by John Buchan
The main concern for Britain, as for other nations, was economic — how to keep body and soul together. In its preoccupation with material needs all the world had gone Marxist. The problem was how to pass from the unbridled extravagance of the war to a normal life. We had been living on stimulants, and we must somehow transfer ourselves from dope to diet. There was a brief gleam of prosperity just after peace, when the replacement of stocks required still further expenditure, and then the nation settled itself to a long thankless toil in the shadows. The first tasks were extraordinarily difficult. The huge armies had to be somehow fitted into civil life. A swollen officialdom had to be drastically purged. Industries had to be freed from Government props and made to stand alone. House-room had to be found for hundreds of thousands who were houseless; the price of living must be brought down; wages, too, must be reduced from war-time extravagance to some scale on which they could continue. It soon became apparent that the War, whatever it may have done for men spiritually, had left a hideous material mess to be cleaned up.
The first duty was to cease spending more than we could afford; no easy thing, for our obligatory expenses were almost beyond our earnings. We had to face some eight thousand millions of war debt, and this meant a scale of taxation which crippled industry and bore crushingly on all but profiteers. There was a strenuous effort after economy in administration, and presently some fifty millions were lopped off the civil estimates, but a formidable difficulty remained. We had created a great system of social services, which the well-being of the nation required should be enlarged instead of diminished. They involved high taxation, and that, and our wage level, greatly increased the cost of production. But while our costs had risen our business was declining. We had lost our industrial pre-eminence in the world’s markets, since other nations had climbed, or were climbing, to our level. Our exports, visible and invisible, looked like soon ceasing to pay for our necessary imports. The whole nineteenth century fabric of British trade was breaking down. With shrinking markets, and the cost of Government, local and central, nearly three times what it had been in 1913, with taxation absorbing one-third of the nation’s income instead of one-eighth, we were ceasing to be able to pay our way. The industrial worker was already receiving a higher remuneration than was warranted by the sale-value of his product.
The situation was met by a vigorous effort on the part of industry both to enlarge its house and to set it in order. Agriculture, which had for a little during the War taken its old place in the nation, was allowed to slip back into a melancholy trough, but industry in the face of the gravest difficulties put its shoulder stoutly to the wheel. There was a second industrial revolution, under which a variety of new businesses arose, chiefly luxury products, and much of the green landscape of southern England became hideous with raw factories. The War, too, had stimulated research, and in many forms of production there was a notable technical advance. But, while this improved the efficiency of the machine, it dispensed with part of the human factor, and by increasing unemployment increased industry’s overhead burdens. To add to our other difficulties there was the growing economic nationalism of much of the world, an infection which had not yet seized on Britain, so that the industrialist, heavily taxed, and encumbered with high costs, had to compete abroad in lands hedged round by tariffs, and at home against foreign imports, cheaply produced and often subsidised.
Under such handicaps the marvel was that our industrial system did not crumble altogether. It had another drawback to contend with, for at the start the national policy was a banker’s policy. Deflation was the watch-word, and the international stability of money was regarded as the key to trade revival. In April 1925 the Chancellor of the Exchequer, Mr. Churchill, took the fateful step of returning to the gold standard at the pre-War parity. This was deflation with a vengeance, for the amount of money was curtailed, and therefore internal prices dropped while interest charges and wages were unreduced. This added to the cost of production at home, while the price of British goods to the foreigner was automatically increased. It was orthodox finance in the old sense, and it re-established Britain as the world’s financial centre, but it crippled still further our export trade, and prepared the way for wage troubles in our exporting industries.
Seven difficult years ensued. Other Governments followed the British return to gold, but at something far below the pre-War parity. Meantime unemployment grew, and it became clear that some of our heavy industries had sunk permanently to a lower level. Money, the medium of trade, was losing its old, stable flexibility. Under the futile system of war debts and reparations a large part of the world’s capital was diverted into barren channels. The debtor countries could not pay their debts in goods, since their creditors had erected colossal tariff walls, and the consequence was that their exports were diverted to Britain, the one great free-trade area that remained. But the payment received for these goods did not go to buy British produce, but to purchase gold wherewith to satisfy their creditors. Gold, instead of being a running and fertilising river, had become a frozen glacier bringing death in its train.
In these years the country sorely required some other heartening than the obligatory optimism of statesmen. As in the War, the King did much by his constant visits to distressed areas and to embarrassed cities to keep the popular temper steady. His words were always of hope, a reminder that Britain had passed through dark places before and yet had emerged into the sunlight. Take, as one instance out of many, what he said at Glasgow in 1931, when he opened a new dock on the Clyde:
What chiefly impresses me is your present courage and enterprise. At a moment of industrial depression you are steadfastly preparing for the long-hoped-for trade revival. I believe that those who have faith in the future of our nation will not be disappointed, and will reap the full reward of their foresight.
Two centuries ago Glasgow was the pioneer in the development of trade with North America. That enterprise, in the words of the best-known Glasgow citizen in literature, Bailie Nicol Jarvie, was the most fortunate event in her history, “since St. Mungo first caught herrings in the Clyde.” Moreover, it was the first step which raised Scotland from a poor and backward country to a foremost place in all human activities. She has been the window from which Scotland especially has looked out upon the world. She has been the port from which Scotsmen have gone forth to colonise and develop new lands. For a century her ships have sailed every ocean, and there are few corners in the world, however remote, where you cannot find a Glasgow engineer.
It is a great record, but I am convinced that it is not yet ended. There are still new worlds for Glasgow to conquer. . . . The motto of this great city is “Let Glasgow flourish.” When Scotsmen aspire earnestly to a purpose, the purpose is already half accomplished. We shall watch with cordial interest the fulfilment of that hope.
Disaster was imminent, for the whole mechanism of the world’s commerce was out of gear. The climax began in the autumn of 1929 with the downfall of America’s swollen prosperity. Like the first break-up of the ice in a river, cracks started in all quarters, and then came a slow loosening and upheaving. Future historians will no doubt have as many explanations of the cause of the great depression as of the origin of the War, but certain facts are indubitable. The money system of the world was no longer adequate to the complexities of the world’s trade, complexities increased by political troubles, by economic nationalism, by the unbalanced position of gold, and by a distrustful and uncertain popular temper. Increased production could not be brought into relation to increased demand.
In Britain the crisis came in the late summer of 1931, when a Labour Government was in power, a Government in which only a few were able to read the signs of the times. The warnings of Mr. Snowden, the Chancellor of the Exchequer, had little effect upon some of his colleagues, whose financial creed was a blend of mysticism and emotion. A creeping sickness was spreading over the world, and during the summer the symptoms became acute, first in Austria, then in Germany, and last
in Britain. A conference of European Ministers in London in July provided no remedy. On the last day of the month the May Report was published, which revealed that, on the present basis of income and expenditure, there would next year be a deficit in the British budget of over 120 millions. There followed at once a heavy withdrawal of foreign balances, and the Bank of England had to seek assistance from France and the United States. On August 24th the Labour Cabinet resigned, and the King invited the Prime Minister to form an emergency Government of all parties. In September a supplementary Budget was passed by the House of Commons, which by heavy economies and increased taxes provided a small surplus for that and the coming financial year.
The emergency Cabinet was formed to keep Britain on gold. It found the thing impossible. On Monday, September 21st, we left the gold standard, an example speedily followed by a number of other nations. Next month Ministers went to the country as a National Government, and were returned to power by an immense majority. Their task was to restore the international credit of Britain by scrupulously balanced budgets and by a reasonable reduction of the adverse balance of trade. The gold standard proved to have been largely a bogy; it had seemed the only palladium when we were on it, but we found that we did very well without it. The sterling group soon became a force in the world. There was no fall in the purchasing value of the pound at home, and its depreciation in terms of certain foreign currencies was in effect a bonus to our export trade. We had redressed the inequalities of our 1925 ambitions.
The years since 1931 have seen Britain, by a great effort of sacrifice and discipline, restored not only to an economic, but to a moral, leadership among the nations, and her Dominions have walked in the same path. She has eschewed flashy panaceas and perilous short cuts, and stuck to the highroad of common sense. Difficult problems still confront her, but more than any other Power she has attained poise, confidence, and a measure of stability. The ill weather continues, but to meet it she has strengthened her house walls. . . . But it is a new house. The year 1931 marked the end of the Victorian regime which had given her prosperity. Changed conditions have forced her to accept some degree of economic nationalism, and free-trade in the old sense has departed. The corporate effort of the War has had its effect, and the nation has been ready to use more amply, when circumstances warranted it, the powers of the community. Capital is more under State control, because it has often to seek the help of the State. We are beginning to realise that the machine, if wisely used, may play the part which the slave system played in ancient Athens, and provide an ampler leisure for the citizen. Yet the phrase, the “new socialism,” is a misnomer. Collectivist methods are used, not because they are deduced from any creed, but because they happen to meet the case. In accordance with her secular practice, Britain has troubled very little about political theory; she accepts change under the potent compulsion of facts.
II
To all this upturning of foundations Labour could not be insensitive. At the end of the War it was in a difficult mood, conscious of its power, shaken out of many of its old beliefs, uncertain of its future. The example of Russia was disquieting, for, though the older and wiser saw the tyranny under the veneer of that workers’ dictatorship, younger men were excited by the spectacle of a dream come true in a night. To such evolution seemed a refuge for the feeble, and revolution the method for the strong. Yet in the labour unrest there was very little that was doctrinaire. Nationalisation was demanded not so much as an advance towards state socialism as on the practical ground that private ownership meant local inequalities, and — with the war mobilisation of industry in mind — inefficiency; and a short working day because more men could be employed. But the cardinal point was higher wages, to meet the rise in prices, and to give the worker the margin above subsistence which is the basis of freedom.
In the first two years of peace there was a big crop of trade disputes, inevitable in the dislocation of economic life. Three great unions, the Miners, the Railwaymen, and the Transport Workers, formed a Triple Alliance. Through the early months of 1919 a Coal Commission sat on the miners’ problem, and from its somewhat confused findings there emerged a shortening of hours and an increase in wages. That summer and autumn there was serious trouble with the railwaymen. In April, 1920, the Triple Alliance threatened a general strike in support of the miners’ case, a strike which was only called off at the eleventh hour. The following year there was another stoppage in the coal industry, but the other members of the Triple Alliance held their hand, and the miners had to fight their battle alone. The trouble in that industry was not merely a dispute between men and masters, but the fact that in the new conditions of the world it simply could not maintain its old scale of employment. Subsidies from the Government tided it over from year to year, but it was becoming plain that the flash-point was not far distant. In 1925 another Coal Commission was appointed which rejected nationalisation, but proposed new wage scales and other reforms on a national basis. The miners refused the terms, the Government subsidy ceased on April 20th, 1926, and on May Day the General Council of the Trade Union Congress decreed a general strike.
The General Strike — it was not general, for only certain key industries were affected, and it was not quite a strike — marked the end of an epoch in our industrial life. Labour had come to believe that it could dictate to the nation, and it found that the nation was its master. The Government, which had striven for peace until the last moment, used its statutory emergency powers, and worked on a plan which it had elaborately prepared. Food supplies were perfectly organised, a reduced system of transport was provided, and order was strictly maintained. The amateur proved that at a shift he could do the work of the expert. Youth rose to the crisis as it had risen to the call to war, and the universities emptied themselves into the dock, railway, and bus services. There was no violence, and everywhere there was good temper and a determined geniality. To the outside world it was an amazing exhibition of coolness and common sense. The trade union leaders, who had released the jinn from the bottle without considering the consequences, were alarmed and bewildered. They realised that the feeling of the nation was against them, and that their action might make their funds liable at law for colossal damages. Almost at once they sued for peace, and after nine days they called off the strike. The miners struggled on alone till November, when they too capitulated, having driven a good many more nails into their industry’s coffin.
The events of May 1926 did much to clear the air and purge the mind of Labour of certain post-War delusions. The unions had challenged the nation — innocently but unequivocally — and had found the nation by far the stronger. There was another wholesome result. All classes had served together in the trenches, and a very solid respect had grown up in each for the quality of the others. But the post-War youth had had no such opportunity, and the notion had spread in Labour circles that the young men of the middle and upper classes had not the same spirit and hardihood as themselves. On this point the General Strike left no doubt, and the foolish truculence which had characterised the previous years was sensibly abated.
It was well that this should be so, for the Labour party was now the second greatest of the political camps of Britain. Though its professed creed was socialism, it had little in common with the socialist parties of the Continent. Its backbone was the trade unions, which were the most English thing in England. They were more radical than socialist, and in a sense more conservative than radical. Their object was not to pull up things by the roots, but to get their own roots deeper. Their faults lay in an occasional blindness of eye and confusion of head, not in any unsoundness of temper or heart. Their attempts at dictatorship were bungled tactics, not a serious strategy. But, while they formed the strength of the Labour party, from their sectional narrowness of outlook they were also its weakness. They brought to the House of Commons a refreshing realism, for they spoke as experts on many practical things, and their stalwart vernacular was a joy amid the clipped conventions of parliamentary speech.
But larger questions they were apt to judge on too low a plane and with imperfect knowledge. The corrective was to be looked for in the socialist intellectuals, of whom they were inclined to be suspicious, but who applied to policy a wider education and broader sympathies. They were often viewy and pedantic, but as a group they were serious students of public affairs, with a genuine scientific apparatus behind them. It was well for Labour, and well for the country, to have this laboratory of experiment and thought.
The conditions of working-class life had on the whole been greatly improved since the War. Higher wages did not lead to waste, but to higher standards of decency and comfort. The average household had better food, better clothing, more margin for amusements, wider horizons. Small wonder that they struggled to maintain what they had won. That was for those in employment: for the unemployed, who had now passed beyond the two million figure, there was a bare subsistence and a tragic idleness, a steady loss of their technical skill, and a slow souring and dulling of mind. Yet in the very tragedy there were elements of hope. A problem of such magnitude required for its solution not only the energies of the State but the thought and the goodwill of every private citizen; and, largely owing to the work of the Prince of Wales, these were forthcoming. People began to recognise a personal duty. Also there was a stimulus to clearer thinking and to an effort to remake our whole industrial machine. Hitherto the task had been to remedy the defects of industrialism, now it was to transform industrialism itself. One social danger was however forgotten — the embarrassed middle-classes, especially their youth. When a young man of that class was unemployed, he was the care of nobody; when he was employed, it was too often on a job without light or horizon. From such natural discontent fascism, or some other authoritarian creed, might draw many recruits.
