. The mayors petitioned Mond to seek the prisoners’ release. Mond gave some ground, asking the mayors to draw up a proposal for equalising the rates; but they reported that this could be done only with Poplar’s co-operation, which would not happen until the prisoners were out.

With the Coalition itself becoming more fractious, Mond was increasingly vulnerable as a rare Liberal minister in a Conservative-dominated government. Word reached Westminster of an organisation of Poplar tenants who threatened to withhold their rent – and therefore rates – in support of the councillors. The LCC told Mond that if anyone were responsible for collecting the Poplar rate it should be him, and not the county council. With Bethnal Green and Stepney following Poplar’s example, Mond realised he was in trouble.

Luckily for him, everyone had had enough. Some Labour lawyers worked out that if the councillors apologised to the court, and the plaintiffs in the action against them – the LCC and the Metropolitan Asylums board – raised no objection, they could be released. They could attend Mond’s conference and a settlement might emerge. Certainly, the plaintiffs would not get their money so long as the councillors were in jail. Although the aﬃdavits of apology given to the court made no mention

of complying with the court order to raise the rate and pay the plaintiffs, the court decided the only chance of this happening were if the councillors participated in Mond’s conference. After six weeks in prison they were released, and returned to Poplar in triumph. Their victory was, however, incomplete.

Following the recent slashing of public spending – the so-called Geddes Axe, discussed in the next chapter – Mond was clear that without central funds to fill the gap created by Poplar’s behaviour he would have to raise it from richer boroughs, Royal Commission notwithstanding. He advised the cabinet on 7 October of the need for a new law – the Local Authorities (Financial Provisions) Act – that made the eight most aﬄuent London boroughs pay £800,000 a year into an equalisation fund instead of £400,000, the rest to be shared among the others. Although this would give Poplar an extra £21,000, it would be swallowed up by the £7,000 a week the Board of Guardians spent on outdoor relief because of high unemployment, the level of which some ministers considered ‘reckless’.75 Poplar wanted £61,000 and further help for the unemployed, and its problem became ever more disproportionate to that of surrounding boroughs. By 17 October its 92.5 paupers per thousand had become 125, ministers blaming the increase on ‘the reckless way in which the Poplar Guardians were discharging their responsibilities.’76

The conference with Mond proceeded with predictable diﬃculties. The main argument was about central government paying for the unemployed, which Mond would not allow to be discussed. However, the measures he had already been forced to take had marked the beginning of the end of the Poor Law. The rich boroughs wanted no more money poured into Poplar, agreeing with the cabinet that the existing system of poor relief was adequate, but funds had been distributed extravagantly compared with elsewhere; were they to allow more it would be spent just as badly. The most the rich boroughs would agree to was that the capitation grant from the Metropolitan Common Poor Fund should treble, from 5d to 1s 3d, the most they could defend. Labour rejected this as inadequate.

Westminster suggested the charge for outdoor relief alone should be equalised across London, thereby approaching the territory the antiredistributionist Mond had refused to discuss. He saw this as a way out of his diﬃculties, not least because a failure to settle the problem equably would lead to other Labour councils following Poplar’s example. Mond

amended his Bill to allow the costs of outdoor relief to be pooled; Poplar ended up doing better than any other borough, gaining nearly £350,000 a year. Two Labour councils turned out to be so well off that they lost under the settlement; one, ironically, was Morrison’s Hackney, for which its council censured him.

This completed Lansbury’s triumph. Direct action had worked, as behaviour in accordance with the law would not have, which while an embarrassment for Morrison made Mond look foolish. Had the government taken this step at the start there would have been no ‘victory’, no martyrs and no trouble, and above all no triumph for ‘revolutionary’ methods. The Poplar controversy also initiated reform of the 1834 Poor Law, which had assumed anyone needing parish relief was an idle scrounger. It had not envisaged that there might be no work in some areas. In January 1922 Mond published scales setting out what relief might be paid as standard, which a borough could supplement if it wished. Poplar did so wish: whereas Mond suggested a man and wife should draw 28s a week, including a 3s winter fuel allowance, Poplar paid up to 33s, to include both a winter fuel and a rent allowance. The legal maximum out of the Common Poor Fund was reached at 54s a week, paid to a man with a wife and five children; those with more children had to make do. However, Poplar paid 59s 6d for a couple with five children, rising to 74s 6d if they had eight children.

This, though, opened another chapter of conflict. To maintain some incentive within the Poor Law, relief for a family could not be more than 10s below a labourer’s standard wage. Given wages were falling following Geddes’s cost-cutting, Mond argued that relief had to be restricted too – because prices were falling too. The regulations stipulated a means test, so if a child was working and bringing money into the household, that would be considered when setting relief. Poplar chose to disregard the first 15s of the earnings of any child and, thinking even this harsh, the Guardians resolved in January 1922 to take into account only earnings of the applicant or his wife. The Guardians sent Mond a resolution to tell him the new scales were inadequate, especially the levels of relief for larger families. Mond replied that his scales were more generous than some London Boards of Guardians’, and declined to discuss the matter further.

The Poplar Board was then lobbied by a deputation of the unemployed, demanding 36s for a man and wife and 5s for each child, with rent paid separately. To pay this would have caused Poplar to run out of money.

Lansbury realised this and, unusually, advised caution. Charlie Sumner, the chairman of the Board, claimed the demands of the unemployed were too modest: he proposed 40s for a married couple and 6s per child, excluding rent. The councillors soon realised the promise was unaffordable, and the scales would pay more than some workers earned; and so the council voted not to implement the new scales for the moment: which was widely interpreted as a climbdown. This caused a protest by hundreds of unemployed, who besieged a Guardians’ meeting. However, the attempted extravagance embarrassed Morrison and his comrades in the London Labour party, who were trying to convince the public that they were responsible with public money, and would be if entrusted with the national government. The council’s conduct led to a coinage that would enter the dictionary: Poplarism.

In late June 1922 Mond, after trying to make the Board compromise, and failing to find the legal means to unseat the Guardians, made an Order under the 1834 Poor Law Act to make it illegal for the Guardians to pay relief in excess of his scales. This was widely ignored: in the first week after the Order, the Guardians made 1,829 grants of outdoor relief beyond the Mond scales. Poplar continued to ignore the order; and that was how matters rested when Mond, and the Coalition, left oﬃce in October. At the election that followed, Labour more than doubled its Commons representation, and Lansbury became MP for Bow and Bromley.

The Coalition had sought to ensure that those who could not afford a roof over their heads could be provided with one, even if the reform was accomplished incrementally, accidentally or, as in the case of Poplarism, by an element of force majeure. The nationalisation of unemployed benefit was an important step towards the abolition of the workhouse, which happened under Ramsay MacDonald’s second administration, a legacy of Neville Chamberlain in the 1924–29 government. The steep rise in unemployment in 1921–22 caused the insurance principle to be cast aside. The principle established became of huge importance in the early 1930s: that those in work would, through their taxes, fund those who were not.

Although the East End of London remained poor, the general rate of unemployment in the LCC area dropped by 75 per cent by 1930 as the

capital and its environs benefited from new industries – notably cars and electricals – booming in the south-east. But elsewhere, the unemployment associated with the 1930s started well beforehand. Once Germany could extract coal from the Ruhr again, after 1923, it became rare in Wales for more than three-quarters of the workforce to be occupied.77 The wide availability of unemployment benefit without an insurance basis was not merely (along with council housing) the establishment of a proto-welfare state; it may well have prevented widespread social unrest, when the fears of the middle classes and the plutocracy that the working-class movement had learned too much for comfort from the Bolsheviks may not have been exaggerated. Welfarism certainly prevented starvation, which might have led to something even uglier. However, it also helped the unemployed not to leave industries in decline, and to move to growing ones, and the dividend for that would be paid after the Wall Street Crash. The experience of mass unemployment in the early 1920s established that responsibility for the care of the unemployed had to be shouldered by the state, and not local authorities. This would prompt further reforms, largely but not entirely fortuitously, just in time for the Slump after 1929.

At the 1923 Labour party conference an attempt to pass a resolution congratulating Poplar on its defiance of the government was heavily defeated. Many delegates felt that Poplar’s largesse to those on outdoor relief was an affront to the working classes who supported themselves; and that Poplar had learned too much tactically from the Bolshevik revolution to respect laws most Labour voters (and potential voters) abided by. MacDonald’s wing of the party thought Poplar extravagant in paying their municipal workers, and that when private-sector wages had fallen with prices during 1920–22, like those in the public sector, so too should those in Poplar. Lansbury believed the attacks on him and his fellow councillors came from comrades who talked about improving the lot of the working classes by redistribution, but who lacked the guts to do anything about it.

At the conference, Sidney Webb argued that moderation would bring victory. The next day the hard left had its revenge in the Commons. In a debate on the Scottish estimates James Maxton, a radical Labour MP, accused the government of spending cuts that were prematurely ending children’s lives. A Conservative MP, Sir Frederick Banbury, asked whether it was in order for Maxton to brand an entire political party murderers.

When Maxton refused to withdraw the comment, the Speaker suspended him and three others. It would be seven weeks before they made the apology required to resume their places, retarding MacDonald’s efforts to make Labour appear moderate and electable in a profoundly conservative country.

The argument about Poplar’s wage rates boiled over again in 1923 when the district auditor threatened to surcharge the council £17,000 for excess wages paid in 1921–22. The council’s defence was that the Metropolitan Management Act of 1855 allowed it to pay its servants what it thought fit. A hearing at the town hall in May 1923 attracted a huge protest, with supporters singing ‘The Red Flag’ ; many forced their way into the public gallery. They proceeded to applaud and heckle. Although the 1855 Act provided a defence, counsel for ratepayers argued, successfully, that the council had exceeded its powers in setting a minimum wage. The district auditor imposed a surcharge, but of just £5,000. The council went to the Court of Appeal, where the case was not heard until May 1924 when the first Labour government was in power. On 23 June the court, despite a dissenting judgment by one of the three Lords Justice, denied the district auditor’s right to override decisions by councillors in this case.78 However, he in turn appealed to the House of Lords. The case would not be heard until April 1925. In the meantime the district auditor, to prove his point, announced his intention to surcharge the council £45,000 for extra wages paid from 1922–23.

The Law Lords overturned the Court of Appeal, unanimously. Lord Buckmaster, Asquith’s Lord Chancellor, spoke like a good Liberal in mocking the idea of a minimum wage at all, paying a certain rate for a job whatever that job might be. His colleague Lord Atkinson, a Unionist and former Attorney-General for Ireland, claimed the councillors failed in their duty if they ‘allowed themselves to be guided . . . by some eccentric principles of socialistic philanthropy or by a feminist ambition to secure equality of the sexes in the matter of wages.’79 He said that paying a charwoman £4 a week in wages was really ‘to a great extent gifts and gratuities disguised as wages and [are] therefore illegal.’ He believed Poplar’s Labour councillors had bribed their clientele in the electorate: its minimum wage was 40 per cent above what labourers earned in other local authorities, and the women’s wage was 78 per cent higher. Poplarism had reached the end of the road: on 9 April 1925 the council passed a resolution agreeing to abide by the Lords’ decision; and they asked

Neville Chamberlain, who had become the Minister of Health and responsible for local government, if in return he would cancel the surcharge.

However, the cuts implemented in wages were modest – no more than 7s 6d a week, down to £3 12s 6d, so pay was still comparatively high. Chamberlain cited the continuing extravagance as a reason for not cancelling the surcharge. In December 1925 thirty-nine councillors received summonses not just for the initial £5,000 surcharge, but for £1,198 costs. A negotiation started and the summonses were postponed, and cancelled altogether in March 1926, weeks before the General Strike, in return for Poplar’s promise to have their pay rates linked to a central cost of living index. That years of surcharges were written off was a victory of sorts for the councillors, and for tactics that had divided the Labour party; but the chance of recovering any but a fraction of that money was non-existent; the political cacophony that would have been triggered by pursuing the councillors would have been appalling. It had been a superb opportunity for Chamberlain, who until they were finally abolished would use central powers over the next few years to take over Boards of Guardians when they behaved profligately, to prove his political skills. He succeeded, paving the way for one of the century’s more remarkable political careers.

Poplar was the first, but not the last, instance in the inter-war years of severe social problems raising the prospect of unrest and causing catastrophists to believe that public order and the very way of life of the people were under threat. However, most of these problems culminated in peaceful resolution, not least because of the governing class’s awareness that a people badly shaken by war and its turbulent aftermath would only put up with so much. As would be seen again during the Slump of the 1930s, and the attempt to launch both fascist and communist mass movements, the British people, whose classes always tended to rub along well together, were just not interested in extremist solutions.

THE OLD GANG

PREFACE

Lloyd George had won the election of December 1918 – known as ‘the coupon election’ after HH Asquith, the former prime minister, a casualty of it, described those candidates endorsed by the ruling Coalition as having received ‘the coupon’ (a letter of commendation from the Coalition whips’ oﬃce) – with an overwhelming majority. However, Lloyd George’s personal position was compromised from the start. His instincts on social, economic and most other questions were not those of his Unionist supporters. This would most blatantly become apparent over Ireland, dealt with separately in the next chapter. He had a tendency to autocracy, which the Unionists felt compelled to check. He had been reluctant to attend parliament during almost three years as prime minister: The Times savaged ‘a system which leaves Mr Bonar Law to lead the House of Commons and the Prime Minister in a quasi-Presidential posture, out of touch with Parliament and ignorant of the opinion of the country’ and called the executive structure ‘a relic of the War Cabinet’ that mocked the idea of collective responsibility, because there were so few ministers to subscribe to it.1 The Coalition Unionists pressed Lloyd George to expand the cabinet to its pre-war size, ending the tiny and authoritarian war cabinet that had existed since December 1916. The body met for the last time on 27 October 1919. It drew attention to a series of heavy defeats in by-elections that showed how quickly public disenchantment had set in and demanded change. What Lord Northcliffe – the increasingly megalomaniacal proprietor orchestrating, as ever, The Times ’s political line – wanted was not a pre-war cabinet, but one of people of whom he approved, possibly even including himself.

Directly after the last meeting of the war cabinet, however, Law (not, unusually, the prime minister himself) announced a cabinet of twenty ministers. Northcliffe’s newspaper’s response, on behalf of its affronted owner, was predictable. ‘The Prime Minister has once more failed to fulfil expectations,’ it complained.2 A cabinet of twelve might have been acceptable; one of twenty was ‘swollen’. It feared the new vehicle ‘must degenerate into a debating society’ and was merely for show, existing to endorse decisions taken by an inner cabinet that resembled the small executive it had just supplanted. The Times may have had a point. Eleven members – a majority – were Unionists, eight being Lloyd George Liberals and one, George Barnes, representing the Labour party as Minister without Portfolio, as he had since 1917, and for which at the 1918 election the party had expelled him. To maintain his old ways, however, Lloyd George had frequent ‘conferences’ of ministers, usually no more than four or five, to agree matters before bouncing them on the rest of the cabinet.3 Governance built on autocracy and cronyism came naturally to him.

Those left outside this magic circle, notably Earl Curzon, the grandest Tory grandee and a former Viceroy of India, resented it intensely, not least because Curzon so liked being Foreign Secretary that he would endure any humiliation rather than resign. However, the prime minister realised that if he aggrieved the Unionists too much they could evict him and put one of their own in charge: as, in time, they did. Lloyd George was suﬃciently calculating to know that by diluting his hitherto almost dictatorial powers, he could give a semblance of democracy and also spread the blame for any failures. As Neville Chamberlain would later say, Lloyd George was ‘so sly, so treacherous and unscrupulous’ and ‘never had the rudiments of a gentleman’.4 Coalition MP s made him promise to attend the Commons more regularly, again in keeping with pre-war practice: Law wanted this, and he pledged to come at least once, and possibly twice, each week. This was confirmed at a cabinet meeting on 4 November, where it was ‘agreed that it would be desirable for Ministers to be present in Parliament as often as possible during the parliamentary session, and that, with this object in view, Ministers should transact their oﬃcial business in their rooms in the Parliamentary buildings.’5 Lloyd George retained Sir Maurice Hankey as Cabinet Secretary, and the organised practices – an agenda and minutes – that he had initiated.

Lloyd George had used the ‘coupon election’ to try and strangle the Labour party; and in ensuring it won only fifty-seven seats, he might have appeared successful. But from then onward the party flourished, especially in urban areas. By 1919 it had 572 councillors in London boroughs, controlling twelve. Labour was better organised at municipal level than its opponents, and also ran a superior campaign of persuasion. Fabians, notably Sidney and Beatrice Webb, sought to argue the benefits of leftism to people in general, and not just its natural constituency. This had begun with their 1918 treatise Labour and the New Social Order, and would continue with Mrs Webb’s The Wages of Men and Women: Should They Be Equal? the following year, which argued for equal pay. She had sat on the War Cabinet Committee on Women in Industry, and this was her minority report. Before the 1923 general election the Webbs published their Decay of Capitalist Civilisation. This intellectual and political activity, which went far beyond the movement’s elite but was inspired by them, should have been a warning to Liberals and Unionists, but neither noticed the rise of the Labour party until too late.

Theoretically, the United Kingdom of Great Britain and Ireland had considerable assets with which to capitalise on the peace. It had substantial manpower – and womanpower – and thus massive productive capacity. However, its infrastructure was increasingly obsolete and sub -standard, which posed an impossible political challenge: to fill the huge gap between reality and Lloyd George’s election promise of December 1918 to have homes fit for heroes. Private spending enjoyed a brief boom: in 1918– 19 alone consumer outgoings rose 21 per cent. Much speculative activity took place; the London money market made £65.3 million of new capital issues in 1918, rising to £384.2 million by 1920 . 6 The 1920 figure would not be attained again until after 1945. Also in 1918– 20 total bank clearings in the United Kingdom rose from £23,000 million to £42,000 million. Much of this speculative capital was, however, poured into declining enterprises, notably the Lancashire cotton industry (which accounted for 80 per cent of the UK total), rather than into concerns where it could fructify. During 1919 and 1920 some 238 mills, representing 42 per cent of all cottonspinning capacity, were bought and sold, for around seven times their capital value, and largely financed by banks, which themselves were completing a period of amalgamation . 7 In 1919– 20 speculative

investment was also high in shipbuilding, another industry that would shed value. In 1913, 1.93 million gross tons of shipping had been launched; it would never reach those levels again. Even in the relatively prosperous years before the crash of 1929 it only managed about 75 per cent of its 1911– 13 average output . 8 With so much capital squandered, it is astonishing the interwar economy was not even worse. The strength of the currency would depend on Britain’s recovering its ability to make goods to sell globally. Ironically, the Great War had created opportunities for employment and relative prosperity among the working classes that the peacetime economy was insufficiently developed to replicate.

Nowhere was the vacuity of Lloyd George’s ‘homes for heroes’ rhetoric more obvious than in the continuing failure to address the problem of housing. Residential property cried out for investment, having been mostly unmaintained for five years; but it had been inadequate even before that. There was by the Armistice a shortage of 800,000–900,000 dwellings.9 The task of implementing the housing programme fell to Christopher Addison, the Minister of Health. He was a qualified doctor and another of the men of ‘push and go’ who was largely invented as a politician by Lloyd George. However, he was also acutely aware of the connection between sanitary living conditions and good health. That, and the vicious cycle of disease (especially among those living in insanitary conditions) and poverty, would have been work enough for one minister: but Addison wanted not just housing, but also the administration of local government, absorbing the duties of the old Local Government Board. This combination of responsibilities was of his choosing: he was an empire builder who foresaw himself commanding just about the most powerful department of state, overseeing the Coalition reform programme. His portfolio anticipated the monolithic Department of Health and Social Security of the 1960s, and would become grossly overloaded as local authorities had also to care for a growing number of unemployed and their families.

There would be one overriding problem: the Ministry of Health itself was so badly funded and constituted that it became the Coalition’s great wasted opportunity. Had Addison been allowed the money and time to fulfil his vision he would have transformed Britain, and possibly prolonged Lloyd George’s time in oﬃce. Another key reform he envisaged – dismantling the Poor Law with its local Boards of Guardians and putting

the responsibility for supporting the unemployed and indigent on central government instead – fell victim to the Coalition’s inertia and economic mismanagement: it would be the task of one of his successors to complete the process. In the economic morass of 1920–21 it would be considered unaffordable, until a Conservative government was forced to afford it.

Addison’s ambitions concerning housing would be similarly thwarted. He began his attempt to keep the ‘homes for heroes’ promise by introducing what became the Housing, Town Planning, &c. Act 1919, compelling local authorities to start a detailed survey of the requirements in their area, and to provide dwellings where needed. However, in the brief post-war boom materials and land were expensive, and for a time there was a shortage of labour. The building trades refused to relax regulations to admit new apprentices: they did not wish to create a pool of skilled labour for which there might be too few jobs once the boom was over. Addison complained in February 1920 about a builder who had asked permission of a union, the Operatives Builders’ Society, to hire a man of twenty-nine (who had served in the Army for five years) to train as a bricklayer; the man would work for an apprentice’s wages to keep his wife and children, as he was unemployed. He was happy to join the union, but it flatly refused permission. The following month Addison discovered that there were just 3,645 bricklayers employed on local-authority schemes; one man for every twelve houses for which there were contracts. The union allowed only 400 bricks to be laid each day, which meant each man could build four houses a year; so it would take a decade to build 40,000 houses and around 140 years to build the 580,000 then required.10 Nonetheless, the union adamantly opposed ‘dilution’.

Trained builders were tempted from other trades to work in construction, builders in the Army were returned to civilian life, and non-essential building was suspended: an intelligence report as early as September 1919 had warned of ‘unrest . . . accentuated . . . by the erection in certain districts of Kinematograph Theatres instead of houses.’11 Ministers blamed the lack of progress on a conspiracy between masters and men to restrict labour and inflate costs; this was partly true, and would advance the economic bust then heading towards the economy like an express train. Also, the large number of speculative builders willing to put up houses required a return on their capital unobtainable from the meagre rents affordable to those supposed to benefit from this new stock.12 There

was no agreement on how to improve matters, so a cabinet committee was established; options ranged from even heavier subsidies of local authorities to banning non-essential building, raising the question of what was essential. A programme of school-building was vital: the country lacked 32,500 places in elementary schools and 40,000 places in secondaries.13 The diﬃculties of the state becoming involved in what had always been private concerns became ever-more apparent. To avoid the ideological diﬃculty of central government becoming their landlord, the government had local authorities start to build the houses, with the aid of a central government subsidy, but with (at Addison’s insistence) each authority making its own provision to borrow money in the capital markets. By the end of 1919 a total of 1,715 local authorities had submitted plans for projects.14 These included 7,885 separate sites totalling 58,000 acres, which the Ministry estimated would provide space for 580,000 dwellings.

Although by late 1919 London, like other towns and cities, was undergoing widespread repair as builders and decorators refurbished street after street, this, like the building programme, was going far too slowly to match the government’s rhetoric. It was the subject of a debate in the Lords on 13 November. Lord Buckmaster complained that the amount of subsidy required to get houses built – £57 a year per house in one urban district, Godalming – would ensure ‘all private enterprise in building will be permanently destroyed.’15 Matters were not helped by the minister deputed to speak in the Lords for the government on the subject, Viscount Peel, who had a War Oﬃce brief, being unable to supply any figures about what had, or would, be built or at what cost to the taxpayer; though he said that local housing commissioners had approved plans for 40,000 houses around Britain, far too few to satisfy demand.16 Lord Islington complained that only two houses had been built in Wolverhampton, and only after ‘the stream of correspondence and the torrent of forms’ from the bureaucracy needing to be overcome to achieve even that.17 Lord Salisbury observed that a huge contingent liability on the rates, apparently unnoticed when the Housing Act was passed, was deterring local authorities from building houses that ‘will not be able to earn the economic rent, and therefore the ratepayers will have to make good the difference.’18 There was ‘a great danger’ of the government scheme ‘breaking down.’

This debate so embarrassed the government that at cabinet the next

day it was agreed that ‘some immediate action was necessary to stimulate and increase the output of houses.’ It admitted that in England only 43,299 had been approved ‘compared with at least 500,000 required.’19 Unfortunately, the money to build them became scarce. As numerous local authorities went into the money markets, the availability of capital became tighter and the cost of borrowing rose. Had central government provided the money as a Treasury loan, borrowing would have been cheaper and the housing programme more successful. However, by the spring of 1920 the government could not fund its own debt, and with banks rationing credit local authorities could not borrow to build. The minister in charge did not help matters. Although Addison was something of a visionary he was remarkably pleased with himself, had few manners and managed to rub up the wrong way everyone who could have helped him. It was not a recipe for achievement. Even if the necessary money had been available – and its absence underlines the recklessness of Lloyd George’s promises – the plan for 580,000 houses would not have been enough. The 1921 census would show 750,000 more families than there were separate dwellings; thus other accommodation was diverted into domestic use – large houses and other buildings were converted into flats, military barracks and huts were used for civilians, and people lived in disused railway carriages. The conversion of large Victorian and Edwardian houses into flats could be done rapidly, but the availability of such properties was restricted.

Post-war building and repair schemes extended beyond the housing stock, and became emblematic both of a determination to improve the country and of the challenges faced in doing so. London’s roads were blocked by repair gangs for much of 1920, with the whole of Oxford Street being relaid. Despite railways crumbling in places and its roads being relatively primitive, Britain had inventiveness and expertise, and a determination to improve and recover. This spurred a massive burst of economic activity, though bust would swiftly follow boom. Laissez-faire economic liberalism had ended in 1914, and it would not have satisfied the demands of rebuilding post-war Britain. Chancellors of the Exchequer had to master a practice largely unknown to their predecessors, even the gimlet-eyed Gladstone: economic management. With government raising and spending huge amounts, massive war debts, a growing public sector and payroll to match plus a nascent welfare state, they would struggle to balance the books. For most of the inter-war period they

would pretend this management of the economy was strategic; but so frequent and shocking were the crises that it became, in fact, largely tactical. The government frequently found itself in the confused and paradoxical position that while it wished to restore something approaching the pre-war economy, it also sought to intervene in matters hitherto considered the responsibility of the individual. Also, such now was the government’s economic power because of its spending, or more accurately borrowing, that it moved markets. However, one fundamental of economic management remained until 1946 outside government control: monetary policy, controlled by the Bank of England, which was still a private institution.

At the December 1918 election those pledged to support Lloyd George had won 133 seats, whereas those supporting Law won 335. However, the government’s manifest failure to keep its promises inevitably caused it to lose support. By late 1919 the Coalition was losing by-elections. Some Liberal members, elected on the coupon, were starting to desert to the Asquithian faction, even though Asquith himself would not return to the Commons until he won the Paisley by-election in February 1920 (to sit in what he thought was ‘the worst House of Commons he had ever known’).20 That put paid to the idea of a Liberal party absorbed into the Conservative party by an act of what enthusiasts called ‘fusion’. The loss to Labour on 20 December 1919 of the Spen Valley by-election drove Lloyd George into panic. He began the new year with a heightened suspicion of colleagues and opponents. He would spend the next two years increasingly convinced of a conspiracy against him until, eventually, one actually occurred. There were more by-election defeats, not because of any plot against him or the Coalition, but because of inadequate grassroots organisation; and the reluctance of some in the largely Unionist organisation to put it to Lloyd George’s service.

II

As the economy began to overheat because of unduly high spending, the main message to Whitehall in 1919–20 was to cut to pre-war levels of staffing and responsibilities. On 16 October Lloyd George made a speech in Sheﬃeld in which it was hoped he would address the problem, which The Times had helpfully set out that morning, using oﬃcial Treasury figures: ‘Expenditure to Oct 11 – £794,682,669. Revenue – £482,481,978. Deficit to

date – £312,200,691. Estimated deficit for the whole year – £233,810,000.’21 The government’s critics – mainly higher-rate taxpayers – concentrated on civil service overmanning and the doctrine of cutting the state, but also on the failure to reduce the Army to pre-war levels. With the creation of Ministries of Health and Transport to fulfil election promises, cutting bureaucracy would be even more diﬃcult. Ministries without new agendas were less fortunate: Pensions had ballooned to 20,000 staff and was an obvious soft target.

A cabinet committee on the economy had been sitting for weeks and was, as Lloyd George spoke in Sheﬃeld, struggling to identify savings. He had sent a circular on 20 August saying that ‘the time has come when each Minister ought to make it clear to those under his control that, if they cannot reduce expenditure, they must make room for somebody who can . . . that is the public temper, and it is right.’22 In Sheﬃeld he merely mentioned the growth of debt, but added that the world needed essential commodities, and if Britain could fulfil those demands all would be well. He promised, against expectations, to deal in greater detail with the economy in a speech the next day, at a lunch in his honour. He criticised the public for spending too much and saving too little, absolving himself of personal blame. Disingenuously, he said it was parliament’s role to scrutinise spending, and it was failing. The chances of a mass of ‘coupon’ MP s violating the whip were, he knew, minimal; they would support whatever the Treasury put before them. Yet he urged his parliamentary colleagues to engage in scrutiny ‘not by levelling wild indefinite charges of extravagance, but by examining where the money is spent, making suggestions where savings can be effected, and listening to what has to be said on behalf of a Government Department when they explain why either is premature or could not be effectively accomplished for reasons of public safety.’23

He tried to reassure his audience by saying the huge deficit was caused by ‘the temporary expenditure which marks the passage from war to peace’. The pay of servicemen had been increased, ‘and rightly so . . . there is no class of the community that more thoroughly deserves recognition and appreciation in that respect.’ He argued that to retard progress in education was the worst false economy, like a farmer not using fertilisers. But inflation meant that servicemen, teachers, police and other public servants also had to be paid more. However, he knew spending could not go on at its then rate. He claimed, culturally, a corner had been turned. ‘I

do not want you to allow yourselves’, he said, ‘to be persuaded by stunthunters into the belief that you will get the expenditure of the country for years and years into the position it was before the war.’ He promised to end subsidies on bread and train fares; and the coal subsidy had ended, allowing him to joke that subsidies were ‘going, going, gone!’ He said the Versailles treaty and the peace would not have happened had a massive Army and Navy not been maintained, ready to resume the fight if necessary. He promised that by the end of the year ‘98 per cent of the conscripted soldiers will have been returned to their home’.

When parliament met on 22 October 1919 MP s bombarded the government with questions about the Whitehall payroll, and why it was not being reduced to pre-war levels. Thomas Macnamara, Financial Secretary to the Admiralty, an ex-schoolmaster and radical Liberal MP, admitted the numbers employed by his department had risen from 4,366 in August 1914 to 20,457 at the Armistice, and had barely been reduced. He promised to cut the numbers to below 5,400 by 31 March 1920.24 The Ministry of Labour had increased its establishment by 17,000 from the Armistice until late March 1919, though Sir Robert Horne, the Minister, said 5,404 staff had been sacked since May. He refused to commit to further reductions, hardly surprising given the level of state intervention in the labour market.

Also in Whitehall, Foreign Office staff had increased from 187 before the war to 938 by 31 March. Cecil Harmsworth, the under-secretary, argued that new responsibilities were to blame – a Prisoners of War Department, for example; and the Passport Office had grown from three people to 256, and the Foreign Office had absorbed the Ministry of Information’s Foreign Propaganda Branch. Churchill promised he would cut the War Office’s complement by more than half to about 8,000 by January 1920; and added that ‘in the next financial year the British Army will have been reduced to dimensions not dissimilar from those of our prewar Army.’25 The Ministry of Munitions had also cut its staff by 60 per cent since the Armistice, and claimed that many of the remaining 10,000 were engaged on work consequent to the war, notably disposing of surplus government property; and when that was done the ministry would close. Because the lifting of state controls was slow so too was the dismantling of the regulatory apparatus that ran them. It was not until 31 March 1921 that the Ministries of Munitions and Food evaporated, as the government finally took its hands off the railways and the coalfields. For

the last year of its existence, as controls caused prices that should have fallen to remain fixed, the Ministry of Food in particular, with its sub-sets that included the Oils and Fats Department and the Sugar Commission, became an increasingly baroque institution. Having taken control of this feature of everyday life the government struggled to relinquish it, long after U-boats had stopped sinking shipments of foodstuffs.

It was also from 31 March that the Bank of England’s line became harder on economic matters generally, as Montagu Norman took over as governor. Although in his fedora and with his Van Dyck beard he resembled a portrait painter with more than a professional interest in his models, he was born to be governor. His maternal grandfather, Sir Mark Collet, had held the post from 1887 to 1889. His paternal grandfather, George Warde Norman, was a long-serving director of the Bank. Collet had also been senior partner of Brown Shipley, the merchant bank where his grandson acquired a partnership in 1900 after six years there and two spent working for Martins Bank, where his father had been a partner. The young Norman was more than a man in a silk hat and frock coat: he volunteered for the militia (forerunner of the Territorial Army) in 1894, aged twenty-three, and was sent to fight in the Second Boer War, in which he won the DSO. He was appointed a director of the Bank of England in 1907, became a government economic adviser during the war, and deputy governor in 1917.

He conducted himself in an almost theatrical fashion as governor and was happy with the image, or legend, he created. He was a ferocious advocate of the Gold Standard, which he saw as a safeguard against politicians debauching the currency. He came into oﬃce with a ‘dear money’ policy – as deputy governor he had been influential in raising Bank Rate in 1919 – which he saw as a vital tool in forcing the country to stop living on credit. If money became too expensive to borrow, inflation would fall. He had an early quarrel with the government about housing policy, the money for subsidising which was entirely borrowed. This was the main reason why the ‘homes for heroes’ ideal was not realised, after Norman, at Chamberlain’s request, gave him a briefing document to show Lloyd George and Law that set out why that party could not go on. Norman argued that the consequent fall in prices would benefit everybody: he appears not to have predicted just how quickly and how steeply they would slide once the brakes were applied. A fortnight after he became governor, Bank Rate rose again, to 7 per cent, with what Norman’s

biographer terms, for the avoidance of doubt, ‘Chamberlain’s reluctant consent.’26

The government – haunted by Thomson’s continuing reports of budding revolutionaries among the unemployed – at least sought to provide against economic uncertainties, and to recognise the nation’s debt to old soldiers who had trouble finding work. This consideration lay behind the Unemployment Insurance Act of 1920. Some trades with strong seasonal fluctuations, such as building, were already covered: those not covered had to rely on an unemployment ‘donation’ from the Treasury, which was proving expensive and a further drain on the economy. The new system would be funded by contributions from workers and employers and was set at 15s for a man and 12s for a woman. Soon family allowances would follow, ensuring the costs of feeding and clothing children were met. Luckily for the 8 million additional people covered by the Act, but not for the Treasury, it operated from November 1920 as unemployment was rocketing.

Twelve million people – all earning under £250 a year – were insured; domestic staff, farm labourers and civil servants were excluded from a scheme that otherwise marked a major step towards a welfare state. However, to maintain the fiction that central government kept clear of the lives of individuals, it would be paid by local authorities. This would soon cause diﬃculties. The Treasury could not know that in the twenty years before war with Germany resumed there would never be fewer than a million unemployed, meaning, usually, more than 10 per cent of the working population, or that job losses would be concentrated in industries on which pre-war Britain had based her economic power – shipbuilding, iron and steel, textiles (notably cotton) and the export of coal. In such a Britain, and in a world clothed and swaddled in British finished goods of cotton and wool, sent around the country in British trains drawn by British locomotives and around the world in British ships, an unemployed man had by definition been an idle one. As one industry after another declined between the wars, an unemployed man became a helpless and stranded one, unless he had the resolve to move and, if capable of acquiring skills, retrain in the new industries – electricals, the motor trade and, increasingly after the mid-1920s, construction.

Until the recession the economy appeared to be heading in the right direction. Public spending fell from £2.696 billion in 1917–18 to £1 billion in 1920–21; and there was a budget surplus of £230 million against a £2

billion debt in 1916–17.27 This was, however, achieved by higher taxation: annual revenues per head rose from £18 in 1919 to £24 in 1921.28 The costs of the state continued to drive up the burden, despite ministers’ promises to scale it back. The civil service payroll, £81.3 million in 1913–14, had reached £590.7 million in 1921–22, despite promises to economise. In that financial year the Armed Forces still cost £190 million, compared with £77 million in 1913–14.

Inflation accounted for some of the increase in state spending, but state payroll, notably in the civil service, continued to be a contributing factor. On 8 December 1920 the cabinet issued an instruction that ‘except with fresh Cabinet authority, schemes involving expenditure not yet in operation are to remain in abeyance.’29 The only exception was to fund temporary anti-unemployment measures, in case unrest was provoked. Mrs Webb noted on 8 February 1921 that ‘the growing unemployment has added to the ferment of rebellious discontent . . . the wonder is that there is not more outward sign of angry resentment.’30 It was agreed to wind up the Ministries of Munitions, Shipping and Food, and sharply to reduce military spending, notably on commitments in the Near and Middle East. In 1921 a sell-off began of land, property and factories by the Ministry of Munitions.31 Naval construction was to be halted and ‘the utmost economy will be enforced in the administration of the Air Programme.’

The Sunday Pictorial, owned by Lord Rothermere, Northcliffe’s younger brother and collaborator, launched the Anti-Waste League in January 1921 to demand further cuts, and to expose what it deemed to be government profligacy. Rothermere, no less politically motivated than his brother but somewhat more rational, saw a drift to socialism or even communism in what he viewed as the government’s insatiable desire to spend. He was especially aggrieved by the state’s growing role in housing, feeling (on what evidence it is not clear) that council estates could be built by private speculators and rented out by them, or by rentiers who bought from them, as before. The Daily Mail also took up the cause, and 170 MP s signed a motion demanding a state economy drive. Reginald McKenna, now installed as chairman of the Midland Bank, called for ‘ruthless, relentless, remorseless’ action. Addison, as housing minister, was in their sights, and despite his record of loyalty the prime minister, fearing diﬃculties with the press, started to contemplate removing him. He survived briefly, but the writing was on the wall.

The Treasury was as anxious as the Anti-Wasters to cut spending, but Chamberlain lacked the force of character (or, perhaps more accurately, sheer ruthlessness) to bring his colleagues into line. He had battled for over eighteen months with Addison about money for housing; when Addison failed to persuade builders to cut costs, he asked Chamberlain whether the cost of borrowing could fall. Chamberlain left that to the Bank of England and to Norman, and for good measure told Addison that local-authority borrowing arrangements for housing were wasteful. Chamberlain thought the builders’ unions should be publicly shamed for intransigence, to force them to cut costs and to make a restive public realise whose fault it was. By the spring of 1921 some ministers were indeed pointing the finger at builders in their speeches. Addison then suggested local authorities be allowed to create direct labour forces rather than rely on contractors, after the unions in February 1921 rejected a government proposal to recruit 50,000 unemployed ex-servicemen and train them in building trades. Thomas Macnamara, now the Minister of Labour, had appealed to the building unions’ conscience by describing the potential recruits: ‘young, active ex-Service men, to whom the country rests under the most profound obligation, ready and willing to engage upon productive work, asking work and not charity, and finding themselves without the opportunity of earning that decent subsistence to which their services to the country in the hour of its necessity so abundantly entitle them.’32

This had no effect, any more than Macnamara’s factual statement that, at a time when Britain needed houses built, their trades included ‘considerably’ fewer skilled men than in 1914. So determined was the government to get jobs for these ex-servicemen – and to advance the building programme – that it considered subsidising the private sector and public works contractors with £100 a house if they would build them using exservicemen; or to have the Oﬃce of Works build such houses with a direct labour force of such men, or to demand their employment in any schemes they controlled. It was even suggested that the country might concentrate ‘on new methods of construction which would largely eliminate the employment of bricklayers’, though these were not specified.33

Chamberlain regarded saving money to pay debt down as imperative: in November 1920 he told colleagues he wished to reduce it by £250 million or even £300 million. This entailed a 20 per cent cut in spending

across the board; and he suggested a limit on the number of new houses for which the state would be responsible.34 It enraged Addison, who said the commitment could not be cut and that, indeed, his department might well ask for more money. Chamberlain, conscious that 35 per cent of public spending was servicing debt, equivalent to 7 per cent of national income, rejected the demand, and at a cabinet finance sub-committee on 30 January 1921 it was agreed ‘there was no alternative open to the Government but to decide housing questions not on merit, but on financial consideration only.’ This was the beginning of the end for the housing programme, and for Addison as a Coalition minister.

Lloyd George, as so often, played a double game, commending the need for economy but wishing to be seen applying no pressure to achieve it. He ensured his former protégé ran out of rope and was blamed for over-ambitious housing promises, something easily done because of Addison’s lack of political ability and his absence of clout from having so few supporters in parliament. Then Law’s decision to resign as leader of the Conservative party in April 1921, because of the early signs of the throat cancer that would kill him two years later, forced a reshuﬄe. He was succeeded by Austen Chamberlain, who also became Leader of the House of Commons – a more arduous job than today because of Lloyd George’s reluctance to attend. Chamberlain’s loyalty to his prime minister was beyond reproach but would have the consequence of rendering him one of only two Conservative leaders in the twentieth century not to attain this rank.35 His appointment would soon put more pressure on Addison.

Although the unprecedented levels of unemployment were dire, the worst failure of the Coalition was in housebuilding. Addison launched his housing programme in the expensive climate of 1919, and soon found costs were being forced up by the system of competitive borrowing by local authorities. This had become even worse when Bank Rate rose from 5 to 6 per cent, further tightening the screw on Addison. In March 1921, before the price and wage crash, it cost £858 to build a ‘parlourtype’ house; it cost £371 by January 1923.36 Addison, who seems not entirely to have understood basic economics, ordered that the houses be rented out at 1914 prices, which made the financial return even less satisfactory. He had asked local authorities to build what they could, while central government subsidised the cost under the Town Planning Act. The government set a target of building 500,000 houses by 1922.37 Shortly

after Bank Rate rose Addison had had to admit to his cabinet colleagues that the rate of progress was disastrous, with just 43,299 houses approved, and few completed.38 Even by the end of March 1920, nearly 17 months after the Armistice, a mere 715 local-authority houses had been completed in England and Wales.39 It did not add to Addison’s attractiveness to his colleagues that he simply blamed local authorities for being useless, being reluctant to take responsibility himself.

The manifesto promise on housing was complicated by a subsidiary promise to ensure an adequate house-building programme in rural areas too, encouraging the development of smallholdings and an increase in agriculture. This led to ribbon developments in rural towns and villages, unrestrained by serious planning and often impinging on ancient landscapes, one of the leading examples of which were the so-called ‘plotlands’ of south Essex. There was one rare example of a major new settlement being properly planned; Welwyn Garden City, in Hertfordshire, was begun on 29 April 1920 by Ebenezer Howard, the father of the garden city movement: the first houses were inhabited before Christmas.

Early in 1921 Addison finally – or so he thought – reached agreement with Chamberlain that the government would seek to build 250,000 houses by June 1922. Chamberlain’s main concern, though, was stopping the drain on the capital markets by local authorities, more than building houses or keeping ex-servicemen employed. Soon both men had moved on. Following the Anti-Wasters’ campaign, and after Law’s resignation, Addison was removed from Health in March 1921. His new appointment as Minister without Portfolio allowed Lloyd George to scapegoat him without his being sacked altogether – which would have been an admission of failure on Lloyd George’s part. Addison’s lack of popularity among his colleagues meant few rode to his defence. His consolation, apart from his cabinet salary of £5,000 a year, was the fine-sounding duty of ‘coordinating the political effort of the Government and adjusting it to the needs and sympathies of the new electorate.’40 However, the combination of his high salary and nebulous responsibilities fuelled outrage, with many Unionist MP s threatening to vote against the appointment, which would either have broken the Coalition or forced Chamberlain to resign as leader in order to stay in it. Lloyd George hoped Addison would resign, but he, arrogant as always and, more to the point, believing he was owed something by a prime minister who had let him down, was determined to stay, the better to defend assaults on his reputation over housing policy.

Lloyd George followed his customary course in moments of severe crisis: when matters turned really toxic, in early June, he claimed ill health and went to Wales for a week, convincing himself others were to blame for problems largely of his own making. While in Wales Lloyd George had a letter from Chamberlain, writing as party leader, warning him of the erosion of support for the Coalition among Conservatives; Addison had given an interview to the Evening Standard in which he had said he would not be driven from oﬃce. On 10 June Lloyd George replied that ‘I have been only too conscious for some time that the defence of his appointment would be diﬃcult if not impossible.’41 But he continued as though it was entirely Addison’s fault that he held this pointless and extravagantly remunerated job, and not that of the man with the power to appoint him. ‘He does not realise in the least his position. He regards himself as a martyr to the cause of Public Health,’ Lloyd George continued, reminding Chamberlain (again as if it were no fault of his own) that Addison’s £5,000 would be hard to justify at a time when the middle classes were howling out for spending cuts.

The prime minister built his case against Addison by telling Chamberlain that his protégé ‘has not behaved very well since his deposition. He has thought it necessary to be sulky and resentful.’ If true – and one always needs to apply that caveat to any claim by Lloyd George – then it would be no surprise, given how Addison had been asked to help the prime minister keep his main election pledge, and then been denied the resources to do it properly. This was the first government, and would not be the last, in the twentieth century to find that a massive expansion of the state ends inevitably in financial stringency. Lloyd George then completed his Pontius Pilate act by blithely assuming Chamberlain would tell Addison to resign ‘in his own interest’. He claimed his doctor, Sir Bertrand Dawson (who would later dispatch King George V), had ordered him another week’s rest.

Not only was Addison not prepared to resign, but support for his position from Winston Churchill, who sat in the cabinet with him as Colonial Secretary, seemed to convince Lloyd George of a conspiracy against him, led by Churchill and his drinking crony Lord Birkenhead, the Unionist Lord Chancellor and former FE Smith, and inspired by Lord Beaverbrook, proprietor of the Daily Express, who hoped to install Law, his fellow Canadian and crony, in his place, despite Law’s being in poor health. Again, Lloyd George used traditional methods to scatter his

enemies, getting the Daily Mirror to run a story on 21 June saying Unionists were preparing to stab him in the back, and then briefing the Manchester Guardian for its 23 June edition that Birkenhead was the main conspirator. Birkenhead had indeed tried to persuade Churchill to supplant Lloyd George as prime minister, though Churchill, a friend of both, declined. But that day Lloyd George had to face parliament about Addison, and sought to wriggle out of the problem by moving the goalposts. He claimed ‘we only regarded this appointment as a temporary one’, said Addison’s salary would be halved, and asked the House ‘to vote only a sum of money that will enable us to retain and pay for the services of the Minister without Portfolio until the end of the present session.’42 He attempted to defend Addison’s record in housing, arguing that he could not have taken on the job at a worse time – which was true. But he let the House believe that the housebuilding initiative had been Addison’s, and not his own, which all present would have known to be nonsense. Another remark held against Lloyd George – ‘I know that his unfortunate interest in health has excited a good deal of prejudice. He was rather too anxious to build houses!’ – may perhaps have been a joke: if so it was crass.43 But the reform programme was over. Government grants for new houses were limited in July 1921 to the 176,000 for which contracts had been placed, and then ended altogether in 1922. The government conceded the halving of Addison’s salary, and won by 250 to 40 votes with many abstentions, indicating diminishing support for the administration. When Mond, Addison’s successor at Health, proposed at cabinet (where Addison then still sat) on 11 July to end the housing programme because of the financial constraints on his department, and suggested the government announce in the Commons that it intended ‘further to explore the whole housing situation and to ascertain whether it is possible to devise some alternative methods by which the housing needs of the working classes can be adequately met in consonance with the financial diﬃculties of the nation’ – whatever that meant – Addison registered a strong protest.44 He noted the commitments local authorities had entered into, at the government’s urging, to buy land, lay out roads, dig sewers and serve notice on slum owners; and argued that to change the policy would break faith with the contractors and with the ex-servicemen still waiting for a home. The programme had already been scaled down from 800,000 houses to 300,000. His colleagues told him that the deterioration in the financial position of the country, and the ‘consequent

imperative duty of the Government to reduce expenditure and avoid fresh liabilities’, left no option but to renege on the promise.45

Addison was invited to join a cabinet committee convened to thrash out the problem; chaired by Sir Robert Horne, who had succeeded Chamberlain as Chancellor, its conclusions were predictable. Addison attended the next day and repeated his view that the policy change was wrong; instead of suspending building, he argued, it should merely be delayed and spread over a longer period.46 He described the politics as ‘disastrous’. He was told that the cabinet had taken a decision and that was that: the maximum room for manoeuvre, now at Mond’s discretion, was that if circumstances necessitated there could be an expansion by 12,000 houses on the 176,000 agreed, but no more. A statement would be made to the Commons. Addison asked the committee to agree he could be allowed to supply an alternative wording for that statement, an idea to which it assented. They met again the next morning to consider Addison’s proposal, which was that there was enough work with the 176,000 houses to keep men employed, and held out hope that at the end of that year the economy might have improved.

However, Horne told Addison that Lloyd George had that morning decreed there could be no further change of policy; those waiting to hear whether they might build further should be put out of their misery. Addison objected: as the government’s own draft announcement stood, the true reason for suspending the programme – the direness of the financial situation – would be concealed, which he as a man of probity felt wrong. Some redrafting was undertaken, but the policy change Addison sought was adamantly refused. He brooded overnight and on 14 July, betrayed by the man he had served loyally – including, in 1916, trying to gather support from Liberals for the Coalition itself – he resigned. He accused Lloyd George in his resignation letter of breaking his promises on housing and public health (in fairness, to ensure the existing rudimentary system of health care continued, the government had in fact increased doctors’ remuneration from 10s to 11s for every insured patient).47 Smarting, the prime minister told him that ‘the financial situation’ had forced them to stop the housing programme, which at least had an element of truth, and that Mond would put the scheme on ‘a more businesslike footing’.48 Like the promise of homes for heroes, this was a self-serving lie. Mond was given no time: Horne presented him with a fiat that the government could be responsible for no more than 176,000 dwellings, confirmed by

the cabinet. Mond announced the new policy the following week. The Addison furore created a fissure in the Coalition and pushed it closer to the exit.

Lloyd George accused Churchill of having supported Addison in ‘this very fatuous policy’, one occasioned mainly by the promise for urgent housebuilding that had helped win Lloyd George the coupon election; but then, taking responsibility for his own mistakes did not come naturally to him, any more than telling the truth did.49 AJP Taylor said of Addison that ‘he, more than any other man, established the principle that housing was a social service.’50 He also established the principle that local authorities provided that service, using the state’s money. By 1923 the shortfall in houses was still 822,000, despite those that had already been built.51 This was partly because of people who had put off marriage in the war deciding at last to take that step, leave the parental home and start families. The divorce rate had also risen, putting yet more pressure on demand. There had besides been further decay of the existing stock. Addison’s and others’ housing measures changed the landscape of Britain, with large suburbs of public and private housing appearing outside cities, and numerous villages having rows of drab council houses parked in them, again often on the periphery.

III

Sir Robert Horne was a politician with more of the stamp of Lloyd George on him, although a Unionist of long standing. Horne, a fiftyyear-old Scots don, barrister and businessman, had had a somewhat meteoric rise, typical of the sort of men the prime minister favoured. Elected only in 1918, he went straight into the government as Minister of Labour, and after a year became President of the Board of Trade, accelerated thanks to a series of high-profile wartime administrative jobs that earned him a knighthood before his election. Like Lloyd George he was an accomplished womaniser, though unlike him conducted the hobby from the more satisfactory position of being unmarried; he was, after all, a son of the manse. His success with the ladies was attributed to his skill as a raconteur, and also as a dancer.

Because Horne was handling the coal dispute (mentioned in the last chapter) at the Board of Trade, Chamberlain delivered the 1921 budget; but no sooner had Horne moved in than Treasury mandarins pitched

him into a confrontation with Lloyd George that went far beyond the contentious question of housing. In May 1921 it issued a circular saying that the cost of Supply Services, set for £603 million for 1921–22, had to be cut to £490 million. If a measure of the public mood were needed it came on 7 June, when an Independent Anti-Waste candidate, JMM Erskine, won the St George’s by-election in London. Just over a week later another Anti-Waste candidate, Rear-Admiral Murray Sueter, beat the Coalition candidate in East Hertfordshire by more than two to one. ‘Waste’ was characterised mainly as too many state employees, a hangover from the expansion of wartime, finding needless things on which to spend money. ‘I won because the whole country demands economy,’ Erskine said after his victory.52 Ernest Outhwaite, the secretary of the Anti-Waste League, specified three areas of waste: Addison’s appointment as Minister without Portfolio on £5,000 a year ‘when the taxpayer had a hard struggle to make both ends meet’, extravagance in governing Mesopotamia and Palestine, and above all ‘the payment of bonuses to an enormous number of public servants already in receipt of £2,000 a year and over.’53

Ministers were slow to take the hint, however. Instead of the £103 million reduction demanded by the Treasury, the departments affected offered just £75 million. The lack of will this represented was magnified by the fact that prices, and wages, had been falling from late 1920, and the excuse of tying up loose ends from the war was wearing thin. Horne embarked on further initiatives that ranged from cutting MP s’ expenses – they would only be allowed free travel to and from their constituencies when the House was sitting – and relocating government oﬃces to ‘outlying areas’, such as Acton in west London, where development was under way.54 More alarming still, the unemployment insurance fund was running short of money. Payroll was being cut too slowly: the wartime habit of state profligacy in this and other regards had not yet been conquered. Therefore, a new anti-spending weapon would have to be deployed.

The Treasury adopted this weapon, and Horne was entirely supportive. He told the cabinet on 2 August that an earlier assumption that spending should be cut by 20 per cent was insuﬃcient, and ‘in the near future further economies would be essential, and there was very little prospect of achieving this by the ordinary departmental methods.’55 The cabinet appointed a new independent committee, and it was announced

within hours that it would be composed of businessmen and chaired by Sir Eric Geddes, the buccaneering Minister of Transport and one of the leading ‘men of push and go’. Its brief would be to make recommendations to the Chancellor ‘for effecting forthwith all possible reductions in the National Expenditure on Supply Services’, and commenting on the financial effects of certain policy changes to which the cabinet might, or might not, agree. The one minister who asked to have his dissent recorded – though it was not dissent he carried to the point of resignation – was Churchill, worried about defence cuts. Once the committee was established, Horne, pressed by oﬃcials, changed the rule as he had warned his cabinet colleagues he might have to. The earlier target of a cut to £490 million had instead become a cut to £428 million, or of £175 million, or an extra £62 million beyond what had originally been envisaged. Thus Lloyd George’s social reform programme, such as it had been, was stone dead. He remained prime minister at the leave of the Conservative party, and bound by its doctrines. To depart from them would mean the end of his power.

The Geddes Committee deliberated for four months and examined numerous witnesses before publishing its first report ten days before Christmas 1921. It dealt with the Armed Forces, Pensions, Education, Health and Labour, with other areas of expenditure to be reported upon later. The cuts that would have the greatest implications for the future were to the Armed Forces. It initiated a disarmament programme, for financial and not ideological reasons, that would deepen later and store up considerable problems for the 1930s. Before the war the Navy had 159,000 men; the Admiralty had proposed to Geddes a cut to 121,000; Geddes said it could manage on 80,000; Churchill, speaking as a former First Lord, said a Navy of fewer than 98,000 men was not viable, and urged the cabinet to agree.56 Geddes found the Navy could run with 35,000 fewer oﬃcers and men, and the Naval estimates could be reduced from £81 million to £60 million. The immediate post-war Navy had had 70 battleships and battle-cruisers, 120 cruisers, 463 destroyers and 147 submarines, and a budget of £334 million: it was unsustainable.57 The committee wanted air power to replace sea power, ending the construction of four new capital ships. The Army, it said, could lose 50,000 oﬃcers and men without compromising imperial defence. It complained of abnormal reserves of arms and equipment, stored at huge cost. If all this were done the Army estimates could be cut from £75 to £55 million, and the Royal Air Force budget could shrink from £15.5 to £10 million.58

Perhaps even more controversially, the committee argued that more was being spent on education than the country could afford: £59.3 million was allocated for 1922–23 compared with £17.2 million in 1913–14. Grants to local government and charges on the rates that supplied the needs of schools added almost another £45 million. Geddes wanted £18 million cut out of the budget; a cabinet committee examined the figures and felt £6.5 million was as far as it could go.59 The divergence was because the government felt it could not cut teachers’ pay without being in breach of contract, and it was not prepared to exclude children under six from schools, a move the public would have deeply opposed. Teachers’ pay was nevertheless cut and the vision for secondary schools of HAL Fisher, the university professor responsible for education in the wartime Coalition, remained unfulfilled – as big a betrayal as failing to build ‘homes fit for heroes’. The failure affected Fisher, an honourable man, deeply. Virginia Woolf, his cousin, recorded that ‘he said he had neither the physical force nor the combativeness to carry things through. He said he hated parliament.’60

The costs of standardising teachers’ salaries and providing a pension fund proved enormous. The committee asserted that teachers’ pay and superannuation had been settled on an ‘ill-advised and unconsidered basis’ and that grants for secondary and higher education – which Fisher had aimed to improve out of recognition, to develop the nation’s human capital – were described as ‘excessive’. It said the Board of Education was ‘impotent’ to control expenditure, that local authorities had been pressed into expenditure they would never have contemplated, and that it had to stop. The committee demanded a cut of £18 million and parliament took care of the economies centrally, by cutting salaries and pension contributions. Local authorities relied on a 50 per cent state subsidy to fund education.

A school-building programme was curtailed and class sizes rose. This was incredibly short-sighted in terms of developing talent and helping prosperity – as well as for non-utilitarian reasons. Worst of all was a cut in free places for talented children at grammar schools. The main victim, however, was the planned ‘continuation schools’ Fisher had conceived as part of his 1918 Education Act, which would have provided part-time education for those aged between fourteen and sixteen. Elementary education had been free of charge since 1902; now the government was providing free places for secondary education, but on a level far below

what Fisher had expected and with the poorest families still unable to afford having a child of fifteen or sixteen in school when he or she could be contributing to the family budget. It would not be until the Butler Act of 1944 that state secondary education would become available for all who needed it, tailored to children of academic promise or with practical aptitudes.

Housing remained unfinished business. Geddes’s committee forecast a cost to the taxpayer of £10 million ‘for the next sixty years’ to fuel the housing scheme, and recommended that as many of these houses as possible be sold to defray the cost; the committee had no ideological problem creating a vast new rentier class, which it preferred to the state’s acting as a giant landlord. If house sales proceeded, only £2.5 million would have to be cut from the £24.5 million budget. Savings in war pensions were harder, but it was felt that money was being wasted on administration and treatment of the war wounded, and a saving of £3.3 million was possible. The Ministry of Pensions provided 25,856 beds in its hospitals, 9,821 of which were empty. It cost 10s 11d a day to keep a patient in them, whereas in civil hospitals the cost was 9s a day. It advocated abolishing the Ministry of Labour and its Employment Exchanges, a brainchild of Churchill and Lloyd George in the halcyon days of Asquith. If all these savings were achieved, the total would amount to £70.3 million. The government hoped that if spending could be cut then so could taxation, stimulating economic activity.

There were two further reports about what was becoming known as ‘the Geddes Axe’, one in late January and the other in February. Together they identified almost £87 million in possible cuts in various civil service and revenue departments across Whitehall, and another £13 million in the defence budget: the committee had discovered that the Navy had enough ammunition for twenty years’ consumption based on its annual use during the Great War, yet was proposing to buy another £2 millions’ worth. This extra cut would reduce the total to £428 million as the committee had been asked; but it also aﬃrmed that this was just a start, that the state was too large, and that further savings should be pursued. The committee advocated cutting social services – it claimed it found duplication and scope for streamlining their provision – and abolishing five government departments. Wartime civil servants began to leave.

In further cost-cutting, the committee recommended ending the Ministry of Transport and transferring its functions to the Board of Trade,

which even Horne rejected. The government also refused a recommendation to abolish the Department of Overseas Trade and the Department of Forestry. The response to this was typical of that from most ministers about most proposals: shock. No-one had prepared himself to share responsibility and cut expenditure as Geddes now demanded. Lloyd George, who thought the Admiralty’s response betrayed a sense of ‘bitterness’, had it minuted that he ‘deprecated the adoption of a hostile attitude of mind towards the Geddes Committee.’61 It should not, he said, ‘be treated as making a wanton attack upon the Government Departments.’ Its members ‘had gratuitously given their services to the country’ and ‘the Cabinet should treat them generously and should recognise the great services they had rendered.’ Lloyd George was trying to hold a line and prevent resignations, or further attacks from the press about profligacy. Horne, who made it clear he almost entirely accepted Geddes’s proposals, supported him. The Admiralty denounced the proposed Naval estimates and the intended cut was halved – though with the warning that more would come if the international disarmament conference then being held in Washington bore fruit. Geddes proposed 54,000 men fewer in the Army; after a fight between the Treasury and the War Oﬃce, the government settled on 40,000.62

The 1922 budget contained £910 million of expenditure, compared with £1,136 million in 1921, so some impact was made; income tax, since the war regarded as a serious brake on enterprise and prosperity, was cut from 6s to 5s in the pound. Horne warned his colleagues of a deficit of £51 million despite the cuts, and that further cuts would have to be made the following year, especially if the economy were stimulated by tax cuts.63 Norman, however, told Horne that the most urgent step was to negotiate a debt settlement with the Americans. Congress had just passed an act demanding repayment of all war loans within sixty-two years; Britain owed £900 million, but was owed four times that amount by its allies. Some British politicians, led by Balfour, believed Horne should aim for an agreement to cancel debts all round; Norman felt this delinquent, and wanted Britain to pay up even if its former allies could not.

The Geddes programme caused nervousness, and the government started to do badly in by-elections. Those who had supported the antiwaste drive would not be content with the £64 million the cabinet had agreed to save against the £87 million Geddes recommended, with another £13 million obtainable, his committee thought, if the disarmament

conference succeeded.64 Horne warned his colleagues the savings would have to rise to £100 million in the following two years. He still eyed the Admiralty budget, but knew the main reason for rising expenditure was unemployment relief and other benefits. He believed that genuine waste, as opposed to money spent for political reasons, was ‘negligible’, despite what the Anti-Waste League claimed. The question was also being used by Unionists agitating against Lloyd George and the Coalition, which in little over a year they would break up.

Real interest rates remained high throughout the 1920s to defend the currency, even before the return to the Gold Standard in 1925: this was deflationary and helped keep unemployment high. As interest rates rose the cost of servicing Britain’s debt rose with it, at little immediate benefit to the working public, and the urgency of cutting costs became ever greater. Despite the Treasury’s attempting to pay the debt down, the UK ran a budget deficit throughout the 1920s even after the Geddes cuts, because of the cost of servicing debt. That debt remained high as a proportion of gross domestic product because GDP itself was contracting. Having been around 130 per cent of GDP in 1920, debt rose to 180 per cent in 1923, fluctuating between that and 160 per cent until 1935.65

Between late 1920 and late 1922 the index of wholesale prices halved, and continued a slow decline until the bottom of the Slump in 1932 when prices stood at around 30 per cent of the level of 1920. Inflation fell from 15 per cent in 1920 to minus 15 per cent in 1922. After the initial readjustments of 1920–22, wages, which had lagged behind inflation, soon stopped falling in line with prices. This was partly because of a recovery in the power of the unions, and the reluctance of successive governments to confront them (until the 1926 General Strike). However, as demand for labour fell, unions priced their members out of the jobs market. The coal and cotton industries were badly hit, as was shipbuilding – a key employer on Clydeside, Tyneside, Merseyside and in Belfast – because fewer goods had to be transported, with exports nearly halving in value between 1920 and 1921 from £1.56 billion to £810 million.66 In Barrow-in-Furness, a big shipbuilding town, 49 per cent of insured workers were idle in August 1922, and 43 per cent in Jarrow. The wider effect on heavy industry was seen in the 60 per cent unemployment in Hartlepool, and 49 per cent at Stockton-on-Tees. Shipbuilding’s decline would be precipitate and would revive only with the approach of war in the late 1930s, by when a generation of skilled labour had been lost.

Because it was deemed politically imperative to ensure those hit hardest by economic misfortune were protected, unemployment insurance was extended to 12 million workers. This not only directly helped the jobless, but also allayed public fears about their plight and the possibility of social unrest; and it precipitated the end of the workhouse. The state, like many Britons, recognised that unemployment was caused not by feckless people, but by economic convulsions for which the individual could not be held responsible. Mrs Webb said that for ‘the first time some sort of weekly allowance is being received without the stigma of pauperism . . . everyone accepts the “innocence” of the unemployed person and admits that he ought to be maintained either by his own industry or by the community.’67

This was a seismic cultural and social change, and answered the question she had posed about the absence of civil unrest. However, the new scheme also incurred huge liabilities when unemployment failed to fall. It prevented mobility of labour to growing industries – and institutionalised unemployment. On the other hand the state’s willingness to provide staved off unrest, and the populace’s already limited inclination towards revolutionary activities lessened. Many in Britain may have been economically disadvantaged in the 1920s and 1930s, but the nation was calm – although the flourishing of Hannington and his movement continued to concern Special Branch and ministers.

Unemployment among insured workers had rocketed to 2.2 million by 10 June 1921, but by 19 August was down to a still troublesome 1.6 million. Ironically, given the government’s housing promises, over 20 per cent of the building trade was jobless at the end of 1921. The number of working days lost to strikes fell: from 85 million in 1921 to 19 million in 1922, and that figure almost halved in 1923. Exports in 1921 were just 47.3 per cent of those in 1920; imports fell to 43.9 per cent of their 1920 total, reflecting the collapse in domestic demand.68 The Ministry of Labour’s cost-of-living index fell too, from 276 in November 1920 to 180 in December 1922. However, in an apparent reversion to Edwardian levels of inequality, those living off dividends became better off in real terms, with the average ordinary dividend being 10.2 per cent in 1920 and falling only to 8.4 per cent two years later.

The government kept passing legislation to help the unemployed, extending the time for which their insurance would cover them and improving some benefit rates. An original fifteen-week maximum was

extended to two sixteen-week periods, with the gap between the two covered by ‘uncovenanted’ benefit from an unemployment fund, the resources for which were borrowed from the Treasury. This uninsured assistance came to be known as the ‘dole’, after the medieval charity local magnates gave to the parish helpless. This development of welfarism came at a cost to the working man, whose contributions rose; and it instigated a national bureaucracy to quiz claimants about the zeal or otherwise with which they sought work. It would later be deployed to operate the means test. Such methods were essential if the middle classes and ‘respectable’ working class were not to be outraged by this new breed apparently living off the state, creating a different sort of political problem.

A measure of the caution with which the government felt it should proceed was seen in its Unemployed Workers’ Dependants Bill, which came before the Commons in October 1921. It proposed to pay, from the non-contributory Unemployment Insurance Fund, 5s a week to the wives of the unemployed and a shilling for each child, even less than the Poor Law. JR Clynes, the then Labour leader, said such rates mocked the poor, and on 26 October his MP s walked out of the House in protest. They had failed to grasp that, however mean the levels of benefit, another step had been taken towards a welfare state: never before had the state paid an allowance to an unemployed man’s wife or children. In March 1922, as prices fell, proposals came before ministers to cut weekly benefits from 22s for a married man (plus a shilling for each child) to 17s; the single man’s allowance would fall from 15s to 12s and the single woman’s from 12s to 10s.69 The proposals worried the cabinet, which feared ‘grave disturbance’ if the plan was adopted.70 Apart from its alarm at 2 million out of work, the government was rattled by growing disputes in the engineering and shipbuilding trades, and feared a breakdown in law and order to the extent that it discussed and updated the plan for calling up the reserves. The proposals were rejected: Horne, pointedly, had his dissent recorded.

As already indicated, the Geddes Axe had an immediate effect and a wide and portentous impact. The cuts to the Armed Forces, which would be continued throughout the decade, helped create the national weakness in defence that would cause such problems in the 1930s, with the rise of

Hitler and the threat he and his regime posed to Europe. The final hurrah of the pre-Axe British Army was the expedition to Russia, conceived by Churchill too late to strangle Bolshevism at birth. It was doomed to failure because of supply problems, a shortage of allies and the enemy’s superior numbers. Lloyd George had resolved late in 1918 to permit no large-scale intervention, and certainly nothing such as Churchill envisaged: a march on Moscow to smash Bolshevism.71 Its last soldiers left Archangel on 27 September, not least because, as Lloyd George told Churchill unequivocally, the government had ‘to comply with the legitimate demand which comes from all classes of the country to cut down the enormous expenditure which is devouring the resources of the country at a prodigious rate.’72 Nonetheless, Russia remained of acute interest to the British government.

With its own defence expenditure being forced down, the United Kingdom was increasingly placing its faith in international co-operation to do the job of armies and wars. It strongly supported the establishment of the League of Nations, which met for the first time in Paris on 16 January 1920 having been established by the Versailles treaty. The League had, for a time, fervent supporters in Britain inside and outside the governing class, notably Lord Robert Cecil, whose idea it largely was, and whose devotion to it would win him the Nobel Peace Prize in 1937. However, America never joined, greatly weakening the organisation; and by the early 1930s it was clear that Germany in particular had no regard for the League because of its commitment to disarmament at a time when the Germans were bent on aggression. This increasingly divided opinion in Britain, some parts of which had been unhappy about aspects of Versailles. The country would, during the League’s lifetime and for decades after it had wound up, suffer from internal conflicts on questions of diluting sovereignty by joining supranational bodies whose aspirations were sometimes greater than their ability to achieve them.

While it was clear that the revolutionary potential of the working class could be dampened by their having a roof over their heads and food on the table, post-war discontent took a different form among the intellectual and political classes, focused on the long-term dangers of the Versailles treaty: even in the early days of peace there were already harbingers of a darker future. Foremost among the younger generations of thinkers was John Maynard Keynes, whom Beatrice Webb would after the 1931 financial crisis describe as ‘the imaginative forecaster of events

and speculator in ideas’. He had been a Treasury oﬃcial since 1915 and was part of the British delegation to Versailles. He left it ostensibly for health reasons a month before the treaty was signed, and spent the summer of 1919 writing The Economic Consequences of the Peace. Published that autumn, it predicted Europe could be stable only if Germany were allowed to flourish, and that it would be an abuse of power to ‘destroy’ the defeated nations. This meant either no reparations or, at the most, £2,000 million worth; a general forgiveness of debt, which would benefit Britain enormously; and the United States offering Europe huge credit to rebuild, much as it would after 1945. Lloyd George, according to AJP Taylor, used General Jan Smuts, the South African military leader, to egg Keynes on to attack the Versailles settlement.

Keynes feared the British expected a return to ‘not only to the comforts of 1914, but to an immense broadening and intensification of them’: which was a delusion.73 He felt that for the victors ‘the future life of Europe was not their concern’, but rather a preoccupation with ‘revenge’ that had brought the ‘Carthaginian Peace of M. Clemenceau.’74 He argued that ‘Europe, if she is to survive her troubles, will need so much magnanimity from America, that she herself must practise it.’75 He mocked as ‘untenable’ Lloyd George’s 1918 election pledge to make Germany pay the whole cost of the war; and called any attempt to persuade his fellow leaders to agree to it ‘beyond the powers of the most plausible.’76 He was right. With interest also payable, he dismissed the notion that Germany could meet even a modest level of reparations: he predicted that by 1936 the total debt, even with regular repayments, would be £13,000 million compared with the 1919 figures of £8,000 million. He argued that ‘the policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness should be abhorrent and detestable.’77 The instability inflicted upon Europe can with hindsight be seen as sowing the seeds of the Second World War: ‘The Treaty includes no provision for the economic rehabilitation of Europe – nothing to make the defeated Central Empires into good neighbours, nothing to stabilise the new states of Europe, nothing to reclaim Russia.’78 He felt Lloyd George’s only concern had been ‘to do a deal and bring home something that would pass muster for a week.’ He warned the governing class of imminent economic crisis, unemployment and inflation, with central European currencies virtually valueless and capitalism in crisis. He argued for an

early revision of the treaty, because Germany needed to become a creator of wealth, with Russia as Europe’s trading partner. He was ignored: the privations predicted for Britain would soon be felt; the international price would be paid later, and terribly. Keynes could not have been more right about the consequences of Versailles.

In the early post-war years no event symbolised Britain’s ambiguous place in the world so much as the British Empire Exhibition, opened by the King on St George’s Day 1924, and designed to showcase the country’s global influence. The Empire had reached its largest extent just before the creation of the Irish Free State, and had therefore just begun its decline. It was something the country wanted to boast about to the world; but it was a calculated morale-boost for a public that saw America overtaking Britain, and looked back with unashamed, if cynical, nostalgia to the Great Exhibition of 1851, the curtain raiser to British economic might in the Victorian age. The people loved it.

It was held in parkland around Wembley Stadium, a structure that rapidly became a symbol of the optimism of post-war Britain. Marked by two neo-colonial twin white towers that echoed Lutyens’s Delhi, it had opened in April 1923 with the intention that there would be a great exhibition in what had been pleasure gardens the following year. The stadium was built in 300 days at a cost of £750,000, and its inauguration was the staging of the 1923 FA Cup Final on 28 April. An estimated quarter of a million people turned up; the stadium’s oﬃcial capacity was 127,000. In an illustration of the public restraint and orderliness that prevailed, mounted police, including one oﬃcer prominent on a white horse, managed to ease the crowd back to the terraces. The match began just forty-five minutes late, Bolton Wanderers beating West Ham 2–0. Although the stadium then and thereafter was associated with football – the FA was its main tenant – it also had athletics tracks and would, in 1948, host the Olympic Games.

The Empire Exhibition’s opening ceremony a year later was broadcast by the infant BBC , another sign of the modern world into which Britain was plunging. Afterwards, His Majesty and Queen Mary took a turn around the grounds on the miniature railway. The Great Exhibition of 1851 had turbocharged a Britain rediscovering free trade after the repeal of the Corn Laws five years earlier; this one, too, was supposed to advertise British products and quality. But it was also a showcase for the produce, achievements and ingenuity of the Empire. A deputation had

9781804940983

Sing As We Go

A. N. Wilson, The Critic

Sing As We Go

Britain Between the Wars

s imon h effer

PENGUIN BOOKS

CONTENTS

PREFACE

ACKNOWLEDGEMENTS

PREFACE

INTRODUCTION

THE LEGACY OF WAR

PREFACE

PART I

FROM THE WAR TO THE STRIKE

A TURBULENT PEACE

PREFACE

II

III

THE OLD GANG

PREFACE

II

III