The Making of Modern Britain

by Andrew Marr

  From Rambling to Marching

  There is no reasonable way of marking the borderline between the frantic, sometimes silly political searching of the twenties and the darker mood of the thirties. But it could be said that the rambling stopped and the marching began. Instead of the home-made clothes and sexual libertinism of the commune-dwellers, we enter a time when the streets of Britain are suddenly crowded with lines of marching men, often in uniform. There are the communists, either in their own right or as Unemployed Workers. There are Mosley’s Blackshirts, and other rival fascist organizations, all with their drums, banners and placards. And then there are the most disciplined marchers of all, heckling at meetings, throwing bricks through the chancellor’s window, tramping through the streets under their distinctive flags, running demonstrations and ‘street patrols’, handing out their tabloid newspaper . . . the Greenshirts. The who? The what? The Greenshirts were considered among the most effective street performers in the turbulent politics of the thirties. They were determined and enjoyed considerable intellectual support. Since then they have been almost entirely forgotten. This is possibly because they do not fit easily into the left–right politics that history remembers, and probably because they have left behind no successor organization at all. They were in fact our old friends the Kindred of the Kibbo Kift, still run by John Hargrave, but now mutated into a paramilitary movement dedicated to the cause of Social Credit.

  Social Credit was also known as ‘Douglasism’ after its creator, a rather mysterious electrical engineer from Stockport called Clifford Douglas. A draper’s son, he had worked on aircraft manufacturing in the war and had come to believe he had an answer to the post-war slump that did not involve the tyranny of Bolshevik communism but was, in its way, just as radical. Major C. H. Douglas, as he liked to be known, believed the real economic problem was lack of purchasing power. Rather than wages or the banking system, he thought that as wealth grew through technological advance, it should simply be divided each year among everyone, whether they worked or not, and passed to them as their share of the national dividend. Power would be removed from the Bank of England because ‘the Credit of a community belongs to the community as a whole’. Eventually, as societies grew richer through technical progress, unemployment would disappear and people would have to work far less: the ‘leisure society’ would be born. Douglas was taken seriously by many and his third way, between totalitarian tyranny and capitalist anarchy, seemed highly attractive. Hargrave saw it as the economic ideology his movement had always lacked, and converted to Social Credit. He formed a ‘Legion of the Unemployed’ in Coventry in 1930 and then adopted a paramilitary uniform of green shirt and beret, folding the Kibbo Kift into the new movement.

  Away went the totem poles and Apache-decorated tents and in came square-bashing, massed drums and flags – Hargrave was a talented artist and his Greenshirt insignia with two back-to-back Ks is as distinctive as a Nazi swastika. Yet though Douglas had the taint of anti-Semitism in his writings on the banking swindle, the Green-shirts were not anti-Jewish at all. They heckled both communists and fascists, but reserved their real hostility for the Treasury and the Bank of England. The Greenshirts lacked a big overseas sponsor, had very little money and eventually fizzled out, the final blow coming when the Public Order Act of 1937 banned the wearing of political uniforms. In a response straight out of P. G. Wodehouse, the Greenshirts for a while expressed defiance by marching with their shirts carried aloft on coat hangers. The movement had a curious afterlife in Canada, where the province of Alberta voted in a Social Credit government which soon ditched the pure milk of Douglas’s ideas but stayed in power for thirty years. Hargrave himself went on to design the world’s first moving optical map for aircraft – used much later in Concorde after his idea was filched – and continued to write novels and sell drawings. He tried to revive the Social Credit Party after the war, but without any success. He died in 1982. Though it has been forgotten, the mutation of the mildly batty and thoroughly idealist Kibbo Kift of the twenties into the paramilitary Greenshirt movement of the thirties seems a near-perfect parable of the age.

  We have noted the acrid smell of anti-Semitism in some of these movements already, and the lure of blood-and-soil race politics. The rise of the Nazis, and the rise of anti-Jewish right-wing parties in France and other continental countries, has put inter-war Britain in a benign light. This was the country to which persecuted or worried Jews fled, after all. But the picture is too simple. For Britain had some ferociously anti-Semitic groups too. The British fascist groups were mostly small and inclined to fight one another. They emerged out of the Great War alongside anti-communist organizations – the Middle Classes Union, for instance, and the British Empire Union – and angry groups such as the Silver Badge Party of ex-servicemen, run by the eccentric aviator Pemberton Billings, who during the Great War had caused a sensation by claiming the Germans had a ‘Black Book’ containing the names of 47,000 highly placed perverts, and that the Kaiser’s men were undermining Britain by luring her men into homosexual acts. Such people tended to see Lloyd George’s government as a corrupt sell-out, and possibly under the influence of German Jews, much as the extreme right had seen things before the outbreak of war in 1914.

  Henry Hamilton Beamish, a rear admiral’s son who had fought in the war, set up an anti-Semitic group called the Britons and campaigned for Jews to be resettled in Madagascar. By the late thirties he was publicly prophesying that Germany would have to invade Russia and place half the population in the lethal chamber: all Jews must be sterilized, killed or segregated. After losing a libel case he had to flee the country and eventually settled in Rhodesia. Arnold Leese, a retired vet from Stamford in Lincolnshire and a world authority on camel diseases, took control of the International Fascist League in 1928 and turned it into a fanatically anti-Jewish group; though never big, the IFL marched under its own uniform, including a black shirt, khaki breeches and puttees, a black beret and a Union Jack armband with a swastika on it. On Empire Day 1934 it raised a Union Jack with swastika over London’s County Hall.115 Then there were secret groups like the Nordics, and the Right Club, run by a well-known Conservative MP, Archibald Maule Ramsay; there was even a Nazi British version of the Ku Klux Klan, called the White Knights of Britain or the Hooded Men.

  These groups were quickly penetrated by British intelligence and their extreme language kept them far from mainstream politics, but they should not be entirely dismissed. The Brownshirts and other fascist groups in Weimar Germany had also been small, apparently ridiculous, and fought vigorously among themselves. Had Britain been beaten in 1940, in the conditions of national collapse and a search for scapegoats, she had her proto-Hitlers waiting in the wings, ready to call on an underground tradition of anti-Semitism that ran from aristocrats to dockers. This will take us to Oswald Mosley, the man who dominated the British far right. He was vilified by the more extreme anti-Semites as a ‘kosher fascist’ and in return his party simply beat up its rivals, breaking up one of Leese’s fascist gatherings so effectively in 1933 that the IFL virtually disappeared. Now, he would be brought to public prominence, if never to power, by the great world crash that upended half the world.

  Crash!

  If there is one thing we can learn from history it is that we rarely learn from history. In the United States of the 1920s, as eighty years later, there was a long stock-market boom. It was not all based on froth but on new goods and services pouring out to a hungry people; new cars being registered at the rate of a million a year; the entertainment boom of the radio age; nylons and cosmetics; soap powder and canned fruits. These were the flat-screen televisions and global coffee franchises of our grandparents’ and great-grandparents’ time. Yet much of the spending had been based on borrowing, albeit via the new hire-purchase deals rather than credit cards. There were property bubbles, notably a hysterical and fraudulent one in Florida devised by an Italian immigrant called Charles Ponzi, who sold tiny blocks of land for development, some
of them actually underwater. Ponzi gave his name to a financial scam which again hit the headlines in 2008–9 with the arrest of the New York financier and former stock exchange chairman Bernard Madoff, who had modelled his investment con on the original 1920s model. Ponzi’s Florida scheme was an early indication of the US economy running out of control but the warning signs were largely ignored in Washington, just as later ‘sub-prime’ mortgage assets took a while to become notorious as ‘toxic debts’. Both Ponzi and Madoff ruined many, rich and poor.

  The US president Calvin Coolidge, speaking just before the crash, had not promised there would be no boom and bust, but he had boasted of ‘the highest record of years of prosperity’ in US history, and promised a sunny future. There were no hedge funds or super-complicated financial instruments in the 1920s, but there were innovative and dangerous financial schemes, notably the pyramid arrangement of new investment trusts, borrowing and investing in each other. In the twenty-first century the spectacular fall of investment banks like Lehman Brothers and British mortgage lenders began a wider seizure of the banking system. In the early 1930s in America, which admittedly had a much more diverse and localized banking culture, around 10,000 banks failed following the first crashes of share values in Wall Street. That happened in October 1929 and over the next three years the US stock market lost nearly 90 per cent of its value. Eventually nearly a third of the working population would lose their jobs.

  Some lessons would be learned. Economic historians mostly believe the US crash was provoked by a lack of liquidity, made far worse by tight monetary policies followed by the Federal Reserve. Around the world, as trade contracted by an extraordinary two-thirds, countries put up tariff barriers to try to protect their own industries, pushing recession into depression and slump. It is also widely believed that the gold standard, which Churchill and Norman had returned to the centre of British financial life, made the world crisis worse by transmitting the problems across the oceans. When today politicians speak of the need for radical action and international agreements they are remembering some of the after-the-event lessons of the Great Crash of 1929. Back then, the Wall Street disaster took longer to affect London and other world financial centres. Images of bankers throwing themselves from high buildings were not repeated in the Square Mile, perhaps partly because in the inter-war period it had no high buildings. But many City high-fliers were ruined and many cautious investors, older people living on their savings, lost almost everything.

  Politicians sometimes talk of governments arriving in power at the wrong moment, receiving (in rugby terminology) a ‘hospital pass’. In May 1929 it was a second minority Labour government which found itself in this unhappy position, winning the formalities of power less than six months before the crash. These were dark days for the world economy. Unemployment was already at nearly a tenth of the registered working population, 1.16 million. By June 1930 British unemployment had reached 1.9 million and by the end of that year 2.5 million. This was not unemployment as it is known today, with a large welfare state, free health care and free education. It was unemployment which kept families on the edge of starvation, in underheated and almost bare homes, with the cosh of the means test waiting for any family which might show the least sign, with decent sticks of furniture, warm coats or clean shirts, of living much above the breadline.

  It was obvious that the old financial order represented by Sir Montagu Norman would be challenged. Norman himself greeted the arrival of Ramsay MacDonald and his chancellor Philip Snowden as ‘the beginning of the end of all the work we have been doing’. In 1930, to his chagrin and public embarrassment, Norman was obliged to defend his policies publicly before a government committee of inquiry, goaded by the young Ernie Bevin to admit the impact of his ‘sound finance’ on industry. Sir Montagu, so sure of himself in clubland and the City, made a poor fist of it; bankers were no better as witnesses then than today. But by the summer of 1931, as gold flowed out of London, the Bank was forced to scurry around looking for support in the USA and, paradoxically, the balance of power shifted. Now it would be the same bankers blamed for causing the crisis who would dictate to the newly elected socialist politicians. Interest rates were frantically raised. The City became unpopular in the rest of the country. People spoke of Britain paying the price for choosing to be a nation of moneylenders rather than of manufacturers. And now, when the terms of an American loan arrived, it would be Norman – struggling with one nervous breakdown after another, so great was the strain – who forced MacDonald and Snowden to confront the cost of staving off bankruptcy. It meant drastic cuts in public spending, including a brutal cut in unemployment benefit, which half the cabinet would not swallow. This led directly to a split in the Labour government and the formation of a Tory-dominated National (coalition) Government to push through the cuts.

  Even this, however, would not be enough to keep sterling backed by gold and in September 1931, after a failed emergency Budget, Britain ‘temporarily’ left the gold standard. Sir Montagu Norman was aboard a liner returning from Canada and was sent a telegram so cryptic he failed to understand what was happening – ‘Sorry we have to go off tomorrow and cannot wait to see you before doing so’. The politicians would never be forgiven, either for their original belief in gold, or for the national humiliation of being forced off gold. Montagu Norman, on the other hand, recovered himself and sailed serenely on, advising against public works programmes on the Roosevelt ‘New Deal’ model, because Britain could not afford them, and surviving as governor of the Bank until 1944. But perhaps that is how things must be. As one historian of the City wisely put it: ‘If politicians fail to challenge the assumptions of bankers, that ultimately – then as later – is their responsibility.’116 Norman’s simple vision of virtue, based on gold and free trade, had been broken, but not by the challenge of politicians or by marchers on the streets. The old world of the City had collapsed from the whiplash impact of the American crash and the judder of protectionism which swept the world. Then, as later, hardly anyone had seen it coming; the booming stock market party had been just too exhilarating to walk home from early.

  The human consequences of Britain being forced off gold in the 1930s were complicated, rather as when Britain was forced to leave the European exchange-rate mechanism in the 1990s. After the 1931 election had effectively destroyed Labour and set in place the Tory-dominated National Government, policy was rather less unimaginative and tough than might have been expected. The devalued pound and lower prices meant the large majority of people who were in work were actually better off than ever before. Though protectionism in the form of tariffs on some goods did arrive, it did not have a decisive impact in a world where trade had already shrunk drastically. A housing boom helped move the economy forward again, and the policy of cheap money, partly influenced by Keynes, was relatively successful. By 1936 world rearmament finally laid the Depression to rest. The recovery was geographically biased, as we shall see: the north of England and much of Scotland and Wales, starved of capital by the high priests of the City, continued to moulder. Britain had ambled away from the slump rather than turning to sharp and radical measures when the crisis happened – something people with sharp and radical minds found intolerable. And this explains the appeal of the half comic demon-king of inter-war British politics.

  The Pantomime Villain

  Oswald Mosley is remembered as a full-blown villain, the nearest Britain came to siring a Hitler. But for the first half of his life he was a thoroughly mainstream figure, moving in high society and welcomed in the best political salons of London. When he first married, it was to the daughter of the Tory grandee Lord Curzon, and the King and Queen were among his wedding guests. From a wealthy landed family, he was brought up in a seemingly unchanged semi-feudal society in which everyone knew their place. He was sent to Winchester, a grand school which produced grand, self-certain and annoying adults, such as Stafford Cripps, who, in the thirties, was seen as the potential dictator of the left. Mosley join
ed the Royal Flying Corps – incubator of so many right-wing thinkers – and was wounded in a crash, making him the model of the dashing war-hero squire by the Armistice. In 1918 he was elected as a Tory in the landslide general election victory. His earliest political hero was Lloyd George, for his creation through the Ministry of Munitions of a really effective state reform system, though he also admired the ‘social imperialists’ who wanted to protect and strengthen the Empire in order to give the British working classes better lives. Though the family estate was one of those sold and broken up in the twenties, he was by any sensible standard very rich. Yet his first act of political heresy was moving to the left. He broke with Lloyd George over the repression of Ireland and turned more and more to study the problem of unemployment, as the post-war boom ended and the slump arrived. To start with, while people such as Churchill were inclined to admire Mussolini, Mosley was bitterly critical. Instead he became fascinated by Douglas and Social Credit, and began to admire those socialists who were also Social Credit enthusiasts, particularly the energetic Clydesider John Wheatley.

  The young Mosley was not only dashing and cut a swathe through well-born British womanhood, he also had a raging thirst for ideas. He was an early and intelligent reader of Keynes. He went over to the United States and learned about the social ideas of F. D. Roosevelt and the organizational achievements of Henry Ford. That Keynes would end up as the guru of the British parliamentary left while Ford was a right-wing anti-Semite should not confuse us. The great division in the twenties seemed to be between those who wanted a more organized, efficient world in which unemployment and war could be banished, and those who stuck with the old ideas of the Edwardians. (The Bolsheviks were way out on the margins, regarded by all except a few clever billy-goats as barbarians.) In this division, the corporatism of fascists and advanced socialists did not look so different. The ruthless efficiency of Lloyd George in wartime, the direction and ordering-about of the parliamentary dictator, bore some relationship to Mussolini’s public works programme. Political impatience was a virtue. Vice was to be timid, conventional, cautious about state power – the fallback position of Tories like Bonar Law and Baldwin, traditional Liberals like Asquith and soon of Victorian-era Labour leaders like MacDonald and Snowden. This was the political version of the war between the urgent young and the flaccid old we have already seen in the nightclubs and in culture. Unless one understands this urgent search for answers, and the way it darted across old party boundaries, one has no hope of seeing the Mosley story clearly.