Understanding the Factors Leading to the Creation of the National Government in Britain in 1931
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Analyse the reasons for the formation of a National Government in Britain in 1931.
ESSAY
The formation of a National Government in Britain in 1931 was a significant political event that arose due to a combination of economic challenges, internal divisions within the Labour Party, and the unique circumstances of the Great Depression. This essay will analyze the reasons for the formation of the National Government based on the failure of the Labour Government to fund its programs, political factions within the Labour Party, the Conservatives' willingness to work with Ramsay MacDonald, and the overall sense of crisis during the Great Depression.
Firstly, the economic downturn following the Wall Street Crash of 1929 and the subsequent Great Depression had a severe impact on Britain. The European Banking Crisis of 1931 further exacerbated financial instability, leading to a dramatic withdrawal of funds from the Bank of England. In order to secure loans from international banks, including those in New York and Paris, major cuts to government spending were deemed necessary. The May committee's prediction of a significant budget deficit highlighted the urgent need for austerity measures, including a proposal to reduce unemployment benefits.
Secondly, internal divisions within the Labour Party played a crucial role in the formation of the National Government. While Prime Minister Ramsay MacDonald and a significant portion of his cabinet supported the proposed cuts, many party members and leaders opposed them. The proposed reduction in unemployment benefits was seen as a betrayal of Labour's principles, as it would disproportionately affect the most vulnerable members of society. This internal conflict within the Labour Party created a deep rift, with notable figures such as Henderson, Clynes, and Graham opposing the austerity measures.
The Conservatives, led by Stanley Baldwin, demonstrated a willingness to collaborate with Ramsay MacDonald to address the economic crisis. Despite the political differences between the Labour and Conservative parties, Baldwin agreed to allow MacDonald to continue as Prime Minister of a new National Government, which included support from all major political parties. This pragmatic approach to governance in a time of crisis reflected the need for unity and a common strategy to navigate the challenges faced by the country.
Overall, the unique sense of crisis during the Great Depression period set the stage for the formation of the National Government in 1931. The economic challenges, internal divisions within the Labour Party, the Conservatives' cooperation with MacDonald, and the pressing need for decisive action in the face of a severe financial crisis all contributed to the decision to form a coalition government. While Ramsay MacDonald faced criticism for his role in the austerity measures, the formation of the National Government was a response to the extraordinary circumstances of the time, highlighting the complex interplay of economic, political, and social factors in shaping British history during this period.
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**Analyse the reasons for the formation of a National Government in Britain in 1931.**
In 1931, Ramsay MacDonald accepted the King's proposition to form a National Government. In October 1929, after the Wall Street Crash, Britain, along with much of the world, fell into a deep recession. In the aftermath of the crash, the Great Depression ensued which led to the European Banking Crisis (1931) where several Swiss banks went bankrupt. This started a dramatic withdrawal of funds from the Bank of England.
The May committee headed by Sir George May, secretary of the Prudential Insurance Company, predicted a budget deficit of £120 million and called for government economies amounting to £96 million, including a major cut (10%) in unemployment benefit. MacDonald and much of his cabinet accepted that cuts were necessary to balance the budget, as they needed to secure loans from banks in New York and Paris.
This led to a division in the Labour Party as many people opposed the proposed cuts to unemployment benefits because it would affect the most vulnerable members of society and go against everything Labour stood for. On 12th August, the members of the Cabinet Economy Committee, including MacDonald, Henderson, J.H Thomas, and Philip Snowden, met to decide what to do. They agreed to the suggested cuts including a 10% cut to unemployment benefit. This would have taken unemployment back to where it was before Labour's increase in 1929. The cuts that the cabinet agreed to amounted to £38 million. By 19th August, the Cabinet had agreed to cuts of £56 million, although this was still substantially less than what was proposed by the May Committee.
These cuts were rejected by the leaders of the other parties as being insufficient. The next day, MacDonald and Snowden met with the TUC leaders, who rejected any cuts that would adversely affect the unemployed. This put considerable pressure on the Labour cabinet. The Bank of England desperately needed loans from New York and Paris, but they would only provide loans if unemployment benefits were drastically reduced. The Conservatives and Liberals accepted this, but MacDonald failed to persuade his colleagues. The proposals represented ‘the negation of everything that the Labour Party stood for’ (L. Butler and H. Jones, Britain in the 20th century).
On 23rd August, the Cabinet voted in favour of cuts, but only 11 to 9. Those who opposed included several leading ministers, such as Henderson, Clynes, and Graham. The vote divided the Labour Party, which prompted MacDonald to go to Buckingham Palace to tender his government's resignation. After speaking to the leaders of the other parties – Baldwin for the Conservatives and Herbert Samuel who was standing in for DLG for the Liberals – it was agreed that Ramsay MacDonald would continue as Prime Minister as the head of a new National Government, based on support from all the main political parties.
Ramsay MacDonald accepted this proposal as his patriotic duty, although he has been criticised by left-wing historians and Labour ministers for 'betraying the Labour Party'. This benefited the Conservatives and Liberals because it was MacDonald who took all the criticism for the cuts to unemployment benefit. The answer needs to examine the failure of the Labour Government to fund its programmes, the political divisions within the Labour Party, the Conservatives’ willingness under Baldwin to allow MacDonald to continue as Prime Minister of a Conservative government following the 1931 General Election, and the unique sense of crisis in the Great Depression period. Candidates will also need to assess the role of each factor and come to a reasoned judgement.