Arts, Faculty of
History, Department of
DSpace
UBCV
Caulfield, Peter
Master of Arts - MA
University of British Columbia
Following a short postwar boom, the British economy fell into a long period of uneven growth. The single biggest symptom of interwar economic transition was the unprecedented phenomenen of persistent mass unemployment, concentrated in the export staple industries. This thesis re-evaluates two important contributions to the debate on unemployment policy in the 1920s, by political mavericks Oswald Mosley, of the Labour party, and David Lloyd George, of the Liberals. Each produced small but pithy books on unemployment: respectively, Revolutiony Reason, and Courp.jployment. Most of the historiography to date on the subject has been overly lieconomicu in its orientation, and lacking in historical context. The thesis argues for another interpretation of the two books.. It looks more deeply into the political and social environment in which the programs were developed, and focusses on the “positive” rather than the “normative” dimension of their economics. It will examine what Lloyd George and Oswald Mosley were trying to accomplish in their programs, and why the programs took the forms they did. It will also, for the first time, explicitly compare the two programs, The comparative approach will show just how different their policies were, an important aspect overlooked by the existing literature..
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BRITISH UNEMPLOYMENT POLICY IN THE 19205A Re—appraisal of RevoItioo,.by Eeonand W.C ..C mp 1.ozmci’byPETER CAULFIELDB.A., McGill University, 1969M..A.., The University of Manitoba, 1974A THESIS SUBIMITTED IN PARTIAL FULFILLMENT OFTHE REQUIREMENTS FOR THE DEGREE OFMASTER OF ARTSinTHE. FACULTY OF GRADUATE STUDIES(History)We accept this thesis as conformingto threquirekstandardTHE UNIVERSITY OF BRITISH COLUMBIAAugust 1992Peter Caulfield, 1992In presenting this thesis in partial fulfilment of the requirements for an advanceddegree at the University of British Columbia, I agree that the Library shall make itfreely available for reference and study. I further agree that permission for extensivecopying of this thesis for scholarly purposes may be granted by the head of mydepartment or by his or her representatives. It is understood that copying orpublication of this thesis for financial gain shall not be allowed without my writtenpermission.((Signature)Department of_____________The University of British ColumbiaVancouver, CanadaDate____DE.6 (2/88)11iBSTRACTFollowing a short postwar boom, the British economy fell into along period of uneven growth. The single biggest symptom ofinterwar economic transition was the unprecedented phenomenen ofpersistent mass unemployment, concentrated in the export stapleindustries. This thesis re—evaluates two important contributionsto the debate on unemployment policy in the 1920s, by politicalmavericks Oswald Mosley, of the Labour party, and David LloydGeorge, of the Liberals. Each produced small but pithy books onunemployment: respectively, Revolutiony Reason, andCourp.jployment. Most of the historiography to date on thesubject has been overly lieconomicu in its orientation, andlacking in historical context. The thesis argues for anotherinterpretation of the two books.. It looks more deeply into thepolitical and social environment in which the programs weredeveloped, and focusses on the “positive” rather than the“normative” dimension of their economics. It will examine whatLloyd George and Oswald Mosley were trying to accomplish intheir programs, and why the programs took the forms they did. Itwill also, for the first time, explicitly compare the twoprograms, The comparative approach will show just how differenttheir policies were, an important aspect overlooked by theexisting literature..1)-iTABLE OF CONTENTSAbstract page iiChapter One Introduction 1Chapter Two Economic, Social, and Political 6Conditions in the 1920sChapter Three Government Policy on Unemployment 27Chapter Four Revolution by Reason 49Chapter Five L.Je Can Conquer Unemployment 70Chapter Six Summary and Conclusion 93Bibliography 981CHAPTER ONE INTRODUCTIONThis thesis is about unemployment policy in Britain during the1920s. Its purpose is to re—evaluate the important contributionsto the debate on unemployment policy made by two politicalmavericks, Labour’s Oswald Mosley, and the Liberals’ David LloydGeorge. Mosley was the author of Revolution by Reas (1925),and Lloyd George the prime mover behind We Can_CongrUnployment, informally known as the Orange Book, because ofits cover, and which served as the Liberal manifesto in the 1929General Election.The first decade after the First World War was marked byeconomic dislocation in Europe. On the Continent, the principalsymptoms of instability were volatile currencies.. Weimar Germanyexperienced a catastrophic hyperinflation of the mark, causinggrievous economic and social hardship.. Austria and Hungary, toname ,just two, had similar experiences to Germany.. Britain, onthe other hand, suffered persistent mass unemployment.. Althoughunemployment as an economic problem gradually attracted more andmore attention as the decade wore on, it generally did notreceive high priority as an object of government policy duringthe 1920s. Some partisan groups and political parties tookunemployment more seriously, however, and put forward policiesto attack aggressively the problem. They included the Liberalparty, and groups within the British labor movement..2The historiography of British interwar economic policy, of whichthe literature dealing with unemployment policy forms asignificant part, can be divided into two schools of thought.Much of the earlier literature on the subject approachedeconomic policy as a study in the history of economic thought.It attempted to link up changes in policy during the interwaryears to contemporaneous changes in economic theory which havesince become known as the “Keynesian revolution”. Implicit inthis historiography is the idea that the debate over policy wasmainly a clash between competing economic theories: ananti—expansionist doctrine of 19th century orthodoxy, versusmodern Keynesian expansionist systems of government interventionin the economy, of which the Orange Book was a shining example.It suggests that Britain’s policy makers could have solved theinterwar unemployment problem if only they had been morereceptive to the Keynesian remedy of massive deficit—financedpublic works to inject new investment spending into the Britisheconomy.( 1)“Keynesian” historiography, as this school of history issometimes called, has not remained unchallenged. Beginning inabout 1980, new interpretations began to appear, as Britain onceagain faced high unemployment, and a government prepared totolerate it as an acceptable cost of economic adjustment.Mthough these new interpretations were also economic in their3approach, they were skeptical of the claims made by theproponents of expansionist policy and their supporters in theearlier historiography..(2) Some writers in the second schoolincluded political and administrative factors in their analysisof policy, but their overall method remained focussed on theuniversal and the general. The second historiographic school hasbeen very critical of the Lloyd George proposals to fightunemployment, making much of their internal contradictions andoverall impracticability. At the same time, at least one of thetitles in this historiography has praised the Mosley proposalsfor their internal rigor.This thesis argues for another interpretation of the Orange Bookand Revolution b Reason. The historiography to date has beenlargely ahistorical; it has been overly “economic”,concentrating on the economic aspects of both programs, andtheir possible effects, had they been adopted as written. Thehistorians to date, in other words, have focussed theirattention on what might have happened, rather than what actuallydid happen, and made their evaluations accordingly. Becausetheir interest is primarily with the general questions studiedin economics, and, to a lesser extent, political science, theyhave not looked at the Mosley and Lloyd George programs asunique products of their times, as responses to contemporary,rather than universal, problems, developed within singular and4complex conditions and constraints.This thesis will look more deeply into the political and socialenvironment in which the programs were developed, and focus onthe “positive” rather than the “normative” dimension of theireconomics. It will examine what Lloyd George and Oswald Mosleywere trying to accomplish in their programs, and why theprograms took the forms they did. The thesis will complement thehistoriography to date by providing a balanced, “historical”account of part of the interwar unemployment debate.The Liberal program has been analyzed by several historians, butthe Mosley program has been largely overlooked. The programswill be explicitly compared, for the first time, in this thesis..The comparative approach will show just how different theirpolicies were, an important aspect overlooked by the existinghistoriography.The thesis is divided into six chapters. Chapter Two surveyseconomic, social, and political conditions in the 1920s. ChapterThree examines the response of government to the unemploymentproblem, while Chapters Four and Five analyze R evReason and..cii.....c..o na&r Chapter Six thensummarizes the thesis and presents conclusions.5CHAPTER ONE END NOTES1. There are a number of titles in this historiography. Theyinclude Michael Stewart, (Harmondsworth, 1972);Donald L4inch, g folic_HJQrjcal Study (London,1972); D.E. Moggridge, British Moneta$olicy_1924-1931(Cambridge, 1972); Susan Howson, Domestic Monetary Management in..Britain 1919—1938 (Cambridge, 1975); Susan Howson and DonaldWinch, The Economic Advisory Council 1930—1939 (Cambridge,1977).2. Some examples of the newer historiography include Alan Boothand Melvyn Pack, Employmen .p..ital and Economic Poliy__GreatBritain 1918—1939 (Oxford, 1985); Jim Tomlinson, Eroblems ofBritish Economic PoljQ1870-1945 (London, 1981); Jim Tomlinson,pkic..j?,Jjçy and the_Economy since_1.QP (Oxford, 1990); RogerMiddleton,(London, 1985).6CHAPTER TWO ECONOMIC, SOCIAL, AND POLITICAL CONDITIONS INTHE 1920SChapter Two is concerned with domestic conditions during the1920s, particularly the symptoms of economic dislocation. Itbegins by looking briefly at the problems of inflation and thepublic debt Today, the British economy in the 1920s isremembered primarily for its excess capacity, but it was highprices and the fear of soaring inflation, and the size of thegovernment debt which held the attention of contemporary policymakers. The chapter then moves to an examination ofunemployment, including its causes, the industries affected andtheir location, and the types of workers who suffered. As well,it looks at some of the new industries which began to emerge inBritain at this time, and which mark the 1920s as a period oftransition, rather than one of unrelieved depression anddistress. While the historiography to date has concentrated onthe economic environment, this thesis is broader in itsapproach. Chapter Two places economic factors in the context ofdomestic political and social change, including working classrestlessness, the rise of the Labour party, and the decline ofthe Liberal party.World War One had a significant impact on the British economy interms of both economic performance and government policy.7Consumer and wholesale prices rose sharply during the war.The war ended with both wholesale prices and the cost of living125% above the levels of 1913(1) Thanks to the short but sharprestocking boom of 1919—20, prices leapt upwards again. By April1920, the Lloyd George Coalition government took fright, andpassed a deflationary budget. Prices immediately began to fall,and kept falling until the late 1930s. The fear of inflation didnot subside, however. Rapid price increases and hyperinflationin much of post—war Europe were associated with social andpolitical upheaval, an association which many saw as a causalconnection..(2) Nor was this apprehension of inflation restrictedto official government circles. The report of the 1928 LiberalIndustrial Inquiry, published by a party which was anxious toreturn to power, and which was an enthusiastic proponent ofgovernment expenditure, sounded the same note of caution(3)A second important effect of the war was the expansion of thegovernment budget. From approximately 12.5% of Gross NationalProduct before the war, government expenditures rose to over 50%during the war, falling back to around 25% in the 1920s.(4) Bythe end of the fiscal year 1918—19, the budgetary deficit was£1,690 million.(5) The national debt was £6,142 million the sameyear, up from £754 million in 1913.(6) Not only was there a debtof unprecedented size, but only part of it was funded. A8substantial proportion was in the form of short—term debt, whichposed a significant monetary problem, since it represented anenormous increase to the liquidity of the economy, and,therefore, the capacity to spend. The scale and structure of thenational debt were key elements in the economic policy—making ofthe 1920s. The Bank of England and the Treasury both sawreduction and changes in the composition of the debt asimportant policy objectives.(7) The turn—around in the budgetaryposition was accomplished primarily by cuts in expenditure, andan extreme reluctance to initiate new programs.While unemployment was not new to Britain, its extent andduration in the interwar period certainly were. It is notpossible to derive an exact comparison of pre— and post—warunemployment because of the absence of satisfactgory statistics.Not until the 1920 Unemployment Insurance ct were reasonablyaccurate figures made available.(8) Except for domesticservants, agricultural workers, and civil servants, the cctprovided unemployment insurance coverage for most manual workersand other employees earning less than £250 a year.(9) fter thispoint it became possible to calculate the number of insuredpeople out of work and the rate of unemployment. Figures frombefore the war are much less comprehensive, tending to cover thesmall proportion of the work force organized in trade unions.9Nevertheless, the pre—war figures present an accurate enoughpicture of the extent of unemployment during that time. Theyshow that in the period 1880 to 1913 unemployment among insuredworkers averaged 4.7%, the rate fluctuating from a low of 2.0%to a high of 10.2%.(10) Unemployment during the war wasnegligible, but that quickly changed in the postwar period.Following a short, sharp boom in 1919—20, unemployment ratesshot up dramatically. The rate of unemployment among thoseworkers insured under the Unemployment Insurance Act ranged froma high of 17.0% in 1921, to a low of 9.7% in 1927, averaging12.0% for the period 1921-29.(11) Among total employed, theunemployment figures for the same period were a little lower: ahigh of 12.2% in 1921, a low of 7.4% in 1927, for an average of9..1%.(12) Nor did the 1930s bring any relief; in fact, they wereeven worse. Among insured workers between 1930 and 1938,unemployment ranged from a high of 22.1% in 1932, to a low of10.8% in 1937, with an average of 16.5%.(13) For totalemployees, the comparable percentages are 17.0%, 8.5%, and12.8%,(14) In absolute terms, the total number of unemployed didnot go below one million between 1920 and 1938 (hence the term“the intractable million”). In 1921, the first year of theslump, they totalled 2.2 million, and averaged 1.6 million forthe period 1921-29. The period 1930-38 averaged 2.6 million.(15)Millions of Britons, after the families of the unemployed wereincluded, were living in circumstances ranging from veryuncomfortable to desperate,10Unemployment in the 19205 was not only severe, it was alsoprolonged. In the bad years 1884—7, unemployment remained over7.5%. There were other periods - 1892-5, 1903—5, and 1908—10 -when unemployment climbed to over 5 or 6%.(16) But between thesebad years, there were times of improved trade and betteremployment prospects when unemployment fell to 2 or 3%.. tfterthe war, however, unemployment was anything but a temporaryinconvenience..( 17)Unemployment was not felt equally by all industries,geographical areas, or demographic groups in Britain. It wasconcentrated in the export staple industries of the IndustrialRevolution, which tended to be located in that part of Englandand Wales lying north and west of a line drawn from the SevernEstuary to the Humber River, and in the Lowland Belt ofScotland. Unemployment often had a chain reaction effect on thecommunities in which it occurred. Many businesses which dependedon the local market were unable to survive once a steelmill orshipyard went silent.. Physically, many of the older industrialtowns began to deteriorate and collapse. In E rig JourJB. Priestly described the decrepit state of northern England.If Germans had been threatening these towns instead of Want,Disease, Hopelessness, Misery, something would have been donequickly enough. Yet Jar’row and Holborn looked much worse to me11that some of the French towns I saw at the end of the war, townsthat had been occupied by the enemy for four years..”(18)Unemployment was much worse in the old industrial areas than inthe south and east. Apart from London, these areas had beenlargely bypassed in the earlier period of industrialization, andwere spared the worst of the 1920s slump.(19)Unemployment and urban decay encouraged inter—regionalmigration. Between 1921 and 1936 the regional distribution ofBritish population changed considerably. The areas of rapidpopulation growth were the regions of new industrial expansion:population in the southeast increased by 18..1%, the Midlands by11.6%.. The old industrial regions, which had grown so quickly inthe 19th century, grew much more slowly in the interwar period..The West Riding in Yorkshire grew by only 6%, Lancashire andCheshire by 3.5%, and Scotland by 2..1%.(20) Unfortunately, toomany of the migrants to southern and eastern England and theMidlands were unable to find employment to suit their skills. Asa result, they were forced to look for poorly paid unskilledwor k -The incidence of unemployment throughout the period wasgenerally higher for men than for women. Between November 1923and November 1929 the unemployment rate for insured males was12109%, and for women 8.0%(21) It was also higher for olderworkers, particularly male unskilled manual workers, and youthsbetween the ages of 21 and 25(22) In 1931, 30.5% of unskilledmanual workers in England and Wales were unemployed, whereasonly 144% of skilled and semi-skilled manual workers were outof a job..(23) Since wage rates for women were substantiallylower than those for men, employers sometimes preferred to layoff male rather than female employees(24) Among adult males,those between the ages of 30 and 39 appeared to suffer thelowest risk of unemployment, while the old remained especiallyvulnerable. Unemployment rates rose with age, not because oldermen faced a greater risk of losing their job so much as becausethey found it harder to find a new job once out of work(25)Juvenile workers under the age of 18 suffered more temporary,short-term unemployment.An analysis of the causes of interwar unemployment is beyond thescope of this thesis(26) A brief discussion of labor adjustmentis, however, in order. Three types of unemployment weredistinguished by contemporaries in the 1920s: frictional,cyclical, and structural unemployment.(27) Frictionalunemployment tended to be short—term. In any year, regardless ofboom or slump, thousands of workers changed jobs. Many of themfound new work fairly rapidly, but while looking they usually13registered as unemployed. Seasonal unemployment was alsonormally short—term. Activity in certain trades, such asconstruction, varied with the time of year. Total unemploymentfigures were usually higher in the winter months than in summer.During the 19th century, businessmen had become aware of thetrade cycle, a fairly regular cycle of economic boom followed byslump. The cycle was closely linked with the demand abroad forBritish exports.. In periods of boom, British exports overseasrose, investments in new factories at home increased, industrialoutput went up, wages rose, and labor force unemployment wentdown. But in the downturn which inevitably followed, the valueof exports fell, investment slackened, output dropped, wagesfell, and unemployment went up. In the years between the warsthe trade cycle continued to operate as in the past, althoughslumps had become more severe, and recoveries more limited.After the war had ended, there was a ‘restocking boom” in1919—20: exports, investment, and wages rose, and unemploymentfell. But in 1921, the volume of exports fell, and unemploymentshot up to unprecedented levels. By the mid—1920s recovery inEurope and the “roaring 20s” boom in the United States fuelledincreased demand for British exports. Even by the height of therecovery in 1929 however, exports lagged below, and theunemployment rate above, their respective pre—war levels.14The reason for this stickiness” in the unemployment rate wasthat there had been a secular or structural’ fall in the demandfor certain industrial products, including coal, cotton,shipbuilding, and iron and steel. Ml of these had been thegreat growth industries of the 19th century, and had dominatedexports before the war. In 1913 the peak output of the coalindustry in the United Kingdom was reached at 287 million tons.Even in the best years between the wars, production was about 60million tons lower. Cotton production fell as well. Before theFirst World War British shipyards had dominated the world, butthey suffered badly afterwards, too. fter the orders for thereplacement of war losses had been filled by 1920, the tonnageunder construction declined sharply. Iron and steel alsosuffered a decline. The two types of products in which Britainhad specialized, puddled bar iron and acid steel, were graduallyreplaced by basic steel(28) Reduced demand for British productswas in part due to changing consumer tastes and preferences athome and abroad. World consumption of coal grew at a much lowerrate after the war than before, partly due to more efficientfuel use, and partly to the greater availability of alternativesources of power, such as oil and electricity Similarly,traditional cotton textiles had to compete with new man—madefibres like rayon.15Another reason for Britain’s structural unemployment was theemergence of competition from overseas producers. This took theform of “import substitution” in previously captive markets, aswell as competition from new exporting countries. The challengeto British predominance had been noticeable before World War IIn 1850 Britain’s share of total world industrial output wasabout 30%, but by 1910 it had shrunk to 13%..(29) The waraccdentuated these developments. While the British economy wasconcentrating on the production of essential war materials,overseas customers could not be supplied. Manufacturers in theseand other countries expanded production, and began to squeezeout British products. The spinning and weaving sections of thecotton industry, for example, were unable to hold markets in theEast against Indian and Japanese competition.. Similarly, theiron and steel industry lost market share to countries whoseoperations had benefitted from postwar reconstruction, andstable or rising domestic demand..(30) To add insult to injury,foreign manufacturers in the interwar period began to challengetheir British competitors in the home market. By 1930, Britain’sshare of total world industrial output had fallen still further,to 105%(31)While the interwar period was one of serious difficulty forthousands of firms and individuals, it was also one of16industrial and technological development, a general rise in thestandard of living, and a more even distribution of income. Oneof the most important of the newly emerging industries waselectrical engineering. Production and consumption ofelectricity in Britain had been low until the early 1920s, whenit began to expand rapidly. l..Jhere there had been only 780,000electricity consumers in 1920, there were nearly 3 million by1929.(32) L.Jith the spread of new electrical consumer durables,such as stoves and radios, families increased their consumptionof electricity. In addition, the demand for electricitygenerated by new non—coal using industries increased rightthrough the decade.Another important new industry was automobile manufacturing andassembly. Before the war, the production of automobiles had beenlimited. During the war, manufacturers learned how tomass—produce trucks and engines. Afterwards, they put theirexperience to good use in the manufacture of automobiles onassembly lines. Production began to increase in the 1920s, andemployment along with it(33)Some new industries were based on advances in the science ofchemistry and in chemical engineering. One of the mostsignificant was the man-made fibre industry, limited in 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The 1922 election marked the end of Lloyd George’s careeras a Cabinet member, and the beginning of the short—lived BonarLaw government.The slump and attendant unemployment of the 1920s wereunprecedented events in British economic history. At the sametime, they were accompanied by profound social and politicalchanges which were equally significant in their impact. Thecomplicated and fractious social and political environment wereimportant constraints on the development of effective governmenteconomic policy, to which the thesis now turns.N(0‘4-1o4),U)ZINzJ01-c3.)N0401>‘3-•-Ia’4.)a”El‘U,4Z.‘.0-401CC0’CU)U),I010,004U)-01—401a’0’3,XI0>C.,QCI0WI-)1Wj13CO(0‘-4’0I‘-4—C’)•..Ca),10.O).0(D’“>‘•—4CEE•-‘—E4-).‘-40(0a)COCOCONNZ,NOi‘,-II(0010ii-.’‘.o3)NCl)-l4.)C1-4a’OjNa)I‘,U)(1)U)U)U)U)‘UI-401a’,-.L)I-—4-—4—4—4CiW‘c-Ia)-4l\O10.0.0.0.0.001•,(0a’I‘00iU)01+‘c.-4j—i—i-.}——-x0>LiC‘-i01WI‘U4)04--‘‘1‘°.‘‘“.‘‘.‘I‘U03.)3.)LOj-‘1-.0CC(0’CO4)3.)3.)4.)3.>.)U)i9001zI-iI“-4“-4“-4“-‘2’(0JC1E’•000000010I01“0j0>.i01C0C,‘.0U)040—1‘-4130.0.0.0.0.0.-‘•.-.-•01004(1)0000000oI‘-IZ041N‘c-i23.)CI‘I.oI0’->C’>----‘(01alii-0..9CCCCCCCC,LL,0.010.D•-1--.-‘.4‘-4‘-1‘.4OJiIo01-U)‘UIU)U)U)U)U)U)‘-4,f)i‘-4’—4.‘Li..U)I4->4->4>4-)..)0‘.oi‘—110N‘04-N(0If)If)(01))C’)3(01COlOj‘•-4,.-).C•‘.04-)C-‘-iiCCCCCC—ZI‘c-4ilC”)-‘-4i—a’--1•.-(‘tCf‘‘-4“-‘-‘10.1‘4->0403.>NDiU)U)U)U)U)U)X‘Ef(01C•1WCoi“0.‘•,(00.U)f—---4131C130.-C0.)2-CISSSSSS0.U)CT.0C10(000Ci)-000000<.4..)Cf(0“-U‘-4C-..I.-..,..s....I(0•-C0—4C‘in00N4—4-1‘4-4-.4-‘4—4-4-CJCf-0’0)C00C‘C.)a)‘01“I-a’‘.00-J00.0’0,13I131)13‘U‘0‘0U)‘Ui5-4CC’)(0C-4U)4-NU)00)0)00inb..of0“-4C>..C-U)•>Z1>)>>>>W4-N——(0•—0“-4•.C—‘.40.1N“-‘‘-“-‘.-“-‘I—•‘-414.)T—4C01‘-4‘00.C‘U—3-N)-‘—)—---0ICiS—513LO5‘-40)0‘-40)Zf‘1)0)0)U)U)U)Z‘Dl.‘-40-0‘-4if00.i-)t).1)001U)0000000“)4-a)—(j)l—4-40C4—4I—4001x-410‘UI0-•*Z‘LI0‘.J0Cl(04N(Y)cLi)‘0U-i...)IN.C’)-U’)-4,‘0Na)s,a’‘-4(01‘c4‘c-I‘c-4‘c-I‘c-42517. During the 1920s unemployment in Britain certainly rose, butso did total employment. After falling 17% between 1920 and1921, total employment slowly began to rise, increasing everyyear between 1922 and 1929, for a total increase of 9.0%.(Derived from Feinstein, Table 57)18. J.B. Priestly, Eng1hj3e (London, 1934), p.411.19. Sidney Pollard, The Development of the_BrjhEconomy1914—50 (London, 1962), p.126.20. Constantine, op. cit.., p.20.21. Derived from Ministry of Labour Gazette, 1923—1929.22. W.R. Garside, British_Unemploynint 191939 A StQcjyin Public...Policy (Cambridge 1990), p.12.23. Constantine, op. cit.., p.25.24. Ibid., p.23.25. Garside, op. cit., p.12.26. The debate on the causes of interwar unemployment has takenthe form of econometric analysis, and continues to this day.27. Garside, op. cit.., p.18.28. Pollard, op. cit.., p.115.29. Constantine, op. cit., p.10.30. Garside, op. cit.., p.143,31. Constantine, op. cit., p..11.32. Pollard, op. cit., p.100.33. Ibid., p.102.,-..-o-II.0-()(i()(()(‘-D(a)aF’.)i-0‘.0(DO.JO’(TI-0’aatOaaHaI\1a0’Içt.—,-•o‘0L)-4I-iQ.D’‘-4‘-4‘I0-rH0‘..J000-ioC7aCDDiCT•D)-‘-‘•Zr-I-’.I-”ItC-ICDClCLfU)aaa00•Caa‘0F’..)-çCD—hr01-(a)tor’-ou‘‘.‘-‘1-aI)CDCDaaT0-oT0.0)aa00DiCDcDCDF...)-F’.)F’.)zU)aDiCF’,)(a)01(a)(a)CL00CD<‘4CD($3CE)•0)..a(J(3’0-hIto0a(•)aa(“4’‘a1W‘a‘a-Di‘a‘aa)..‘(Vr4’l‘-0—..oaCDIC),O)Ha’a’‘DIa•(JCD..,cl0(1)(‘1’%.-,*0DiI-•‘a($3CDb‘0z-Op-1(0)-IIaa(D0(1)F)F’.)1WICL00CDF’.)010(00‘-0ZICI’0CD1a•IQ‘aCDtO-aI-hkop.oIHaCD-•0“,--+or-,•1CDto0toIma0-x.C0ii00lCDCD0‘aICJ10Hfo‘iCD‘-CDlCD‘0CDrlr4’‘‘--,c0Ir4’130IIIDi-‘J_fl0.Di(0‘a0aCLIC)O‘aiCDa(4’C)‘—..0rooi‘.oCD00010)I‘aa0“flCLC)I0..aa‘a‘0DiU)1‘.,j‘—i(3’127CHAPTER THREE GOYIERNMENT POLICY ON UNEMPLOYMENTThe social unrest in Britain in the early part of the 20thcentury was evidence of a fundamental change that was takingplace in society, and which would have a lasting impact onBritish politics. Like much of Western Europe, Britain wasevolving from a political system based on the notion of a commongood and an atomized society of free individuals whoperiodically ratified the decisions of a sovereign parliament,to one which was corporatist, whose main feature was continuousbargaining among organized interests.(1) In their approach toattacking unemployment in the 1920s, governments all sought abalance between the interest groups representing capital andlabor vying for influence in the political arena. The balancethey were looking for was a conservative one, however, in thesense that they wanted as much as possible to restore theBritain of pre—war years, which they looked back at fondly. Thepolicies of every government in power in the 1920s were broadlysimilar. Because the phenomenen of persistent, mass unemploymentwas unprecedented, governments lacked a standard repertory ofproven policies which attacked the problem head—on. The standardpolicy mix consisted of maintenance programs for the unemployed,combined with policies to restore the economy to its formerstrength. The three main policies used by government in the1920s to fight unemployment were unemployment insurance,28countercyclical public works, and, by the end of the decade,labor transference(2) The main policy to restore the economy toits former position, and which was the cornerstone of its entireeconomic policy, was the return to the gold standard forsterling at its pre—war value in relation to the U.S. dollar.nr4During his stint as Minister of Munitions, David Lloyd Georgehelped direct major sections of the British economy whichformerly had been subject only to “the laws of the marketplace”.Later, as Prime Minister, Lloyd George believed the governmenthad an important role to play in planning and directing therebuilding the domestic economy in the transition from war topeace. Accordingly, the Ministry of Reconstruction, withChristopher Addison at its head, was established in 1917. TheMinistry was a successor to two earlier reconstructioncommittees, and its creation was a sign of the importance whichLloyd George attached to remaking the economy. Like most of therest of Britain, including the Bank of England, the Treasury,the commercial and financial communities, as well as the generalpublic, the government believed the key to economic recovery layin the re—assertion of Britain’s former predominance in theinternational economy, an economy of free trade, the goldstandard, laissez—faire, and balanced budgets.29The Ministry of Reconstruction turned to the London financialcommunity for advice on postwar currency and exchange policy. Acommittee was formed with the Governor of the Bank of England,Lord Cunliffe, as Chairman. The Cunliffe Committee believed thatthe gold standard was the bedrock of British economic stability.The dislocations caused by the war had forced Britain off gold;the Cunliffe Committee was determined to get the country back onas quickly as practicably possible. The Committee’s FirstInterim Report called for a cut in government borrowing and anincrease in the Bank Rate. This would check the drain of gold,and create the conditions necessary to return sterling to thegold standard. The Committee realized that high interest rateswould not only attract foreign capital, but also depress outputand employment. It nevertheless believed that stability andprosperity in the long run was worth some pain in the short. (3)Lloyd George and the coalition government which he had led since1916 were re—elected in the “Coupon Election” of November 1918in a resounding defeat of Asquith’s independent Liberals andLabour The new government took office in January 1919. It didnot act immediately on the Cunliffe Committee’s recommendations.In addition to making the peace abroad, it was deeply concernedwith social unrest at home. Industrial unrest had reached such ascale that some government Ministers suspected a conspiracy. (4)30nxious to appease a restive labor movement, the governmenttemporarily set aside its convictions about fiscal and monetaryorthodoxy. In February, the government agreed to continuerestrictions on imported manufactured goods, in order to allowdomestic industry time to reconvert to peacetime production. InMarch, it decided to delay balancing the budget, and maintainpublic spending at a wartime level until the summer. It alsoformally set aside the gold standard.The fear of revolution eventually subsided. Once it did, thegovernment had to confront another potential source of domesticinstability — price inflation. The short postwar restockingboom aided by the removal of wartime price controls, had causedinflation to shoot up in 1919. Encouraged by the Bank of Englandand the Treasury, the government turned its attention toreducing inflation and to monetary questions in general. TheBank Rate was raised from 5 to 6% in November 1919, and again to7% in April 1920(5) The inflationary boom collapsed severalmonths later, but the Bank Rate remained high for nearly a year,contributing to the severity of unemployment. By mid—1922 priceshad stabilized and the Bank Rate had fallen.tJith interest rates in London lower than New York by this time,the Bank saw an appreciation in sterling as the way to achieve31parity with the dollar at the value it wanted, the pre—war rateof $486. The authorities were also aware that sterlingappreciation via domestic deflation would increase unemployment.But they went ahead anyway, hoping that an inflation of mericanprices would enable the pound to appreciate to $486 withoutBritain having to suffer the effects of price deflation.. Themonetary authorities never denied that returning to gold at parwould involve some degree of deflation, but they believed thatnone of the damage caused would be long—term or substantial..(6)To the Bank of England, and, especially, Governor MontaguNorman, the return to gold meant not only the return to soundcurrency, but also the restoration of the Bank of England’sprestige, which had been somewhat tarnished during the war..(7)The Bank’s position was based on the belief that the stabilityof the external value of the pound was more important than theeffect that this would have on employment, output, and thebalance of payments. On April 28 1925, Chancellor of theExchequer Winston Churchill announced Britain’s return to thegold standard at the prewar parity of $4.86..32It had been assumed that the return to gold would restore asmooth system of domestic and international adjustment.Subsequent events, however, showed that the authorities’confidence was misplaced. It is now generally accepted thatsterling was overvalued by at least 10%, and perhaps by as muchas 20 or 25%, in relation to the dollar..(8) The effect of theappreciation was aggravated by external developments. Currencydevaluation and productivity increases on the Continent hurtBritish terms of trade, rendering her exports less competitive.In addition, the new predominance of New York as a center ofinternational finance meant that short—term funds bypassedLondon in favor of higher returns in the United States, puttingpressure on the pound.One of the most significant, and unfortunate, effects of thereturn to gold was that it made the expansion of the economy toreduce unemployment unfeasible. government expenditure—inducedincrease in income would lead to an increase in imports. This,in turn, would cause a drain of gold out of Britain, which wouldreduce the value of sterling against the dollar, the last thingwhich the authorities wanted. Despite the failure of the returnto gold to bring about the desired results, Britain stayed withit for more than six years. By early 1931, with Britain firmlyin the grip of the Depression, a severe balance of paymentsproblem had put intense pressure on sterling. As the budgetary33deficit and the overall economic situation worsened through1931, neither Bank Rate increases nor borrowing from abroadcould stem the outflow of capital. Bank of England efforts todefend sterling ended in September, and Britain suspended thegold standard on 21 September 1931. The financial crisiscontributed to the resignation of the Labour government, anOctober election, and the formation of the National (coalition)government under Ramsay MacDonald.Exports_andbiariffTo most people in Britain, the apparent reason for the country’spost—war economic decline also lay in the international economy,in the failure of her traditional staple export industries.. Itfollowed that the key to economic recovery, including the returnto work of the unemployed, was the revival of exportperformance. No government in the 1920s, however, Labour orConservative, had a comprehensive plan to increase trade.Instead, it was usual to attribute the decline in trade to thecontinuing political and economic chaos in Europe..(9) In theearly part of the decade, it was hoped that the remedy to thesituation could be found in the settling of internationalrivalries and suspicion, and in improving conditions in whichtrade was carried on. ts a result, such policies as were putforward to stimulate exports were temporary34and small—scale. In 1919, the Treasury and the Board of Tradedevised a program to make available advances to exporterstrading with Eastern Europe, for whom the normal bank creditswere unavailable because of the high risk involved. Although thelegislation to enact the program was not passed, the contents ofthe bill were quickly resurrected in 1920 by the Overseas Trade(Credit and Insurance) Act. It empowered the Board of Trade togrant credits and insurance for goods exported to EasternEurope, including Russia. The program operated until mid—1921,when it was abandoned as unsuccessful and too costly. Similarcredit insurance schemes came and went through the 1920s, allwith little success.(10)Alternative ways to stimulate exports were examined during the1920s, including expanding trade with Russia. In addition tocompensating Britain for lost export markets elsewhere,increased trade with Russia could allow her to keep a measure ofstable employment. Little came of the idea, however. On theBritish side, there were continuing fears about Russian creditworthiness. On the Russian, there was little incentive todevelop trade with Britain.(11) The Labour party continued topreach internationalism. It urged action to combat the povertyand hardship facing the former belligerents on the Continent.British trade could hardly be revived, it argued, if her tradingpartners were too poor to absorb her exports. British trade35delegations searched the world for new export markets.Given the hold that 19th century laissez—faire orthodoxy stillhad on official and unofficial thinking, it is not surprisingthat government subsidies to export industries were neverseriously considered.. Subsidies, it was believed, would onlydelay the fall in costs that was necessary before Britishexports were priced low enough to be sold in foreign markets.Then, and only then, could the unemployed return to the jobsthey had lost. A Cabinet Committee on Unemployment expressed theconventional wisdom held in 1924:All schemes for the artificial creation of employment or forrelieving unemployment by payment of benefit can only beregarded as palliatives. . ..The only real cure is such a revival of normal trade activity as will automatically re-absorbunemployed workmen into their accustomed occupations.(12)Since the passing of the Corn Laws in 1846, most Britonsbelieved their prosperity depended on free trade. Tariffreformers had begun to make their voices heard towards the endof the 19th century, but were unable to convince the countrythat a protective tariff could encourage economic progress. Thefirst small breach in the free trade wall was made during theFirst IJorid iJar, with the imposition in 1915 ot the McKennaDuties. The tariff, on certain types of consumer products, was36meant primarily to preserve foreign exchange. Discussion of thepossible role of a protective tariff in post—war Britaincontinued in the Reconstruction Committees, which were underwayby 1916. The Committee on Commercial and Industrial Policy Afterthe War, chaired by Arthur Balfour, rejected a protectivetariff, but argued in favor of preferential Empire duties andfor protecting British industries that were considered essentialto maintaining the country’s independence. Addison, the Ministerof Reconstruction in 1919, asked Cabinet for protective measuresagainst foreign competition. The Federation of BusinessIndustries said that unless controls restricting imports wereput in place, the country’s transition to normal peacetimeeconomic activity would be jeopardized.(13) The result of theseentreaties was that a relaxation of import restrictions begun in1919 excluded key products such as zinc, tungsten, and syntheticdyes. In addition, the McKenna Duties were reduced by one-thirdon all articles manufactured within the Empire.(14)Although reconstruction policy by 1920 included imperialpreference and limited industrial protection, free tradeorthodoxy was still firmly in place. The Board of Trade remainedopposed to using a tariff to revive industry and employment..Furthermore, as unemployment worsened through 1921, criticism ofprotectionism increased. Stanley Baldwin, who became PrimeMinister of a Conservative government in 1923, had,37as President of the Board of Trade, been unenthusiastic about aprotective tariff. However, as the 1920s economic crisislingered, Baldwin’s opposition began to turn to support. At theend of 1923, Baldwin dissolved Parliament, and went to thepeople to seek a mandate for a policy of protection. Imperialpreference would continue. However, 8aldwin’s protectionistmanifesto was no match for Labour and the Liberals, both stillstaunchly free trade. The issue even brought together LloydGeorge and Asquith, implacable enemies since 1916. Theelectorate agreed, and protection as a remedy for economicdepression was soundly defeated.During the remainder of the 1920s, the debate for and againstprotectionism continued. A number of industries applied forprotection to the government, including agriculture, iron andsteel, and woolen and worsteds. They were largely unsuccessful.Of the 49 industries which asked for tariff protection between1925 and 1929, only 9 were successful.(15) As the 1920s economiccrisis dragged on, many formerly strong free traders began toreconsider their opposition to the tariff. One of these was the38influential economist John Maynard Keynes..(16) In the end, freetrade philosophy was forced to bow to the force of economiccircumstance. The rapid deterioration of the economic climateconvinced the government to abandon free trade in 1932, only afew months after another cornerstone of the 19th century liberaleconomic system, the gold standard, had been given up.çgftj:ççlical Pub 1 icWor ksEmployment on public works projects was one of the main ways inwhich the government sought to assist the unemployed. Publicworks as a countercyclical measure had been used in Britain atleast to some extent since the turn of the century. Influentialpre-war publications, such as the Mj ftRept.._.Lt he RoyalCommission on the Poor Laws (17), and William Beveridge’s(18) made strong cases foradjusting the size and timing of government public worksexpenditures in order to reduce some of the impact of thebusiness cycle on labor.. When severe unemployment began toappear in Britain in 1920, the government turned its attentiononce again to a trusted fiscal tool. n unofficial CabinetCommittee on Unemployment was established in 1920, and nextFebruary, a program designed to employ 73,000 was announced..(19)The program included the construction of roads and sewers, the39preparation of housing sites, and repairs on governmentstructures. In addition, a Treasury Committe, known as theUnemployment Grants Committee, was assembled in order toallocate Treasury funds to those local government authoritieswhich were prepared to accelerate labor—intensive projects. Thetotal work approved by the Committee to June 1928 was estimatedto provide direct employment totalling 3,928,167 man—months.This represents an average employment at any time of less than44,000, or less than 03% of the work force, about 4% of theunemployed..( 20)An important reason for the central government’s parsimony andthe limited development of countercyclical policies was theprevailing budgetary policy. The inauguration of the UGC programin 1920—21 coincided with the beginnings of a drive to cutpublic expenditures, and reduce the National Debt Thegovernment’s alarm at the continuing high level of post-warexpenditure had led to the creation of a committee chaired bySir Eric Geddes to find ways to reduce government spending. TheGeddes Committee’s recommendations were wide--ranging, and somewere quite harsh. They included transference of expenditureburdens from central government to local authorities; a40reduction of teaching staffs sufficient to raise the nationalaverage of 32..4 children per teacher in elementary school to 50;and the termination of training facilities for physically fitex—servicemen.(21) As the Geddes Axe” fell on them, localauthorities became more concerned with the relief of their ratesthan with the relief of unemployment, Any unemployed person whocould somehow be made the responsibility of the Poor Law was oneless that needed to be supported by local rates. One of theresults of the attempts to pass responsibility for theunemployed from one fiscal jurisdiction to another was a growingdisenchantment with the whole public works program, since it didnot appear to be working.(22)Another reason why effective countercyclical policies were notdeveloped at this time was the growing skepticism about theability of government expenditure to create employment. The mostrefined version of this pessimism was found in the Treasury, andwas accordingly known as the “Treasury View”. According toadvocates, it was better for society as a whole to leave moneyin the hands of individuals who could spend and invest it asthey saw fit than for government to tax and redistribute itthrough various programs. The influence of this doctrine became41apparent by the end of the 1920s. The amount of work undertakenwas reduced, and the number of persons employed on public worksprojects fell from an average of about 57,000 from the beginningof 1921 to the end of June 1926, to an average of less than7,000 during the next two years.(21) Only £6 million worth ofschemes were sanctioned by the UGC between 1926 and 1929,compared with over £100 million in the previous six years..(24)Unemp1gyrnjjt I nsur ançApart from countercyclical public works, the principal responseof government in the 1920$ to unemployment was to provide cashbenefits to the unemployed in the form of unemploymentinsurance. Unemployment insurance was first introduced inBritain in 1911, thanks in large part to the efforts of DavidLloyd George, then Chancellor of the Exchequer. The insurancescheme which the Liberal government devised was notcomprehensive: it applied to seven trades, with a workforce ofabout 225 million men in a total male labor force of just over10 million..(25) The trades included were regarded as subjectonly to reasonable and fairly predictable seasonal fluctuations.They included such industries as construction, shipbuilding, andsawmilling. The 1911 scheme was never intended to cover allperiods of unemployment. It was designed as a remedy forfluctuations in employment, not as a cure for longer-termunemployment. Compulsory insurance was extended in421916 to include those workers engaged in munitions work, arid insuch industries as chemicals, rubber, leather, and buildingmaterials. Unlike the trades covered by the 1911 legislation,those included in the 1916 Act employed relatively large numbersof women.. As the war drew to a close, plans were prepared toprovide ex—servicemen with free unemployment insurance. Thegovernment was concerned that civil disorder might result ifnothing was done to provide economic security for returningsailors and soldiers. The 41free” benefits were quickly extendedto civilian workers, too, irrespective of their entitlementunder the 1916 Insurance Act.By 1920, political pressure was increasing to put in place arevised peacetime contributory insurance scheme. The result wasthe 1920 Unemployment Insurance Act. Contributory insurance wasextended to all manual workers, and to non—manual workersearning not more than £250 per year, except for those inagriculture and domestic service. The number of insured workersrose to 11.75 million. Unfortunately, the scheme had beenextended and expanded to the point that contributions were notable to keep pace with benefits. The actuarial calculationsunderlying the Act were based on the assumption thatunemployment would not rise above 6..6%, an assumption whichproved to be wildly optimistic. Unemployment in the insured43trades stood at 3.7% when the Act went into effect in November1920; by March 1921 it had risen to 11.3%, and by June itreached 22.4%.(26) In the face of this problem, the governmentreacted by extending the payment of benefits an additional 30weeks. In all, more than 20 Acts relating to unemploymentinsurance were passed between 1921 and 1931. The net effect ofwhat was a confusing series of ad hoc measures was twofold..(27)First, the real value of benefits rose substantially. Those paidto a man with a dependent wife and two children, for example,rose by 240% between November 1920 and August 1931, and thosepaid to a single man by 92%.(28) Second, those benefits werepaid almost continuously and with virtually no reference toprevious contributions. At any time after 1921 over half ofthose drawing benefits would not have qualified under the termsof the 1920 Act.(29)Labor TransferenceBy the latter part of the 1920s, it had become clear thatseveral of the formerly great staple export industries hadpermanently lost a large share of their traditional markets. Thegovernment recognized the necessity of modifying the structureof the labor force, especially the uneven geographicaldistribution of unemployment. The result was the IndustrialTransference Board. Established in 1928, its goal was theencouragement of movement from the depressed areas to other44areas, both within Britain and overseas(30) In other words,industrial transference was an attempt to take the workers towhere the jobs were, rather than to create jobs where theworkers already were. The hopes placed in labor transferencewere not based solely on spreading unemployment more evenly..There was also a belief that it would reduce unemploymentwithout greatly adding to the costs of government..(31) The Boardchose from the beginning to concentrate on the coal industry,where unemployment was very high.. Reporting in June 1928, theBoard stated that the coal industry had a permanent laborsurplus of at least 200,000. The Board arranged for advances tobe made through the Employment Exchanges toward the expense ofremoval and maintenance of families while they were beingrelocated.. By the end of 1929, about 42,000 men had beentransferred..(32) Unfortunately, many of the transferred minershad difficulty retaining their new jobs. ccording to Hancock,the principal defect of Industrial Transference was thatunemployed miners were transferred to areas where unemployment,though lower than in the mining areas, was still high.. In ahealthier economy, the miners would not have been as reluctantto move, nor employers as reluctant to give them jobs..(33)45Policy to directly combat unemployment, despite its persistenceand severity, was never a top priority of government during thisperiod. Successive governments chose, instead, to concentrate onreviving the country’s export trade, the economys traditionalengine of growth. That translated into policies consistent with19th century laissez—faire, such as small budget deficits, andthe gold standard The predominance of the external over thedomestic economy, not just in the mind of the government and theelites, but the population as a whole, placed severe constraintson the ability of the authorities to respond effectively tounemployment.. The policies which were put in place —unemployment insurance, countercyclical public works, and labortransference — were not aimed at the heart of the unemploymentproblem. Not everyone agreed with goverment policy, however.Individiduals and groups inside and outside Parliament debatedalternative policies and programs. The thesis now turns to abrief examination of the unemployment policy debate within theLiberal and Labour parties.46END NOTES CHAPTER THREE1. The Introduction to Chapter Three borrows extensively fromCharles S. Maier, Recasting Bourgeois Eurpe (Princeton, 1975),pp.3—15. The term “corporatism” as used in the thesis does nothave any particular technical or special meaning; it is ageneralized description of social negotiation and bargainingbetween groups.2. K.J, Hancock, “The Reduction of Unemployment as a Problem ofPublic Policy, 1920—29”, Economic History Review, vol. 15,series 2, (1962/63), pp., 334, 338.3. WR. Garside, British Unemployment 1919-1939 (Cambridge,1990), p..116.4. Robert WD. Boyce, British_Capitalism At Th_1919-1932 (Cambridge, 1987) p32.5. Garside, op. cit.., p..117..6. Ibid.,, p..123.7. Jim Tomlinson,(Oxford, 1990), p.55.8. Garside, op. cit.., p.124.9. K.J. Hancock, op. cit., p.328.10. Garside, op. cit., p.145.11. Ibid., p.147.12. Ibid.,, p148.4713. Ibid., p.150.14.. Ibid.., p..151.15. Ibid.., p.158.16.. Sean Glynn and 1an Booth, eds., jçj_pnjt(London, 1987), p.102.17, The Miry_ft 1 Commission on the Poor Law(London, 1909).18. W.H. Beveridge, Unep1oj: blem of Jj1cisjay. (London,1909).19. Hancock, op. cit.., p.334.20. Ibid., p.335.21. Ibid., p.332.22. Garside, op. cit., p.305.23. Hancock, op. cit., p.337.24. Garside, op. cit., p.308.25. Ibid., p.33.26. Glynn and Booth, op. cit., p.33.27. Ibid., p.34.28. Ibid., p.34.29. Ibid., p.34,30. Garside, op. cit., p.243.31. Hancock, op. cit., p.339.32. Ibid., p.341.c) C.) 0 0 13 C.)49CHAPTER FOUR REVOLUTION BY REASONSeveral alternatives were put forward in the 1920s to theofficial government unemployment program. One of the best—knownof these, as well as one of the most creative, came from withinthe Independent Labour Party (ILP). Oswald Mosley’s Revolutionby Reason, written in 1925, was a short document of only 28pages. It was based on Mosley’s address to the ILP’s SummerSchool in August of the same year. The ILP, a left—wingcomponent part of the loose coalition which made up the Labourparty, was committed to the achievement of socialism byconstitutional methods. Mosley came from a family of Englishcountry gentry who had owned estates in the area of Manchesterfor hundreds of years. After being invalided out of his cavalryregiment in World War I, Mosley decided to ‘dedicate myself topolitics.”(l) Mosley was elected to Parliament in the December1918 General Election as a Coalition Unionist. His first term inParliament revealed Mosley’s commitment to social reform, acommitment which was frustrated in the conservative temper ofthe postwar period. He was re—elected in the 1922 and 1923elections as an Independent. When Ramsay MacDonald became thefirst Labour Prime Minister, Mosley crossed the floor to jointhe Labour party, joining the ILP at the same time. Running forLabour in a Birmingham seat in the 1924 election, Mosley wasbeaten by Neville Chamberlain by 77 votes.(2) Following his50defeat, Mosley applied himself to developing a program offundamental economic reform. In late 1925 Mosley published hisprogram under the title Revolution by Reason.Mosley did not work in an intellectual or social vacuum. Informulating his plan, Mosley had the help of a collaborator,John Strachey, nephew of Lytton Strachey, and, like Mosley, a“refugee” from the upper class..(3) Allan Young, a youngpolitical organizer from Birmingham, provided researchassistance.(4) The main intellectual influences on ftolutionkReason came from Cambridge economist J.M. Keynes and E.M..H.Lloyd, Lloyd George’s wartime Controller of Food.(5) Keynes washighly critical of the government’s obsession with restoringsterling to its pre—war parity, because it involved deflating aneconomy with existing excess capacity, thus further increasingunemployment. In his Keynes explainedthe connection between a deflationary monetary policy andunemployment. The causal relationship traced by Keynes was to beof great importance to Mosley in the formulation of hisprogram.( 6)“During the lengthy process of production the business worldis incurring outgoings in terms of money — paying out moneyfor wages and other expenses of production — in the expectat—ion of recouping this outlay by disposing of the product for51money at a later date... Whether it likes it or not, the technique of production under a regime of money—contract forcesthe business world always to carry this position, theproductive process must be slackened.,.. If prices are expected to fall, not enough risk—takers can be found... ..and thismeans that entrepreneurs will be reluctant to embark onlengthy productive processes involving a money outlay long inadvance of money recoupment - whence unemployment. The fact offalling prices injures entrepreneurs; consequently the fear offalling prices causes them to protect themselves by curtailingtheir operations.. -(7)In the Keynesian account of depression, a restrictive creditpolicy initiated by financiers led to excess savings which werenot offset by new investment. The solution to unemployment,then, lay in policies of cheap credit in order to stimulateinvestment spending. Mosley differentiated between a“capitalist” and a “socialist” credit expansion. Mosley wasafraid that speculators would use the new money to cornercommodities, creating an artificial scarcity which would force aprice rise, thus cancelling out working class gains. It was toguard against this that he adopted the proposals of E.M.H. Lloydfor the state purchase of foodstuffs and new materials directfrom the foreign producer, thereby eliminating the middleman.(8)52Another important influence on Mosley and his program was socialimperialism, a broadly—based ideology and movement whichappeared in Britain in the late 19th century as a challenge tothe prevailing liberal political economy of free trade andaissez—fire.. The standpoint of social imperialism was not theindividual, but the national economy. Although it did not rejectfree markets, social imperialism called for the establishment ofa system of tariffs to protect home industries, thereby buildingup a strong national economy which would be able to compete onmore equal terms with such emerging young giants as Germany,Japan, and the United States, which were threatening Britainboth economically and strategically.. Although the socialimperialists were successful in getting Britain to adopt a moreaggressive policy of imperialist expansion, they never were ableto wrest the country from its traditional liberal policy. Mosleywas strongly influenced by Keynes in his program of demandmanagement for the external economy, but he also shared theperspective of the social imperialists with regard to theoutside world.. Mosley believed that Britain should stop tryingto reconstruct the old international economic order, based onforeign trade, laissez—faire, and the gold standard, andconcentrate instead on the domestic economy..53While others were busy developing their programs, the leadershipof the Labour party in the 1920s was ambivalent about how toattack unemployment.. Paradoxically, the working man’s party hadnot developed a comprehensive policy on unemployment since itsinception. To most members of the Labour party, whetherspecifically socialist or not, unemployment was the most vividmanifestation of the poverty to which the working class wascondemned by the capitalist system.. Any attempt to cureunemployment within the capitalist framework was therefore boundto fail.. Labour’s attitude towards unemployment can be seen inits ill-fated Unemployed Bill. It was presented to Parliamentfour times betwewen 1907 and 1911, each time failing to secure asecond reading. The argument behind the Bill was “work ormaintenance..” If society could not guarantee every man a job, ithad an obligation to maintain the unemployed decently andhumanely.. Labour’s lack of faith in capitalism meant that anygovernment, including a Labour government, would be unable toprovide work for everyone who wanted it. The first task of aLabour government in a depression would therefore be to providefor the unemployed.. The implication was that a Labourgovernment’s failure to provide work was excusable; its failureto provide maintenance was not.. The Bill revealed two importantstrands in Labour’s philosophy: its commitment to achievingchange gradually by Parliamentary means, and its ambivalenceabout socialism.. “Work or maintenance” could be seen as a54tactical objective on the long and winding road to socialism, oras simply a more humane capitalism, with better conditions forthe working class, while retaining private ownership ofproperty.Despite Labour’s leadership’s uncertainty about policy onunemployment, two Labour thinkers, John Hobson and BeatriceWebb, attempted to work out practical “transitional” policies todeal with unemployment in the event that Labour were called uponto form a government.(9) Hobson was an economist and lecturerwho had become dissatisfied with some aspects of traditionaleconomic thinking. He believed that unemployment and povertycould be eliminated by evening out the trade cycle. His remedywas to tax the capitalist’s profit, which would reduce thetendency to overproduction. If income were redistributed moreequally among the whole population, consumption would be bettersustained, less would be available for investment, and the biastowards over—rapid growth of productive capacity would beovercome. Beatrice Webb was the daughter of railway andindustrial magnate Richard Potter. Like Hobson, she recognizedthe connection between trade cycles and unemployment. Thesolution which she and her husband Sidney put forward wasdifferent from Hobson’s. It was based on countercyclical publicspending, to be financed either out of general revenues, or byborrowing. This policy was adopted by the War Emergency Workers55National Committee (WEWNC), which was established at theoutbreak of the First World War to speak for the entire labormovement.. Arthur Henderson, chairman of the WEWNC, and laterLabour’s representative in the Cabinet of the Lloyd Georgecoalition, shared the Webbs’ moderate views. The three of themdecided that the Labour party should be recast as a moderatesocialist party, and strove to give the party a socialistprogram.. The program was contained in Labour and the New_SocialOrder, which was circulated in January 1916. The documentproclaimed the end of the capitalist system, and its replacementby a new planned, democratic social order. It was alsowide—ranging, covering everything from the manufacture and saleof alcohol to constitutional devolution.. The main elements ofLabour’s reconstruction manifesto were a national minimum wage,the democratic control of industry, a program for paying off thenational debt, and progressive taxation..The end of World War I brought mass unemployment and a rapiddismantling of the government controls which had been carefullyerected between 1914 and 1918, events for which Labour and theNew Social Order was unprepared.. The party’s initial responsewas to blame the Treaty of Versailles and the government’sfailure to resume normal relations with Soviet Russia after1919.(1O) Labour called for an international economic conferenceto revise reparations, raise loans for the56reconstruction of Europe, and to persuade the governments of allnations to balance their budgets.(11) Labour believed that soundfinance would end postwar inflation, stabilize exchange rates,encourage international trade, and thus make possible areconstruction of the gold standard. Labour policy with regardto the postwar economic situation was much the same as theCoalition and Conservative governments’, both being based on thesame 19th century economic orthodoxy.Labour’s cautious conservatism on unemployment was graduallyreinforced in the early 1920s as the party began to emerge as apossible alternative government.. Party leader Ramsay MacDonaldand Philip Snowden, Labour’s expert in government finance, wereoptimistic that their party could form the next government, andwere accordingly careful not to devise a program whichantagonized either the electorate or any of the groups withinLabour. Thus the 1923 Labour election manifesto re—emphasizedthe safe work or maintenance, and made no mention ofnationalization.(12) MacDonald’s tactics succeeded handsomely,with Labour emerging in minority government as the larger (thanthe Liberals) of the free trade parties in an election foughtlargely on tariff reform. Having formed the government,MacDonald decided to show that Labour could be entrusted togovern, and to implement those policies from its manifesto whichwould command Liberal or Conservative support.57The Labour leadership’s go—slow policy did not sit well witheveryone in the party. Much of the internal opposition wascentered in the left—wing Independent Labour Party (ILP). Afterthe war, Clifford Allen, the wartime pacifist and leader of theILP, made an effort to reinvigorate his group’s activities byproviding it with a more coherent, attractive case forsocialism. To that end, Allen brought into the ILP a number ofmiddle—class economic experts, including the above—mentionedJohn Hobson..(13) Oswald Mosley joined at the same time, andimmediately set to work developing a program of reform. In 1925,he and Strachey presented a detailed statement of policy inRevolution b Reason.Mosley was spurred to write Revolution by Reason by the economicproblems facing Britain in the 1920s, in particular, the attackon real wages of the employed. But he placed them within thecontext of a larger crisis in the capitalist system, Crisisafter crisis sends capitalist society staggering ever nearer toabysses of inconceivable catastrophe to suffering millions”, hewrote.(14) Serious action was required — immediately. “Thesocialization of one or two industries after protracted strugglein several parliamentary sessions can scarcely arrest in timethe fatal process of disintegration and collapse,” he continued.58“Measures of a drastic and Socialist character must be enforcedrapidly over the whole field of industry.” (15) Mosley dismissedthe economic policies of the Liberals and Conservatives as the“empty verbiage of windy rhetoric”. The policies of the twoolder parties did not even acknowledge, said Mosley, the centraleconomic problem in Britain, which was that the working classlacked sufficient purchasing power to command the production ofthe goods which they needed, and which those who were unemployedcould produce. The government’s policy of deflation and wagereduction had made the problem of inadequate purchasing powerworse, said Mosley, not better. Furthermore, he added, a policyof wage reduction in Britain encouraged governments of othercountries to do the same, leading to a downward spiral ineconomic activity, “destroying the very market for which theyare striving.”Mosley also criticized Liberal suggestions for reducing theprice of commodities through greater efficiency and betterindustrial organization, since such a program would also lead toa downward deflationary spiral. He rejected the suggestions ofthe “redistributionsts” in the Labour party who only wanted totransfer the present amount of purchasing power. Instead, Mosleybelieved that new wealth needed to be created, and that it couldbe done in a thoroughly ‘scientific” and judicious manner, by areorganization of financial policy and administration.. Mosley59proposed to create new demand by nationalizing the banks, andincreasing the amount of credit extended by them. policy of“easy money” was the heart of the Mosley program. It wasessential that the expanded credit went into the “right handsfor the program to be a success i.e. the working class. Money inthe hands of the rich would result in inflation, while money inthe hands of the workers meant demand for the products of8ritain’s staple industries, where unemployment wasconcentrated.Revolution yjeason’s program was to be administered by anEconomic Council with statutory powers. The Council was to beginby estimating the differences between the actual and potentialindustrial production, and plan the stages by which potentialproduction could be induced through working class demand. L4henthe maximum productivity of the nation had been reached, no newmoney was to be created, since further credit would only lead toinflation. Once Gritain’s latent productivity was reached, saidMosley, the Council could begin its next stage of work,transferring existing demand from rich to poor throughprogressive taxation. Mosley outlined other ways of puttingextra purchasing power in the hands of the workers. One was toincrease unemployment benefits and wages by direct payment tothe worker. Another was for the Council to fix the wages whichindividual firms were to pay. “The State banks would then grant60overdrafts for the payment of these wages until the EconomicCouncil directed that the industry could shoulder its own wagebill by reason of its incresed prosperity. No additionalover—draft for wage purposes would then be granted..” (16) It washere that Mosley planned to use E.M..H.. Lloyd’s wartime scheme ofstate—controlled purchase and retail of commodities fromoverseas producers to keep down prices.Like the rest of the Revolution by Reason program, Mosley’sposition in the gold standard controversy, which was stillraging, showed originality. He was in favor of a “scientificallymanaged currency” as against a gold standard, because hebelieved the former made planning of a “comprehensive Socialism”easier. Finally, and perhaps most importantly, Mosley attackedwhat he called Britain’s “export fetish..” He wrote that most ofthe manufactured products that were imported at the time couldbe produced domestically. He concluded with a final call to“above all, be realists”. Labour needed to “go forward to earlytriumph in the steel machine of a ruthless Realism with themotive power of a soaring Idealism.”(17) Together, theyconstituted Mosley’s “Revolution by Reason..”Despite Revol ution byg’s creativity and originality, itwas generally ignored by the ILP.(18) Instead, it supported theprogram put forward in a document published the next year called61Ibc_LLü.J,.a..(19) The authors of The Living 4age put forwardan underconsumptionist analysis of unemployment, suggesting thatconsumption could be sustained more effectively byredistribution than by credit expansion. The economic programcontained in Revolution_by. Reason has not received the sameattention in the secondary literature as other interwar economicpolicies, but generally it has been favorably received. AlanBooth and Melvyn Pack have given it high praise: “By anystandards, Revolution by Reason was an impressive pamphlet.Mosley identified the major constraints to expansionistpolicies— ‘sound’ money and the high exchange rate — andproposed the basis of workable policies on both counts.”(20) ButBooth and Pack’s evaluation does not go far enough. They focuson intentions, rather than performance: they see RevolutionbReason as an economic program which, they say, would have1worked” if only it had been tried. In concentrating on abstracteconomic theory, they have overlooked the larger historicalcontext, which would have allowed them to placeReason within the context of the tirnes. It would also haveallowed them to look more closely at Mosley’s goals andmotivations, which is the subject of the final part of ChapterFour.62Unlike the leadership of the Labour party, Mosley did notbelieve that the forces of socialism in Britain had to waituntil the evil capitalist system had collapsed before they couldbring about positive change. Party leader Ramsay MacDonald andthe other Fabian theorists believed in the “inevitability ofgradualness”, that the conversion of the economic system fromcapitalist to socialist was certain, but would also take a longtime. Their patience was not matched with a clear idea of whatto do in the interim. Mosley repeated over and over hiscommitment to Socialist principles in RevolutjyReason, butadded in several places in the text that there was a need forimmediate action to confront a clear and pressing problem. Forinstance, at the beginning of Revolution byjpn, Mosleywrites, “In face of dangers scarcely paralleled and sufferingseldom equalled in our long history, our duty is to face withclear eyes and steady nerves the stark, hard question — ..Jhat isto be done?”(21) ind one page later, ho confronts the doctrineof gradualism. “t.Je hold that evolutionary Socialism is in itselfnot enough.”(22)Mosley was different from other British reformers of his time inmany ways. Peter Clarke has written that the progressive63mentality can take one of four possible forms, reflecting afundamental division between optimistic and pessimistic views ofhuman nature: “But even for revolutionists, it makes a crucialdifference whether an optimistic or pessimistic view of humannature is postulated. On an optimistic view progress can beassumed. A moral change, a change of heart, a new consciousness,will be the agent and sanction of a transformation withinsociety. But the revolutionist who takes a pessimistic view hasno such confidence; instead he is impressed by the ideologicalconditioning which has flawed the social consciousness of thevery groups who ought to bring change about. Nonetheless, heknows that revolution is correct, and concludes that it must ifnecessary be made from above if spontaneous forces fail.Mechanical methods have to be substituted instead..”(23)Following Clarke’s system of classification, Mosley (and, as weshall see later, Lloyd George as well) was a “mechanicalreformer”. It is worth noting that Clarke places J.A. Hobson,along with the important prewar progressives, in the “moralreform” category.. Hobson had an important impact on Labour partythinking before the war, with his articles on guild socialism,and after, with his contribution to the ILP’s . ng L4a9eMosley’s conviction that immediate action based on freshanalysis was required to tackle Britain’s economic problems thusseparated him not only from contemporary Labour thinking, butearlier progressive attitudes as well.64Oswald Mosley was what would be called today a “conviction’rather than a “consensus” politician. There is no evidence thatMosley was prepared even to consider compromise with traditionalLabour orthodoxy, or with the “capitalists”. While some 1920seconomic reformers, particularly those in or connected to theLiberal party, were satisfied with pleading a tempered,reasonable case in mellow generalities guaranteed not to offend,Mosley strove to develop his program such that it was clearlydifferentiated from all others, unmistakably his own. Forinstance, there is a section in Revolution by Reason entitled,“Summary of Differences Between Existing Methods of Expansionand those Suggested by the Birmingham Proposals.” Mosleyintroduced the section by saying, “We thus arrive at a point ofvery distinct difference between these proposals and those ofnon-Socialist monetary reformers, while we have left far behindthe futile inhumanities of wage reducers and the Victorianfallacies of those who hope for extra purchasing power through afall in the price level.”(24) Most members of the Labour partyfound the Marxist doctrine of revolutionary class struggle verystrange. Convinced that socialism was a superior idea tocapitalism, they believed that capitalists would likewise byconvinced.(25) Not so Mosley, who believed that the differencesbetween capitalist and socialist were irreconcilable: “We cannotdoubt that such great powers in the hands of a Workers’Government, will be65necessary if the transition from Capitalism to Socialism is tobe carried through successfully. At every stage we shallencounter determined efforts at sabotage from the great vestedinterests. By the powers here described, Socialism would possessa stranglehold over Capitalism whenever it attempted again toexploit the workers or to sabotage reconstruction.”(26)ft yutjp by_Reason bore the signs of Mosley’s tendency towardseconomic “dirigeism”, signs which became clearer in his laterprograms. He apparently believed that the ability of the Stateto direct and control the economy was almost without limit. Theresponsibility for bringing about the desired changes was in thehands of an Economic Council with statutory powers. The role ofthe Council was nothing less than to assume some of thefunctions of the market, and maintain aggregate demand andsupply at a level consistent with the prevailing price level.Mosley does not say whether the Council was to be elected orappointed, but its powers we’re to be far more extensive than anyother public body in contemporary Britain. To Mosley, therough—and—tumble of 20th century capitalism was an indicationnot of its liveliness and vitality, but of its disintegrationand impending final collapse. Mosely’s solution to the problemcaused by “the dictatorial power over industry and Governmentspossessed by the great banks”(27) was to give socialism the sameabsolute power over capitalism.66Throughout Revolution b Reason Mosley makes references over andover again to his commitment to socialism, and to his desire tosee it replace capitalism. In the very first paragraph, Mosleywrites: “It is a difficult task to describe in the course of onebrief speech or pamphlet proposals which strive to weld togetherthe Socialist case with modern monetary theory, and upon thatsolid foundation aspire to build a whole structure of Socialistproposals..”(28) In fact, however, despite the socialistrhetoric, Mosley’s goal was a planned, mixed, economy.. With theexception of the banks, whose nationalization was critical tohis goal of increasing aggregate demand by expanding credit,Mosley apparently wanted to leave industry and commerce inprivate hands. The powerful Economic Council was primarilyintended to act as an overarching public organization to monitorand direct a private economy. Mosley wanted to inject additionalpurchasing power, through the medium of a nationalized bankingsystem, into the pockets of the working class, who would turnaround and spend it in the still—private marketplace. jJçp_.eason is therefore ultimately a reformist program, a networkof controls to direct an otherwise unruly and unpredictablecapitalist system.ion byReason restricted its analysis to the demand sideof the British economy. It concentrated on those items whichmake up aggregate demand — consumption, investment, government67expenditure, imports and exports. ill of these are concernedwith the distribution of goods once they have been produced. Thedocument does not look at all at the production side of theeconomy, at the allocation of scarce resources to the productionof goods, and the ways in which the level of production can bechanged. Many Britons believed that the source of theircountry’s economic problems lay on the supply side, in the formof real wages which were too high, and would not come down.Mosley’s explanation was radically different.. For him, theproblem was, as has already been pointed out, one of inadequatedemand.Finally, Revolution bypason dealt with Britain’s economicproblem in the abstract. Mosley’s analysis of the economy andits shortcomings, and his program for revival, demonstrated anunderstanding that was rare for its time. His achievement waseven more remarkable, given Mosley’s lack of training ineconomics. But his insights into the economy did not extend tothe political realm. In laying out his program, based on anearly version of indicative planning, directed by an EconomicCouncil, Mosley shows no appreciation for the practical problemsinvolved in setting up and maintaining such as system. It isdifficult to escape the conclusion that, despite its economicinsights, Mosleys RevoluJc.n .Y Rcn was unrealisticallyoptimistic..68CHAPTER FOUR END NOTES1. Robert Skidelsky, Oswald Mosley (London, 1975), p.66.2. Ibid., p.132.3. Ibid., p.137.4. Ibid., p.138.5.. Alan Booth and Melvyn Pack, Employment, Capital and EconomicPolicy Great Britain 1918—1939 (Oxford, 1985), p.23. Skidelsky,op. cit., p.145.6.. Skidelsky, op. cit., p.140.7. J.M. Keynes, A Tract on Monetary Reform (London, 1923),p.36-7.8. Sir Oswald Mosley, My..Ljf (London, 1968), p.185.9. Robert Skideisky, Politicians and the Slum, (London, 1967),p.30. Hobson was a prolific writer on economics, politics, andinternational affairs. His (1902) was an importantsource for Lenin.10. Booth and Pack, op. cit., p.17.11. Ibid., p.17.12. F .14.5. Craig, ed.,1918—1966 (Chichester, 1970), pp.22—3.13. Booth and Pack, op. cit., p.21.14. Oswald Mosley, Reo i.Iic.n jçn (London, 1925), p.7.15. Ibid., p.7.16. Ibid., p.18.6917. Ibid., p.28.18. Booth and Pack, op. cit., p.24.19. H.N. Brailsford, JA. Hobson, A. Creech Jones, and E.F.L4ise, The Liv4,jg Wag (London, 1926).20. Booth and Pack, op. cit.., p.24.21. Mosley, op. cit.., p.6.22. Ibid., p.7.23. Peter Clarke, Liberals and Social Democrats (Cambridge,1978), pp.1—8.24. Mosley, op. cit., p.14.25. Robert Skidelsky, Politicians and th4p (London, 1967),p.29.26. Mosley, op. cit., p.19.27. Ibid., p.7.28. ibid., p.5.70CHAPTER FIVE WE CAN CONQUER UNEMPLOYMENTAs Prime Minister of a wartime coalition government whichremained in power until 1922, David Lloyd George attempted toform a new party of the center. He hoped to fill the gap in theBritish political spectrum which had been created by the splitin the Liberal party, and the rise of Labour. Although LloydGeorge’s first attempts did not meet with success, in themid-1920s he tried again.. This time his goal was not to create anew party, but to reunite the Liberal party under new doctrineand policy which he believed were more appropriate to the times,and which, he hoped, would put the Liberals back in government,and himself back in 10 Downing Street.. Along with variousassistants and collaborators, Lloyd George spent the second halfof the 1920s working out a modern Liberal program. Theculmination of their efforts was the Orange Book politicalpamphlet, formally called We Can Co ej ljpj’t, and whichbecame the Liberal manifesto in the 1929 General Election.. Likethe Orange Book is best understood withinthe social, political, and intellectual context of its times,and not as a piece of abstract economic theory..8y the 1920s, British liberalism had changed considerably fromits 19th century version.. From about 1815 to 1870, liberalismlooked on reform as the reverse of planning, as the liberation71of natural, spontaneous forces in society which would, of theirown, promote social improvement. Towards the end of the 19thcentury, however, many Liberals came to believe that the socialand economic assumptions of liberalism had to be revised, andthe fundamental Liberal belief in liberty reinterpreted. In theeyes of “new Liberalism”, the modern state could, and should,play a positive, interventionist role in order to allow eachindividual — not just the favored few— a greater degree ofpersonal freedom. By the end of the 19th century, therefore,many Liberals no longer saw the individual and the State infundamental opposition to each other.The “new Liberalism” philosophy could be seen in the legislationof Liberal governments between 1906 and 1914. Although the Houseof Lords in 1906 destroyed or modified several Liberalgovernment bills, some important pieces of legislation werepassed. They included the Workmen’s Compensation Act, whichextended employer liability to six million additional workers,and the Trade Disputes Act, which modified some of the effectsof the anti—strike Taff Vale decision of 1901. An Old AgePension Bill was passed in the same session, as was the LabourExchange Bill. In 1911 the National Insurance Act was passed.The general plan had been outlined by the government in the“People’s Budget” of 1909, which had precipitated theCommons—Lords struggle. The Act provided for sickness,72disability, and unemployment insurance for British workers undercertain conditions of employment.“New liberalism” was changed by World War I.. In 1916, DavidLloyd George unseated the beleaguered Herbert Asquith as PrimeMinister.. Liberalism split into two main streams, left andcentrist. Centrist liberalism emphasized individuality andprivate property, while left liberalism was more concerned withissues of social justice, welfare, and community..(1) As PrimeMinister, Lloyd George directed his government to set up anelaborate network of controls, regulations, and organizations toplan and direct the war effort.. Never before had the Britishprivate economy been subject to such a comprehensive collectionof State restrictions. Lloyd George also continued theReconstruction Committee which Asquith had established in 1916,to help Britain rebuild once the war had ended. The Committeewas gradually expanded and its mandate made more ambitious overthe next two years.. However, Lloyd George’s goal of a “Land Fitfor Heroes” was quickly abandoned at the end of the war, as themood of the country overwhelmingly favored a return to prewarconditions of laissez—faire “normalcy”.Although the fortunes of the Liberal party had slipped after1916, the forces of liberal thought had by no means run73their course. An expression of an important element of post—warLiberal philosophy was the Liberal Summer School (LSS).. Startingin 1920, the LSS movement became the linch pin of Liberal and“progressive’ thought during the 1920s. Ernest Simon, aManchester industrialist, believed that the Liberals’ problemsran deeper than the immediate one of leadership.. He thought thatthe Liberal party needed an infusion of new ideas, particularlyideas for an industrial and unemployment policy.. The SummerSchool’s purposes were not entirely intellectual. The Liberalparty was being squeezed between a resurgent Conservative and aLabour party rapidly coming into its own, and was worried lestit be crushed by them.. Furthermore, the Liberals had, over theyears, grown accustomed to holding the reins of government, andwere determined to return to power as quickly as possible. Inthe summer of 1920 Simon and a number of other ManchesterLiberals met to discuss the formulation of a modern economicpolicy for the Liberal party.. Partly out of fear of the Labourparty, and partly out of regard for the grievances of theworking class, they were in favor of a limited degree ofgovernment intervention in the economy. LJhile 1aise—faire intrade was still sacrosanct to this group of Liberals, domesticlaie, already weakened by wartime governmentintervention, could be sacrificed with impunity..A rough blueprint of a plan on which to base future policy cameout of the inaugural meeting.. Produced by Ramsay Muir, Professor74of History at Manchester University, the plan was in the form ofa small book entitled L jjind_Ipctri.(2) The bookcombined financial conservatism, free trade, and measures ofgovernment intervention to form a plan for the social andeconomic reconstruction of Britain which emphasized a more evendistribution of wealth. Muir believed that the challenge facingBritain both socially and industrially was to combine the rightamount of collective action with the maintenance of individualand local freedom. Naturally enough, he believed that onlyliberalism was up to the task.Following the success of the 1920 meeting, the organizers andparticipants decided to meet more formally in the future in anannual Liberal Summer School. The first gathering by that namewas in 1921 in Grasmere, attended mainly by North Englandbusinessmen..(3) Following Grasmere, the LSS settled into aregular pattern, meeting alternately in Oxford and Cambridge.Muir and economist L.Jalter Layton were appointed co—directors ofthe School, and a committee was formed to co—ordinate its workand prepare future sessions. The following year, 600 Liberalsattended the School at Oxford.(4)The men who helped organize, direct, and promote the SummerSchool were a heterogeneous group. The original founders, menlike Muir and Simon, were essentially political in their75approach. The program of Liberalism and Industry consistedmainly of fiscal and instutitional reforms which could becarried out in the traditional way by Parliamentary legislation.The intellectuals and economists who were involved in the LSShad different aims and methods, however. J.M. Keynes, who was tomake such an important contribution to Mosley’s understanding ofeconomics, Hubert Henderson, and Walter Layton were first andforemost theoretical economists. Their interest was in“inventing new wisdom for a new age”, as Keynes put it, not inreforming industrial relations.. Keynes believed that it was notfrom the partnership of capital and labor, but from theintelligent use of capital, that efficiency, prosperity, andsocial justice would flow..(5) By 1923, Keynes had come to heconclusion that the fundamental economic decisions of Britaincould no longer be left to the interaction of individuals’self—interest, but must become the business of government. Whilethe older Liberal concern with the social question coexistedwith the newer concern for economic efficiency, the latterseemed to be slowly gaining predominance..By 1923—24 the LSS’s star seemed to be in the ascendant. Withthe temporary reunification of the Liberals, and there—emergence of Lloyd George, the official leadership of theparty recognized and welcomed the Summer School’s role as party“think tank..” L4ith the help of the party organization, the LSS76began to play an active role in the preparation of the Liberalpolicy reports of the 1920s..(6) These reports included Coal andPower, L _ dNatjQn (the “Green Book”), and Ignj,dhn_(the “Grown Gook”)..(7) Progressive Liberal thought alsobegan to focus on the nature and causes of unemployment.. In1923, The Nation and The Athenaeum, a periodical for the Britishintelligentia, became the mouthpiece of the LSS. HubertHenderson was editor, and he and Keynes wrote numerous articlestouting monetary policy as a cure for unemployment.A new chapter in the life of the LSS was begun in 1926. LloydGeorge gave it £10,000 and the services of a secretariat tofinance a thorough industrial inquiry.(8) Work on the inquiryoccupied the School for the next 18 months, and cemented itsties with official Liberalism.(9) Lloyd George’s attention hadbeen directed in 1924 by Philip Kerr, his former secretary, tothe problem of combatting unemployment. Their approaches weresomewhat different, however. Where Kerr was a social reformerwho was basically optimistic that unemployment was onlytemporary, Lloyd George wanted to mount a direct full—scaleassault on the problem..(1O) Public works had been one of thestandard cures for unemployment in Britain since the turn of thecentury.(11) Lloyd George envisaged public works on a muchgreater scale, however, one which he hoped would restoreprosperity to the country. Keynes supported Lloyd George’s77public works remedy, and he called for a redirection of publicand private investment into road—building, housing, andelectrification. But Keynes was also a supporter of Asquith,Lloyd George’s rival, and for two more years they remainedapart. In 1926, after Asquith had tried to expel Lloyd Georgefrom the Liberal shadow cabinet, Keynes found himself on thelatter’s side. Keynes and Lloyd George were thus finally able toformally work together on the Liberal Industrial Inquiry, todevelop a comprehensive industrial and employment policy forBritain.The finished report of the Liberal Industrial Inquiry waspublished 2 February 1928. Entitled 8ritajn Industrial Future,it almost immediately became known as the Yellow Book, after thecolor of its cover. The Yellow Book was almost 500 pages long, acomprehensive study of what the Inquiry thought was wrong withthe postwar British economy, and what should be done about it. Aconsolidation of progressive Liberal thought of the 1920s, theYellow Book was innovative in many ways, particularly in itsanalysis of the structure and performance of the postwar Britisheconomy, and its relation to the world economy. Britain’srJL.fu‘re was divided into five ‘book&, and these booksinto chapters. The Yellow Book recognized that Britain’serstwhile economic engines, her export industries, had suffereda permanent loss of markets, and had to reduce their level of78operation. Resources had to be transferred to the home market,which would be facilitated by channelling a large proportionof funds destined for capital export into domestic schemes ofnational development. It also meant that labor would have to betransferred from threatened export industries to those which hada brighter future. To modernize and reinvigorate the nationaleconomy, the report also proposed a massive program of publicworks, to restore the country’s infrastructure, to be financedby deficit spending. While the Liberals recognized the existenceof structural unemployment, and were willing to use unorthodoxfinancial methods to reverse Britain’s slide, they also remainedloyal to free trade, that most orthodox of economicinstitutions. The very last sentence of Book One declares, “Ourpolicy must be to return as rapidly as possible to the system ofFree Trade on which our industrial life and our world widecommercial activities have been built up.”(12)The response in the British press to the Yellow Book wasmixed.(13) Philip Kerr said that the mixed reviews were due tothe lack of overriding theme to give the report clarity andfocus.(14) The response of Liberals was just as mixed. TheLiberal Council, the remnants of Asquith’s faction, rejected itsrecommendations, preferring the more traditional Liberal goal ofretrenchment. At the end of March 1928, however, a specialconvention of the National Liberal Federation was summoned to79consider the report’s proposals, which were then adopted in aseries of resolutions. An opportunity to make practical use ofthe Yellow Book came the next year. Seebohm Rowntree, aBirmingham industrialist and one of the participants in theLiberal Industrial Inquiry, called on Lloyd George to make anexpansionist program the basis of the Liberal manifesto in the1929 General Election..(15) The result was that Lloyd George’scontribution to the Yellow Book, the chapter called “NationalDevelopment”, became the basis for We Can Conqier Unemployment,the Orange Book.The 64—page Orange Book began by saying that unemployment was“by far the biggest single issue before the country”, and thattherefore its purpose was to propose specific remedies which theparty was prepared to put into operation. Lloyd George saidthere were three essentials for solving unemployment(l6):deciding that the problem was really capable of solution (unlikethe government, which hoped it would go away); facingunemployment “in the same spirit as the emergencies of the war”;and carefully formulating a policy “based on a survey of theeconomic realities of the situation” Lloyd George said that thepermanent cure of unemployment required “certain long—distanceremedies.”(17) They included a policy of international goodwilldesigned to stimulate foreign trades, as well as domesticmeasures to stabilize prices and increase the amount of credit,80raise the level of efficiency of British industry, and developnew industries and redistribute workers. Lloyd George said thegoal of the Liberal program was “not merely a question offinding employment for those who must in any event bemaintained. It is that we should seize this groat opportunity toraise the whole level of efficiency and amenity of our nationallife..”(18) As will be discussed in more detail later, this is animportant difference between the Lloyd George and Mosleyprograms.Lloyd George made the confident claim that the Orange Book’sprogram of national development, outlined in the Yellow Book andsince then worked out in greater detail, would begin to absorblabor within three months of adoption of the program, and thatthe number of unemployed would be reduced to more normalproportions before the end of twelve months.(l9) He added thequalifier, politically important in the 1920s, that theLiberals’ program of “common sense and wise economy” would becarried out without inflation and without increasing taxes..(20)The Orange Book detailed plans for a number of massive publicworks projects. The first involved modernizing Britain’sout’-of-date transportation system. The project called for thecompletion of a system of new highways to be built throughoutEngland, Scotland, and Wales, as well as urban ring roads, andrural roads. In addition, the Orange Book called for a programto replace old bridges, and build new ones. Costs of the road81and bridge scheme were broken down in detail, and plans for therecruitment of labor and finance were carefully laid out. Thepamphlet also included a similar program to attack Britain’shousing problems. The goal was not only to build urgently-needednew housing, but also to relieve serious unemployment in thehousing industry. Likewise, plans were revealed to modernizeBritain’s backward telephone system, increase the nation’scapacity to generate electricity, drain the land, and extend andimprove public transit in London. In every case, the Liberalplans were accompanied by detailed estimates of their cost.The main theme of the Orange Book proposals was uwork for theworkiess, now”.(21) Lloyd George estimated that the projectsoutlined in the pamphlet would, all together, provide directemployment for almost 600,000. Furthermore, he said that theprogram would have a second, indirect effect on employment. fs aresult, unemployment would be reduced to a more normal 4.7% (thepre—war figure) within a year.(22) The Orange Book anticipatedobjections to its program on the grounds of unsound theory andfinancial impracticability, and refuted them in advance. To dothis, the pamphlet drew heavily on the recent theoretical workof Keynes.(23) The book finished with testimonials from bankersand businessmen, and further reassurances that the necessaryfinances could be raised without adversely affecting either theprivate economy or the government’s credit rating. It claimed,in fact, that the net effect of the Liberals’ national82development program would be to increase tax receipts..(24) Ashort, two-line paragraph containing a political call to actionconcluded the Orange Book: “The Liberal Policy is Work for theL4orkless, now. We Can Conquer Unemployment.”(25)Lloyd George’s unemployment pledge brought forth a mixture ofcondescension and abuse from the Conservatives and Labour.(26)The Tories thought the Liberal program was another Lloyd Georgegimmick to grab the headlines. Labour was placed in a greaterdilemma. Regarding unemployment as its own issue, but lacking asuitable remedy, the party did not know whether to mock thescheme or claim the Liberals had stolen it from them.(27)Despite the Conservatives’ and Labour’s attempts to deride theLloyd George program, their mirth was quickly disturbed by theLiberals’ success in several by-elections in early 1929.(28)Alas for the Liberals, they were unable to shake their “thirdparty” perception in the General Election, Although they tookalmost 25% of the popular vote, they managed to win only 59seats, finishing well behind the Conservatives, as well asLabour, who proceeded to form their second government of thedecade ‘(29)Evaluation by historians of the Lloyd George program has beenmixed. Earlier economic historiography, its approach based onthe history of economic thought, has tended to look favorably on83the Liberal program, seeing it as an early precursor of theKeynesian policies which prevailed in Britain from the 1940sthrough to the 1970s.. This historiographic school explains theLiberal defeat in the 1929 General Election, and the implicitrejection of the party’s interventionist program, in terms of aclash between competing theories, one “modern” and11progressive”, the other “backward—looking” and beholden to“vested interests”. An example of this historiography is 3ohnCampbell’s Lloyd George The Goat in the Wilderness 1922-1931(30), which deals with the fall of the Coalition Government, andLloyd George’s attempt in the 1920s to regain power. Campbell isalmost gushing in his praise of the program: “In the shortterm... the Yellow Book failed in its purpose of reviving theelectoral fortunes of the Liberal Party. Even in the longer termit was unable to achieve that miracle. Yet over the generationfollowing its publication its philosophy so thoroughly permeatedBritish political attitudes that most of its recommendationshave come to seem commonplace, and it stands out today as themost far—sighted policy document produced by any political partybetween the wars — more than a mere policy document, indeed, theYellow Book offered to 1928 a prophetic vision of post-warsociety. Disregarded in its day, it was nevertheless theharbinger of a typically quiet British revolution.”(31) Campbellconcludes by saying, “But the Yellow Book, both in the thenunparalleled professionalism with which it was produced, and in84its challenging and prophetic contents, is the greatest monumentan opposition leader could ever have. It is the outstandingachievement of Lloyd George’s political exile.(32)A later historiography has arisen to challenge this viewpoint.Its criticism has three bases: the perceived failure ofKeynesianism in 8ritain and elsewhere from the late 1960s on,econometric analyses of interwar economic policy andperformance, and public policy theory. This school is moresceptical about the Lloyd George unemployment pledge. Alan Boothand Melvyn Pack, for instance, saw neither the Yellow Book northe Orange Book as deserving of the praise which otherhistorians had heaped upon them: Thus it is impossible tobelieve some of the more enthusiastic claims for the Yellow andOrange Books. The thinking of the progressive Liberals duringthe 1920s was firmly rooted in the orthodox view of the economy,to which was added an array of practical and utopian reformistideas. The involvement of Keynes has given the Liberal proposalsa lustre they do not merit. The economics of the Liberalprogramme faithfully reflected the Liberal Party’s own need tocombine radical working-class appeal with its orthodoxtraditions. Ultimately, the Liberals depended entirely uponLloyd George’s ability to resolve the contradictions in themanifesto and to get things done. The mass electorate did nothave sufficient confidence,., and even Lloyd George had little85trust in his advisers proposals. It is tempting to believe thatthe electorate gave the Orange Book the judgement it and theLiberal Party deserved..”(33)But as in the case of Revolution by. Reason, historians examiningthe Lloyd George proposals have tended to ovrlook the largerhistorical context. Instead, they have concentrated theirattention on the narrower economic dimension, evaluating withgreat care the degree of theoretical rigor underlying theLiberal program. As the thesis did with the Mosley program, itnow will give an evaluation of the Orange Book which goes beyondquestions of economic efficacy..LJe Can Cong meflj was first and foremost an electionmanifesto, a determined attempt by Lloyd George and the Liberalparty to regain office. The chosen vehicle was the issue ofunemployment. It is possible that Lloyd George attached no moresignificance to the problem than that it was the best issuearound which to build a winning election campaign..(34) In theevent, the Orange Book, and the Yellow Book on which it wasbased, recognized the existence of structural unemployment, andits implications for the British economy. The solutions which itput forward concentrated on the “supply side” of the economy, on86increasing productivity, and reducing internal barriers totrade. The “long distance policy at home” reflected thisconcern, calling for price stability and easier creditconditions for industry; raising the level of industrialefficiency; and developing new industries and redistributing thelabor force..(35) Similarly, the national development program —roads and bridges, housing, telephones, electricity, etc —concentrated on building up and modernizing the country’stechnical and economic infrastructure, to make it easier andcheaper for industry to obtain the resources it needed,manufacture product, and distribute it to customers. This is anessential part of the Orange Book, and it is thereforesurprising that virtually all historians have overlooked it. Infact, it can be argued that the economy’s productive capacity,rather than unemployment, was the real focus of the Liberals’attention throughout the Orange Book, despite its nominalconcern with unemployment, !.Jhen discussing the road program, theOrange Book stresses the fact that the roads were to be builtwhere needed for transport, and not in those regions whereunemployment was concentrated.(36) The Liberals believed that ofthose unemployed miners, dock workers, and others attracted fromthe depressed areas, substantial numbers would be absorbedfairly quickly into the labor force in the areas where they wereworking .(37)87While the main body of the Orange Book was concerned with theLiberal program of government intervention in order tostrengthen the domestic economy and help it grow, it alsoreconfirmed the Liberal commitment to the external orientationof the economy.. Protection was explicitly rejected, on thegrounds that,‘4Protection cannot give assistance whereassistance is needed, namely, to the export industries. - -All—round Protection means an all—round increase in the cost ofliving, which is only a roundabout way of reducing real wages..Safeguarding is the protection of inefficiency at the expense ofthe rest of the community..”(38) While it did not give it thesame amount of detail, the Orange Book placed “InternationalAction” ahead of “Action at Home in the text, repeating theargument from the Yellow Book that steps were needed “toincrease the volume of the world’s trade and Britain’s share ofit. No nation has so much to gain as Britain from action alongthese lines. No other nation will suffer so much from failure toachieve success in their pursuit..”(39)Lloyd George believed that the success of the Liberalunemployment program, like the British war effort, depended on anational consensus which extended across social classes andgeographic regions, and on society’s deference to the politicalleaders and civil service of the central government. Thecomparison with the emergencies of the war, while certainly88politically motivated, was nevertheless apt, since one of thereasons Lloyd George replaced Asquith as Prime Minister in 1916was to continue the reorganization of the British economy he hadbegun as Minister of Munitions, and transform it into theefficient, productive machine that was needed in order to defeatGermany. A cornerstone of the national consensus which theLiberals were calling for, but which was not specificallypointed out in the Orange Book, and which can only be inferred,was that the working class was to be accomodated within Britishsociety by granting concessions to their economic, but not theirpolitical, demands.. The Orange Book reforms were to be made, inother words, within the traditional apparatus of the Britishstate. In this way, the Liberals hoped, they would draw offvotes from Labour, and beat the Conservatives in the GeneralElection.Similarly, the Liberal proposals were geared to have as littlechange as possible on the relative positions of the socialclasses. The Orange Book specifically rejected measures, such aswage reduction, inflation, protection, and nationalization,which might be seen to favor one class or group over another. Italso condemned recent government regulations dealing with thecoal industry, which, it claimed, had led to a further increasein unemployment in the mines. Although it is not explicitlystated anywhere in the Orange Book, it is clear that the Liberal89program was intended to benefit the nation as a whole.Finally, WnConquer Unemployment shows that its authorsgreatly desired to be, and to be seen as being, businesslike,logical, and ‘sound” in their analysis and its presentation. Thepamphlet is full of facts, figures, examples, columns, anddiagrams, and its analysis of the problems facing Britain’seconomy, as well as the remedy, are presented in a rigorous,persuasive manner. In the introduction to its proposals, theOrange Book compared the unemployment crisis with the recentwar: “The present situation must be approached in the samespirit, and with that effectiveness of administration which onlydriving force and experience can secure, and which the Liberalleaders possess in special degree... The third essential is acarefully formulated policy, based on a survey of the economicrealities of the situation.(40) From the point of view of thecountry as a whole, it is indeed unfortunate that the Britishelectorate did not agree with Lloyd George’s asssessment oftheir country’s economic crisis.3.)4-0)(UI(UC0)(1)U)314)0)E-0!14.)4)134)4)Ct)(fli4)-C—IU)10)j“•‘-40.(0CU)EC00.UNC’0NE4-(134)-U)4-N•-4a0034)0.“4I4)1oo.o—1(02-Z132(01300’CC-4-(0Ci))U)a’(UiU)0(UU)C.C(U‘-II-133.)•,-40.0)14)!.)fc-3.)311310—4C4)0C4)!13-j4—’!J(U“-4.C•-iU)‘-4!C-I4.)C2>1CDo31Cl(U>-N4-0‘-4U).00)20oja’X)—I13N“—I—0“—4‘—4o3.),C)J(U..130.>.I(UI(—44-C2-.!•>.J0.J’N0)3•0)01Ci-IIa’£>..4)ILU)C4-N0(1)3.)!4),-44)3—23-Z)0)11313(014)..C4)(0-l0•.-CI3!-Ci—I0.4->0(UC4-i0>1-3.)’0000J0•-cI.-•-ic010’!1..-,4.)“-44.)C•-N2’3-3“-44-0SI4)1SI4)0)N201-4-’0—l0•“-403—!U)’CI0)(7’00.14-130(lU)3)C3!0“-4!(03-‘-4(ii4)40.0)(7’00!4-1000,IL0)0—C’)-430.ZiN(0!24)N‘-oC(1)(00•13U)-IU)i(7’CCC100)U)o.U)0.Li“1I‘0U03-.•).0!413!N0‘0J-0404)0.o“-1(0>qNCP’4).CU)a’Z—-0a-—fDU)0(3->4-).CN5-I4-’4)1—-l-1(UN‘—45-“-4f-•4.)i“-Io0:0_ll‘—“a’c0)-o>.3-’0=0‘U)•C)ZC•N“-44)13‘-43>-..0“-4N(Y)31Li0)jI.Q’-C0H-!C0)000-a’ui-‘-‘-400)(0‘‘0.->..0.-Ci0.4U)-—413N03jJCU)-J—4000.000).‘4)C)(7’0.000)0)C0.0-IN5-‘-4C.00-4‘-400.4),0)133—C—4‘-40.‘0>-.U)!‘LiLi.300.J‘I£C0•—(U(0,-C0‘i—0.>Z1350,0.-13.-).4-)Q4)U)---45‘—(U•-iC’)Ci-1-4—4C(00.CCjCD(0U)CU)I—4‘-0•‘414)‘LI.U)>00‘-i-(1)(U4-13s,..--C1-130).00‘\(010(U(U.J(‘3•t)01C130U)0)130.0.N3-10.13Q..C(0C0’-01)U)‘—4I(0U)>..s.-.>.)U)54-)0•-S“-4Li02£‘-4‘-4“-40)CUN030(0U)(U•00’-s-i(U.00H0Jj.0.03-0s-I(0I‘--40.3--5-04‘-40)!0-(0..Z(1)1—,N‘-4IL001CC’)J4.)4)Ii..‘—4s<C13NOJ3(N>..CC•I•5-•(7’•0)0(7’(004)•03‘NCt)ctC)-4N.olCt)U)‘0NCX3—-40)13C.)0)0’‘-4‘-40.N-i-1—4())(4)f’)f’)f’-F.)P4)F.)‘-F’.)1\)f’)1’)--‘,--10(4)F’.)cD‘.0Co‘.J‘0(7’010(4)0‘.0Co‘..Jr01ts*I1”)•*sP4)a*••*o-• IC)i>-l).-4)-4-4-4JI)-4zI1)-10.-za-k-a-a-a-a-a-a-0a-CDCDa-a-ira-a-a-00_.a,0)-.,-‘.-•-*,-•‘0‘.0r’-•a•)-.Z00.ClQCL0.0-0..(4)z0.-O()Cl)0.0..0.0.0-0.-j*0)jO’-.••0)IG)ai—,1‘a(‘a‘a‘a‘a‘a‘a-cotJk0-U0-UtiUT3-oin0—‘titiU0U13P4)a10)rt-•0-o10XCD•‘000-IrtF’.)F4)F’.)F’.)F’.):a-a’I—Ii-c0101ac100‘4)P.)F-.)0.CD31.00-(4)0••-•!U30)01(7)-.10’0—*C-CD••0)i-c*)..aCD0.U0Iia,Q•‘a—‘a1(1‘(ii‘aC-II_I•(l)‘0‘00’1,01)-\J0CDCo-oI“J130)‘c3‘<-.—lo-[U‘—‘CD‘01’-‘a—oI1010-•ICo13-olCD0CD‘<rt0)*03ll)*C)F’.)M1CDCob-..CDND-F’.)(.4)0)(4)01lCDrtIIrt13NO•Co•‘0IrtII.Fa’‘‘3—f0CDI0)0130Hx,aCD•0•‘0+00kG)C).C3010-CD1,ri-•‘aiC*10k-t‘a‘10-).. ‘0).a,G)Co!CDOlf0)r(7’0d[U.a-*CD*In-CDCD1)P1a)—I,_.011)-CD.1:*0)0.I-uaCDp-”0.lCD1[.00.rnCDII1°CD10(0i 10 3 )..I.09235. cn. c. L_VflPJZ , op. cit.., p..7.36. Ibid.., p..22.37. Ibid.., p.23.38. Ibid., p.62.39. Ibid., p.7.40. Ibid., p.6.93CHAPTER SIX SUMMARY AND CONCLUSIONTo this point the thesis has summarized the symptoms of the1920s unemployment crisis in Britain and the attempts ofgovernment to deal with it, and analyzed the alternative”,non—government programs of Oswald Mosley and David Lloyd George.Throughout the thesis, an effort has been made to extend thescope of the analysis of the unemployment debate beyond thatmade possible by focussing exclusive attention on the efficacyand underlying theoretical rigor of the economic programs. Ithas delved more deeply into the Mosley and Lloyd Georgeprograms, and included a political and social dimension whichmost of the earlier historiography has ignored..To summarize and conclude, the two programs will be examined injuxtaposition, and explicitly compared and contrasted, somethingwhich the historiography of the interwar British economy has notdone. It has tended to lump them in together as “radicalresponses” to unemployment, or as early precursors of postwarKeynesianism. Alternatively, it has looked at them separately,as, for example, a harbinger of Mosley’s later fascism, or asexamples of late 1920s liberalism. A specific comparison of thetwo documents which takes into account the broader historicalcontext will help reveal the unique characteristics of each..94Both Lloyd George and Mosley were political mavericks who sawthemselves as strong leaders urging the country forward tovictory over its economic crisis. Both saw unemployment assymptomatic of a larger crisis within modern capitalism. Bothemphasized the importance of a hard—headed approach, and thenecessity of bringing “practical thinking” to bear on theproblem. Despite his socialist rhetoric, Mosley shared withLloyd George a desire to build a mixed economy in Britain. Bothrecognized the threat of inflation as a serious constraint onthe ability of the government to ref late the economy, and weredetermined to keep internal prices at a stable level. Finally,both Mosley and Lloyd George, perhaps over—optimistically,assumed that there would be a sufficient degree of institutionaland administrative flexibility in the British state to transformtheir ideas from policy statement to executed program.While the similarities between the Mosley and Lloyd Georgeprograms are interesting, the ways in which they differ are morerevealing. The basic difference between the two is that LloydGeorge wanted to maintain the long—standing external orientationof the British economy, and reform the internal economy withinthe existing institutional framework. Oswald Mosley, on theother hand, wanted to bring about a fundamental re—orientation,and build up a self—sufficient national economy that was notdependent on exports for its prosperity, Lloyd George saw95Britain’s economic crisis in terms of cyclical and structuralunemployment, and the dangers posed by a weak and out—of—dateeconomic infrastructure. Mosley saw the main symptom ofBritain’s economic problems as an attack on the wages of theemployed, and working class poverty. Where Lloyd George lookedat both the demand and supply sides — distribution andproduction— of the British economy, Mosley restricted hisanalysis to the demand side. Lloyd George looked at the actual,specific problems facing the present—day economy. Mosley wasmore general and theoretical; he wanted to make a fundamental,once—and—for-all change to British capitalism. While LloydGeorge had a better grasp of the actual practical problems whichconfronted Britain, Mosley’s analysis was tighter and morerigorous.Lloyd George’s solution to Britain’s ailments was greaterindividual equality within a reformed capitalist system. Mosleywanted a mixed private/public economy, but one with afundamentally re—ordered relationship between capital and labor.Lloyd George believed that the continued maintenance ofindividual liberty was a critical element of a reformedcapitalist society. For Mosley, however, °liberties were less96important than reform”(i)The goal of this thesis has been to provide a balanced andobjective evaluation of the Mosley and Lloyd George programs, inorder to complement the historiography to date. Both LloydGeorge and Mosley responed with originality and enthusiasm toBritish conditions before the crash of capitalism, before thecommand economies of Hitler and Stalin, and before the jointchallenges posed by the Depression and another war could providethe practical pre—conditions for post—war economic reformism.Both programs had their strengths and weaknesses, as the thesishas pointed out. Re rn by Reason deserves to be recognizedfor its penetrating analysis and analytical rigor.. But it issurely the Orange Book, by dint of its practicality andinclusiveness, which was the superior 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Thesis/Dissertation
eng
History
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Graduate
British unemployment policy in the 1920’s : a re-appraisal of Revolution of Reason and We Can Conquer Unemployment
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