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HOGAN, Neil William, 1936- THE CONSERVATIVES IN BRITISH GOVERNMENT AND THE SEARCH FOR A SOCIAL POLICY 1918-1923.

The Ohio State University, Ph.D., 1971 History, modern

University Microfilms, A XEROX Company, Ann Arbor,

THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED THE CONSERVATIVES IN BRITISH GOVERNMENT AND THE SEARCH FOR A SOCIAL POLICY 1918-1923

DISSERTATION

Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of the Ohio State University

By

Neil William Hogan, B.S.S., M.A. *****

The Ohio State University 1971

Approved by

I AdvAdviser iser Department of History PREFACE

I would like to acknowledge my thanks to Mr. Geoffrey

D.M. Block, M.B.E. and Mrs. Critch of the Conservative Research Centre for the use of Conservative Party material; A.J.P. Taylor of the Beaverbrook Library for his encouragement and helpful suggestions and his efficient and courteous librarian, Mr. Iago.

In addition, I wish to thank the staffs of the , Public Record Office, West Sussex Record Office, and the University of Library for their aid. To my adviser, Professor Phillip P. Poirier, a special acknowledgement#for his suggestions and criticisms were always useful and wise. I also want to thank my mother who helped in the typing and most of all my wife, Janet, who typed and proofread the paper and gave so much encouragement in the whole project. VITA

July 27, 1936 . . . Bom, , Ohio 1958 ...... B.S.S., John Carroll University Cleveland, Ohio 1959 - 1965 .... U. S. Army Officer 1965...... M.A., John Carroll University, Cleveland, Ohio 1965 - 1970 .... Teaching Assistant, Teaching Associate, The Ohio State University, Columbus, Ohio

1970...... Assistant Professor, East Stroudsburg State College, East Stroudsburg, Pennsylvania

FIELDS OF STUDY Major Field: M o d e m Britain. Professor Philip P. Poirier

European History 1648-1815. Professor John C. Rule Civil War and Reconstruction. Professor Merton Dillon Chinese History Since 1500. Professor Frank Wong Since 1900. Professor Harry L. Coles TABLE OF CONTENTS Page PREFACE...... ii

VITA ...... iii INTRODUCTION...... 1 Chapter

I. THE TRADITION...... 22

Toryism and Social Reform Reactionary Tendencies Roots of the New Social Reform II. THE TORY SPECTRUM ...... 60 The Tory Reformers Die Hards and Reactionaries The Coalitionists III. THE LLOYD GEORGE PROGRAM, NOVEMBER, 1918 - MAY, 1921: PROMISE...... 112 Housing Industrial Relations Unemployment Insurance Unemployment IV. THE LLOYD GEORGE PROGRAM, MAY, 1921 - OCTOBER, 1922: DISILLUSIONMENT...... 165 Economy The Geddes Axe and Social Program Fear of the Left V. THE FALL OF LLOYD GEORGE AND THE 1922 ELECTION PLANS AND PREPARATION...... 2 m

The Conservative Program Results and Trends

iv Chapter Page VI. CONSERVATIVES RETURN TO POWER: - ...... 259 Unemployment Housing Rent Control VII. PROTECTION, THE NEW PANACEA: May 1923 - 9 2 ^ ...... 302

Unemployment Remedies and Unemployment The 1923 Election and After Epilogue

BIBLIOGRAPHY...... 339

v INTRODUCTION

The election of 1918 marked an important turning point in British politics. By extending the wartime Coalition beyond the Armistice Lloyd George insured that the Liberal Party would never again return to power on its own. The split of 1916 was widened and although party unity was eventually restored the

Liberals were displaced as a pillar of the British two party structure. In its place, a reorganized, but still weak Labour Party emerged as the official opposition. These were, of course, long term changes whose inpact was not fully realized until the late twenties. Of more immediate concern was a fear that the entire system of party politics had been overshadowed and perhaps even superseded by the dominant personality of one man — . Never a strong party man the Prime Minister's reputation as the "Architect of Victory" placed him in the almost unparalleled position of transcending all political parties. Even the dominant Conservative wing of the Coalition was convinced that it owed its overwhelming majority to the immense popularity of Lloyd George among the electorate.

1 2

In reality, however, Lloyd George was a man almost without a party. With less than 140 supporters of his own the Prime Minister was heavily dependent on an unruly group of over 350 members representing the various factions of his Tory partners. Thus it was not surprising that he tried to convert this unwieldy Coalition into a more manageable body by organizing a Centre Party which would encompass the moderately progressive factions of Liberals, Conservatives, and perhaps even of Labour while excluding the extremes of both the right and left. Although these efforts aimed at the organization of a eventually failed, they reflected the widespread political instability which colored the political scene following the end of the First World War. Much of this ferment was tied directly to the ascendency of Lloyd George over all other political figures. As long as the majority of Conservatives believed the Prime Minister was "the indispensable man" who could captivate the of new voters the Coalition would hold together. At the first sign of public disillusion of disen­ chantment with the Leader of his policies, however, -the Conservatives began to question the political necessity or wisdom of continued support for Lloyd George and his Government. Aside from the issues of party politics, the election of 1918 marked an important watershed in other respects. It was the first general election to see the achievement of universal with only women under thirty still excluded from the franchise. Facing this greatly enlarged electorate the politicians turned their attention away from organizing a military victory and toward the task of satisfying the social demands of these new voters. The sacrifices of the both in uniform and on the home front had merited substantial rewards in the form of a program of unprecedented social reforms. Beyond this exercise of paternalism Lloyd George and his supporters had other and more persuasive reasons for a commitment to reform. In a document entitled Labour and the New Social Order, the Labour Party had outlined a program of nationalization and government control which threatened to overturn the basic economic and social structure of the nation. Even more ominous and frightening was an underlying fear of revolution. In the wake of the Bolshevik Revolution in Russia and similar outbreaks in Central Europe many political leaders were convinced that Britain too would be engulfed in a major revolt. By early 1919 these fears seemed more than justified. A general strike took place during January in and this seemingly nascent rebellion was supressed only with the aid of troops. It seemed that this incident might be a mere rehearsal far a nationwide conflict between the militant trade unions and the Government. In particular, the of miners, railwaymen and transport workers threatened a crippling sympathetic strike if the demands of any of their respective unions were not met. Responding to these warning signs the Coalition adopted a policy of of the working class in an attempt to satisfy the while isolating them from radical agitators or revolution­ aries. Under the direction of the Ministry of Reconstruction and its predecessor corrmittees a sweeping program of economic and social reforms had been prepared for implementation at the end of the War, however, much of the detailed planning remained uncompleted by the fall of 1918 because of the suddeness of the German collapse. While many of the plans for basic economic changes were never accepted the Coalition's social programs including subsidized public housing, improved secondary education, unemployment insurance and a fresh approach to labour management relations through the adoption of the Whitley Councils, formed the core of the Coalition's pledges to the working class. This "Lloyd George Program" reflected an updated version of the reforms introduced by the prewar Liberal Government. With a few exceptions the Conservatives had played a minor role in reconstruction planning and were less than enthusi­ astic about the Coalition's reform programs. While it is true that the Conservatives did have a record of advocating and enacting con­ structive social reforms in the nineteenth century, in recent years the Party had done little to promote social reform and had actually opposed Lloyd George's National Health Insurance Scheme. Still the were willing to accept this essentially Radical-Liberal 5 program as an accomodation to their political partners as well as a necessary alternative to social discontent that might spark revolution. On their own it is unlikely that the Conservatives would have introduced such ambitious plans, but with Lloyd George in command Tory objections were swept aside and reforms were adopted as part of the Coalition's electoral program in 1918. Among the Conservatives, there was never a deep comnit- ment to reform of the type that guided Liberal ministers such as Christopher Addison. Except for a handful of reformers led by the "Group" and another faction headed by Lord Robert Cecil most

Tories viewed social reform as a political expedient that could be abandoned if the prevailing situation changed. As members of the Party of the status quo many Tories found themselves uncom­ fortable in the role of reformers. Another factor that troubled

Conservatives was the cost of Lloyd George's program. In the first flush of victory it was thought that German reparations might be sufficient to materially reduce payments far debt retire­ ment thereby making large sums available for social projects. This mirage soon vanished and the hard financial realities of the early post war period were further complicated by a burst of runaway inflation. The housing program in particular suffered from such vastly increased costs that the entire scheme came under intense criticism and eventually had to be halted. When inflation was followed by a sharp depression in the summer of 1920 the slashing of all government expenditures including social 6

programs became the orthodox remedy. Demand| far reductions in public expenditure was not confined to the Conservative ranksj the Asquith Liberals and even Labour called for economy, although both opposed large cuts in social services. With a few minor exceptions, however, the Tories at all levels readily accepted and encouraged economies in the Government's social programs even at the expense of the unemployed. Lacking a strong party of his own, Lloyd George found it inpossible to resist these demands so that by early 1922 there was little left of the premises made so confidently in 1918. Demands for economy and the failure of the housing program were not the most important factors in the Tory disen­ chantment with Lloyd George. Far more significant was the Government's Irish policy. At first an attempt was made to meet the organized terror of the Irish Republican A m y with the counter terror and reprisals of the Black and Tan, but this policy was abruptly reversed and negotiations were begun in with the leaders of the revolutionary Sinn Fein Party in the fall of 1921. For most Conservatives this was a betrayal of one of the basic principles of their Party — continued union between and . It was the Irish issue more than anything else that led the Die Hards to challenge the

Coalition directly. 7

Although the Die Hards represented only the most reac­ tionary element in the Conservative Party, they received wide­ spread support throughout the Party's organization. Further­ more, Lloyd George was handicapped by the retirement of because of ill-health in . As a strong supporter of and the Unionist cause Bonar Law enjoyed almost unquestioned prestige as Conservative Party leader and could easily defend the Coalition's Policy against Die Hard attacks. His successor, , despite his unanimous selection as Party Leader, never secured the real confidence of the average . Thus the Coalition leadership was exposed to a decline in prestige among the Conservatives just at the point when it was beginning to abandon its tactics of coercion in Ireland. Had the Coalition's Irish policy been an immediate success Lloyd George might still have regained seme of his standing among the Conservatives, but instead the issue dragged on into 1922. Although the Irish Dail narrowly accepted the Treaty negotiated between Lloyd George and Sinn Fein leaders, a factions of dissatisfied republicans led by Eamon de Valera remained intransigent. Civil war broke out between the Irish

Provisional Government and the opposing the settlement. Conservatives were further angered in by the assassi­ nation of Sir Henry Wilson, Chief of thb Imperial General Staff, £ in London by Irish revolutionaries. Eventually the new Irish Free State Government was able to restore order, but not before

a large number of Tories were permanently alienated from the Coalition. Similarly the Lloyd George Government's policy in India and appeared to the Conservative right wing as a betrayal of the tradition of imperial responsibility. Promises of respon­

sible government coupled with the implementation of minor reforms in 1918 were looked upon as a needless surrender to revolution. This opinion was reinforced by the censure of General Dyer who had ordered troops to fire into an unarmed crowd at Armitsar, in killing 380 Indians. For Die Hards only strong action such as that taken by Dyer could keep the Indian masses and their new leader, Mohandas Gandhi, under control. In Egypt too nationalism and revolt appeared in the guise of Zaghlul Pasha and the Wafd movement for independence. Again the Govern­ ment seemed to surrender to forces by abandoning forrral control and granting Egypt at least nominal independence over its own affairs in . The Tory imperialists continued to insist that benevolent despotism was a duty that could not be shirked and that the appeasement of terror and sedition in one comer of the Empire would lead to further revolts elsewhere. Moreover, they were convinced that the events in Ireland, India 9 and Egypt were not isolated events but part of a Bolshevik con­ spiracy closely connected with trade union militancy at home. For nany Tories the miner’s strike in the spring of 1921 was not a question of protecting the individual workman’s pay packet from wage cuts, but instead a sinister attempt to coerce the State in revolutionary fashion. Lloyd George, of course, knew better but by this time he was almost a prisoner of his Conservative partners and had to echo the rhetoric of the right in order to retain their support. This stance probably did very little to raise the Prime Minister's standing with the Tories who demanded a harsher, more consistent policy of firmness toward the unions. This meant, in effect, that the miners or other workers should not be protected from a drastic fall in wages by any State action. The results were a defeat for the miners and the loss for Lloyd George of the last vestige of his influence among the workers. In a vain attempt to recoup his fortunes and public popu­ larity Lloyd George embarked on a series of well advertised inter­ national conferences at which he hoped to break the deadlock on the central issue of reparations. Throughout 1920 and 1921 he played the role of European statesman trying to reconcile the French demands with ’s ability to pay. None of these efforts were successful and in early 1922 the Conference at 10

Cannes turned into a dismal failure when Briand's agreement to a world economic conference was rejected by his successor, Premier Poincare. A further attempt to settle the reparations question in April of 1922 at Genoa was a diplomatic disaster and actually led to a Geman-Russian rapprochement in the farm of the pact of

Rapallo. In the eyes of neny Tories perhaps the most serious fault of Lloyd George's administration was its corruption which finally came to light with the honors scandal in the summer of 1922. Since the timr of Gladstone both parties had nade a practice of granting a peerage or a knighthood to those who contributed large

sums to the party treasury. Lloyd George, however, lacking a party of his own, had sought to build up a fund in anticipation of the founding of a centre party. By allowing his whips to openly hawk "honors" in the clubs and by granting them to those who clearly were not deserving he had gone beyond the acceptable limits of the procedure. The Conservatives, in particular, were outraged at the proceedings. It was not merely petty jealousy that the funds had not been channeled into Tory coffers, although there was an element of this, but many Conservatives were gen­ uinely shocked that Lloyd George had abused the system and even degraded the peerage. It confirmed all their suspicions about the Prime Minister's lack of principle and set the stage for the

final break with the Coalition. 11

By the late sunnier of 1922 the prestige of the Prime

Minister and his Government had reached the stage where only desperate efforts could revive it. Consequently, Lloyd George was willing to take advantage of the defeat of the Greek forces by the Turkish nationalists under Mustapha Kemal to provoke a war in which Britain had no foreign support. Most of the Cabinet led by Austen Chamberlain, and Birkenhead were ready to hold a wartime "kiaj^hi" election to insure reelec­ tion of the Coalition and prevent large Tory defections. This last measure brought the smouldering Tory rebellion into the open. With the re-entry of Bonar Law into politics the Conser­ vatives had another leader and could safely reject Lloyd George,

Austen Chamberlain and a continued Coalition in favor of a government composed entirely of members of their own Party. It is probable that in the process of Tory disillusion­ ment with Lloyd George and the Coalition, imperial and foreign policy as well as the honors scandal played a more important role than social policy. Even those Conservatives who were strongly committed to the Government's social program were dis­ gusted by its corruption and the failure of its foreign policy. The Tories also had much to do with the fall of Lloyd George's public reputation. In an effort to meet Conservative criticism of his policies the Prime Minister had to sacrifice his social 12 program thereby alienating him from his connections with the left, and ending the dream of a centre party. Despite the general preoccupation with foreign and imperial questions between 1918 and 1922 domestic issues gradually re-entered the center of political controversy. Lloyd George, in fact, assisted in this process by settling the Irish question which had troubled British politics for so long. The re-emergence of social and economic problems after the long dominance of foreign issues left the Conservatives woefully unprepared. Out of power on their cwn since 1905, the Tories had little experience or even understanding of the problems of the post war world. Only a handful of the progressives associ­ ated with the Unionist Social Reform Committee prior to 1914, and perhaps a dozen or two Tory reformers had considered the questions of public health, housing, unemployment and education in any depth. Consequently, the proved to be a training school for Conservatives in the field of social issues. While few Tories headed ministries formulating social policy many served under energetic Liberals such as Addison, Mond and

Macnamana. In addition, they benefitted from working in one of the most important reform ministries of the twentieth century ranking only a little below the 1905 - 1915 Liberal Government and the post World War II Labour Government. Not all the 13

lessons learned were the correct ones. In housing, for example, fear of inflationary pressures tended to produce a timid Tory housing policy in the years between the Wars.

By late 1920 the predominant social and economic issue

was no longer the Coalition's reform program, but mass unemploy­ ment. Faced with a problem of unprecedented proportions the

Government reacted with energy and a certain amount of imagina­ tion. Most important in this respect was the creation of the Cabinet Unemployment Committee composed of members of both parties, which formulated and examined a wide variety of approaches to the problem, anticipating most of the palliatives used by a variety of governments up to 1939. Perhaps the most ambitious plan for fighting unemployment was Lloyd George's proposal for a scheme of inflation in the form of a vast program of public works. Under pressure from City bankers and economy minded Treasury officials the Gairloch Scheme, as it came to be called, was cut back to a much more limited program of state guaranteed loans for public or

private programs that would provide industrial contracts and

employment. By anticipating Keynes, Lloyd George's original pro­

posals might have reversed the effects of the deflationary cycle. A similar proposal, but of a more limited nature, was presented to in 1923 by a number of Conservative , but as in the earlier case, fear of inflation, Treasury orthodoxy and 14

a general lack of imagination among the Party leaders killed

the scheme. So great was the influence of Coalition social policy that Bonar Law, who had promised a policy of "tranquility” in

the 1922 election campaign, realized almost immediately after the Conservative victory that a reactionary social policy was out of the question. The electorate expected some action on unemployment, rent control and housing, all of which had been established as legitimate State activities by the Coalition's precedent. Based largely upon experience derived from the pre­ vious Government's pioneering experiments the Conservative admin­ istration was able to implement a modest housing program, rent control legislation, as well as making some minor adjustments in the unemployment palliatives. Unfortunately, the Party never really committed itself to solving the most important social

problem of the inter war period — mass unemployment. The purpose of this paper is to examine the validity of the frequent Tory assertion that the Conservative Party has con­ tributed as much or more for the improvement of the British working class than any other Party. The period between the end of the First World War and the installation of the first Labour Government in has been selected because of its crucial impact on the development of social policy between the Wars. In order to provide some background about the sources 15 of Tory ref arms the first chapter provides an historical dis­ cussion of those elements in the Tory tradition that have served to promote or oppose social change. The Conservative Party as a whole is not being examined. Instead, this study is primarily concerned with the development of social policy among the Tory leaders and ministers. This approach requires that the principle focus has to be applied to the political discussions and policies formulated at the Cabinet level. Party factions such as the Die Hards or the Tory Democrats are of course involved either because they influenced or modified

Ik ■ ■ c. policies adopted by the Party leaders, or tjaafthey provided al­ ternatives and criticism of the accepted social policy.

There has been no attempt to make a detailed study of the influence of the Conservative rank and file on the formulation of social policy. Several important barriers exist which would hinder all but the most affluent researcher. The Conservative Central Office files do not contain any correspondence for this period. Moreover, lacking a detailed study of any of the major parties for the period a researcher would be farced to make a detailed search of the records of hundreds of Conservative local organizations. Presumably such a study might turn up sone infor­ mation that would throw light on the influence of local pressures on Party policy, but this would involve a long term study and could not be undertaken without a substantial research grant over a considerable period of time. 16

Other sources of local, or rank and file opinion, might be found in the papers of backbenchers or local Conservative leaders, but unfortunately most British politicians have not placed their papers in public archives so that most of them have either been destroyed or are not available. In an attempt to locate some of the private papers of important twentieth century political figures, Nuffield College, Oxford has formed a search cormittee and if it is successful the papers of seme of those secondary Tory figures may be made available in the near future. Since this study is primarily concerned with policy making, the records of the Cabinet and its subcommittees are indispensable. In addition, the available private papers of

Conservative Party figures have been examined. The major exception involves the papers of Stanley Baldwin at Cambridge University which were opened after the research for this study was completed. Lacking correspondence of local political leaders the Conservative press has been used as a gauge of the various factions within the Party. The period immediately after saw the influence of the press at its peak. News­ paper barons such as Beaverbrook were an intimate terms with Lloyd George and Bonar Law and often attempted to use their influence to change Government policy. Even the weekly and monthly periodicals such as and Review 17 had an influence far beyond their circulation figures. Before the War, , editor of the , had been an extremely influential figure among the Tory rank and file, even claiming credit far removal of Balfour frcm the Party leadership. While his influence had declined in the post war period, Maxse's correspondence reveals that he maintained such close ties with the Die Hard faction of the Party that he can be considered their primary spokesman. In any case, the actual framing of social and economic policy was in the hands of the Coalition and Conservative leader­ ship with the Party organization usually exercising only a nega­ tive influence. At times the Party Leader would act after con­ sulting only his colleagues in the Cabinet. One example of this tendency was Baldwin's announcement of a tariff in 1923. During most of the period involved in this study the Conser­ vatives were part of the Coalition and it is often difficult to delineate the extent of Tory responsibility for an individual program. As has been pointed out earlier, a discussion of the development of Tory social policy is impossible without consid­ ering the enormous impact of Lloyd George and the Coalition Liberals. The Conservatives accepted what was essentially a Liberal reform program, both in conception and planning, in return for concessions among Lloyd George's followers on tariff legislation. This is not to say that the Conservatives were devoid of any original ideas. The work of small reform groups such as the Unionist Social Reform Committee prior to World War I and its counterpart the "Group" after the War, is far more important in the Conservative tradition than similar bodies in the Liberal

or Labour Parties. The bulk of Conservatives felt no pressing need for reform and seldom concerned themselves with social questions. Thus a small number of energetic, well informed and intelligent Tory reformers always had an importance far out of proportion to their actual numbers. It was not until 1928 that the Conservative Research Department was organized, and the inde­ pendent public research organization did not appear on the scene until the middle thirties so that a socially conscious individual or group with a reasonably workable program usually had a fair opportunity of influencing the Tory leadership. In fact, this fresh thinking was even more needed in the early twenties when the Conservatives were beginning to compete with the growing Labour Party for the working class vote. Therefore, reformers such as Bentinck, Milner and Robert Cecil who were among the leading independent social thinkers in the Party were important because they could provide a distinctive Conservative approach to domestic problems instead of merely imitating Liberal pro­ grams. Bentinck represented the old Tory radical tradition of the nineteenth century, but Milner symbolized a more important element in Tory reform. As a farmer imperial proconsul in and because of his almost unquestioned prestige especially among the Party's right wing, Milner had assumed the role of Tory elder statesman by the early twenties. Despite his age, Milner's views an important political and economic questions had not petrified. Milner's proposals for gradual government purchase of the major industries seemed radical at the time, but it foreshadowed the emergence of the public corporation whose first example came into being in 1926 as the British Broadcasting Corporation. It was the Conservatives who took the initiative in this case and Milner's openness to such an approach may have paved the way for its acceptance. Of all the social in the Conservative ranks after the War, Lord Robert Cecil was potentially the most powerful.

Not only did he enjoy impeccable credentials as a junior member of one of the nation's most prestigious families, but Cecil also possessed a penetrating mind and a reputation for absolute honesty. Even more important from a political standpoint were his close connections with the movement and his advocacy of a system of industrial partnership between management and workers. Cecil was indeed a formidable political figure who was attractive to the working class as well as to 20 moderates of all classes who were searching for an acceptable alternative to Lloyd George. The intrigue and maneuvering involved in Cecil's attempts to form a new party is another example of the close connection between social policy and politics in this very confused period. If Robert Cecil had been able to overcome his political scruples and his strange devotion to the cause of Lord Grey, he might have emerged as a challenge to the Coalition leadership through the organization of a center left coalition of Liberals, left wing Conservatives and right wing Labourites. In any case Lord Robert Cecil's political stature alone demanded that his social views be treated with considerable respect. That they did not attract much enthusiasm from the Conservative leadership does not indicate that Cecil's proposals for "industrial co-partnership" were fatuous or ill-informed. Considering the subsequent trend of labor relations in Great Britain it seems unfortunate that something like Cecil's plan has not been adopted in some large industry. The failure of the Conservative leadership to consider progressive proposals such as Cecil's, or even the mare moderate recommendations of the Party's backbenchers in the summer of

1923 demonstrates a misunderstanding and even lack of interest in the social questions facing Britain in the twenties. By 21

the end of 1923 had established a pattern of moderate administrative reforms that were the main exhibits in the Tory boast of the enactment of progressive social leg­ islation between the ware. Connecting Lloyd George's downfall to inflation and his overly ambitious social policy both Bonar

Law and Baldwin were unwilling to consider any vast new schemes involving public expenditures. Furthermore, the brief career of the First Labour Government in 1924 demonstrated that the Socialist threat was not as formidable as had been feared.

The Conservatives found it was politically feasible to ignore a direct attack on the enormous problem of chronic unemployment in favor of the more traditional solutions such as tariff reform and Empire preference. Thus while the Conservative approach to social reform was modified under the dynamic leadership of Lloyd George the mutation was not permanent. Lacking a strong left wing or forceful direction from the center it was apparent by 1924 that the Tory Party had not been transformed into a vehicle for major social improvement. Real modifications in the Tory social philosophy had to await the coming of another war. CHAPTER I THE TORY TRADITION TORYISM AND SOCIAL REFORM

The Conservative Party has seldom hesitated to take credit for almost any beneficial social reform enacted by a British Government within the last hundred years. As early as * 1892 was claiming that "the Tories have almost always been more progressive than the Liberals, and Conservative leaders in their latest legislation have only gone

back to old Tory traditions." Some three decades later the fourth Marquis of Salisbury announced in the

that he was not surprised to be told "that the Party which numbered amongst its members" the ancestor of Shaftsbury has greater interest in the of the workers than has the Liberal Party." In more recent years Conservative Party propaganda has claimed that virtually all the social and indus­ trial legislation since the early nineteenth century was the product of either Conservative Governments or governments which were dominated by Conservatives. ^

^Joseph Chamberlain, "The Labour Question", The Nineteenth Century XXXII (1892). 709; Parliamentary Debates (Lards) V, 1514, 1515 (13 ) hereafter cited as H of L~Deb.; Conservative Political Centre, How Conservatives Have~Helped the (London, 1963).

22 23

Thus the Conservative Party claims for itself a leading role in social reform and the welfare state. While seme of these claims may be dismissed as political rhetoric they do rest upon one of the central factors of modem British politics — that the working classes comprise the majority of the nation's electorate. This situation has not occurred in any other indus­ trial nation. Even in the 1960's despite the white collar

"revolution" manual workers still maintained their lead over all 2 other groups combined. Once the working class was admitted to the franchise in large numbers any Party had to draw a considerable

part of the working class voters if it ever hoped to cane to power. Recent research has also identified the "deferential" working class voter as a factor in Conservative support. These "deferentials" see the traditional Conservative elite as the natural leaders of the country, qualified to rule by birth, talentand experience. By appealing to the symbols of national unity such as the Crown and Empire, the Conservatives have managed to convince these working class "deferentials" that their basic interests and the 3 national interests coincide. To reach those members of the working class who were neither deferential, nor susceptible to patriotic appeals, the

2 J. Blondel, Voters, Parties and Leaders (Harmomondsworth, 1967), pp. 56-57. 3 Robert McKenzie and Allan Silver, Angels in Marble (London, 1968), pp. 48-71, 167-169. 24 Conservatives had to develop sane response to the social ills of an industrial society. Thus it has been a necessity for the Conservative Party to act as a reforming agent whether by supporting the proposals of the Parties of the left, or by initiating reforms of its own. While there is a substantial body of social reform for which the Conservative Party may justly claim credit, the Conservative record in this area is far less consis­ tent and sustained, far less rooted in any fixed purpose, than the Party propagandists would have us believe. Interpreters of since Burke have attempted to enumerate the principles which constitute a distinct Tory concept of society, government, and the individual. Some of the most important of these are: a concern for the religious basis of society, a respect for the monarchy and for authority in general, a reverence for the past, and an underlying national patriotism extended to embrace the Empire and the Comonwealth. One might add to these a tradition of noblesse oblige and paternalism among the nobility and the country gentry who dominated the Tory Party well into the nineteenth century. This tendency toward paternalism is in itself passive, but when combined with political activism it is transformed into what one writer calls "Tory evangelism".

4 F.J.C. Heamshaw, Conservatism in (London, 1933), pp. 19-33; Viscount Hailsham, The Conservative Case (London, 1959), pp. 19-27, 50-53; Bernard Braine, Tory Democracy (London, 1948), pp. 74-82. 25

The result is the emergence of a number of socially minded Tory reformers. ^ These Tory reformers or evangelicals of the early nine­ teenth century such as Wilberforce, Lord Shaftesbury and Richard Oastler also shared the notion that the balanced traditional society was being destroyed by the ideology of individualism. They rejected the doctrines of Maithus and Ricardo as destructive of the basic harmony of an organic society in which the parts were related to the whole. Central to their reforming zeal, however, were deep religious convictions. God’s laws, not the laws of the economic prophets, should hold sway. They challenged the moral basis of a society which preached the lowest wages for the working class while attempting to keep the highest profits for the masters. According to the Tory evangelicals, such doctrines were a direct challenge to the Christian basis of g society which emphasized a sharing of the fruits of man's labor. This Tory , basically religious in motivation, was more akin to a type of Christian than to the politically orientated social reform movement in the Conservative Party. Still, the examples of these ethically minded reformers

5 Harvey Glickman, "The Toryness of English Conservatism", The Journal of British Studies, I (November, 1961) 116-117. g See especially, Cecil Driver, Tory Radical: The Life of Richard Oastler (, 1946), pp. 424-437. demonstrated that the essential ingredients of the old Tory tradition could be invoked to deal with a growing industrial society. Even more important, reform from the right became a part of the British political tradition and a factor in the weakening of the dominance of laissez faire individualism. One must not overemphasize this tradition of Tory paternalism. It was often given more lip service when actual attitudes and legislation reflected individualistic tendencies. Equally important to the strategy of Tory reform has been a tradition of opportunism, an ability to adjust to a changing political climate or situation. A union of these two elements kept the ideal of Tory radicalism alive while allowing the Tories to be transformed into a modem political party that could compete for the large numbers of new voters who had little concern or even knowledge of a nation dominated by the gentry and their traditional values. The key figure in this transition was Sir RobertPeel. In Conservative hagiography Peel is often criticized as being too

7 opportunistic or, on the other hand, too inflexible. Neverthe­ less, he discerned that if the Tories were not to be left behind as some sort of curious relic of the agricultural past the Party had to adjust to the needs of a wider constituency. In other

n Glickman, "Toryness of English Conservatism", Journal of British Studies (1961), 116-119; Braine, Tory Democracy, pp. 60-61 Lord Hugh Cecil, Conservatism (London, 1912), pp. 66-70. 27 O words the Tories had to become the Conservative Party. Peel was not interested in leading a campaign of social reform for the benefit of the working class. It was Disraeli who successfully combined Peel's opportunism with the social

conscience of the Tory radicals. In the 1840's, however, Disraeli

was ready to attack Peel's opportunism as "Tory men and Whig measures". He proposed instead, a return to true Tory "principles" which remained ill defined, but included a reactionary proposed. Q for reassertion of the royal perogative against Commons. Unrealistic and romantic as he was, Disraeli perceived the great reality of the industrial revolution - England was: "Two nations, between whom there is no intercourse and no sympathy." ^ He and his Young England movement sought to remedy the wretched conditions of the new urban working class, but they had little conception of any solution outside of factory legislation. Disraeli's own record as a supporter of working class legislation was very thin. He opposed or was silent on the educa­ tion appropriation of 1838, the Public Health Act of 1848, the

Mines Act of 1850 and a Bill to increase the power of the Board of Health in 1854. 11

g See especially A.A.W. Ramsay, Sir (New York, 1928), pp. 180-191. g , or the New Generation (London, 1880), p. 103.

^Benjamin Disraeli, or the Two Nations (London, 1905), p. 99. i;LDavid Roberts, "Tory Paternalism and Social Reform", American Historical Review LXIII (1958), 328-333. 28

Only when he became aware of the necessity and advantages of an appeal to the working class did Disraeli translate the social consciousness of Sybil and the Young England Movement into seme real social legislation. The reforms of Disraeli's second administration between 1874 and 1880 are particularly significant. Under the guidance of Sir Richard Cross at the Heme Office, the Conservative Government secured the passage of a number of important measures. Of these, the most important were the removal of the restrictions on peaceful picketing, an Artisans Dwelling Act giving local authorities the power to initiate slum clearance, a Sale of Food and Drugs Act and several factory acts to ameliorate indus­ trial conditions. Although they constituted substantial reforms their significance should not be exaggerated. They were limited in scope and often permissive rather than compulsory. In the 1870's the middle and upper class taxpayers were not willing to accept more than very limited reforms. Moreover, most of this legislation reflected individualistic rather than

Tory paternalism. 12 The issue of social reform emerged again in the early 1880's with the rise of the new radicalism of Joseph Chamberlain in the Liberal Party while the Conservatives had their own

^Robert Blake, Disraeli (New York, 1967), pp. 553-557; Paul Smith, Disnaelian Conservatism and Social Reform (London, 1967), pp. 257-261. "ginger group" in Lard Randolph Churchill's "".

Churchill's espousal of radicalism and his slogan of Tory Democracy seemed to point the way to a new appeal to the working class after the passage of the Third Reform Bill in

1884. Churchill's career was unfortunately short lived. His abrupt resignation from the Cabinet followed by a fatal illness removed him from the scene. Chamberlain's break with the Liberals over for Ireland seemed to promise the Con­ servatives a replacement for Churchill and a more effective spokesman for Tory reform. With the Liberals divided, the Conservatives effectively dominated British politics for the next twenty years except for a brief Liberal interlude from 1892 to 1895. Meanwhile, a growing social consciousness among the combined with the acceptance of socialism on at least the municipal level and the emergence of the "new unionism" all seemed to provide a much more favorable climate for reform.

The Conservatives were presented with a golden opportunity to demonstrate the viability of solid social reform from the right.

Certainly Bismark's Germany had already provided an example of the possibilities. Unfortunately the opportunity was missed. To be sure, the period did see the enactment of a small number of important measures which involved a degree of political and social reform. 30

The County Councils Act of 1888 revitalized local government, the Education Act of 1891 eliminated fees from the primary schools and a more important Education Act in 1902 laid the basis for the development of a modem education system. Even this legisla­ tion was not without its major defects. For instance, the Education Act of 1902 failed to establish a complete system of secondary schools and continued the traditions of elite secondary education by maintaining fees in the grammar schools which were 13 not finally abolished until the Butler Act of 1944. In terms of labor legislation the only significant reforms were the passage of Workman’s Compensation in 1897 and a weak bill enacted in 1905 to provide seme type of public employment in times of economic distress. How can this meager record of the Conservatives be reconciled with the opportunities for reform? In part this failure may be attributed to Party leadership.

Lord Salisbury was not uninterested in social questions. He shared the social conscience of the Cecil family, demonstrating 14 a particular interest in housing legislation in the early 1880's. Basically, however, Salisbury was not inclined to lead a program of reform while his continuing interest in foreign affairs left

13E.J.R. Eaglesham, The Foundations of Twentieth Century Education in England (London, 1967) pp. 49-61. 14 Lady Gwendolen Cecil, Life of Robert, Marquis of Salisbury (London, 1931) III pp. 7?-83. 31 little time for domestic matters. Similarly his nephew, , in spite of the urgings of the Webbs and other reformers, lacked any continuing interest in social questions. At the same time, he was suspicious of any direct appeal to the masses. He once termed Chamberlain's campaign for tariff reform an attempt at "buying each class of the community in turn". ^ Chamberlain's own interest in reform had waned consid­ erably since his "unauthorized program" of 1885. Increasing emphasis on collective action by many reformers had left Chamberlain far behind. At the same time he had to push hard to commit the Conservative leaders to even his most moderate proposals such as free primary education and local self- 16 government. By 1892 it was clear that Chamberlain's cwn radicalism was fading. He was increasingly unwilling to outbid the socialists or the radicals for working class votes. Chamberlain feared this would lead to a polarization of politics between the "haves" and the "have nots" which would be destructive 17 both of the Conservative Party and the existing social structure. To head off this sort of division Chamberlain offered an alternative program with a pension system as its capstone. He

^Balfour Papers, British Museum Additional Manuscript 498319, Balfour to Gerald Balfour 10 November 1905. 16 J. L. Garvin, The Life of Joseph Chamberlain II (London, 1933), pp. 419-421, 431. 17 Peter Fraser, Joseph Chamberlain (South Brunswick, New Jersey, 1966), pp. 151-154- 164-169. 32 proposed a contributory scheme to be administered by the Friendly

Societies, but it would exclude the "submerged tenth" of the population. For these unfortunate people nothing oould be done but to fall back on the Poor Law. He justified this parsimonious attitude by claiming that the "principle object of the whole scheme" was "to stimulate and persuade to greater self-denial 18 those with whom the ordinary inducements have hitherto failed." The obvious philosophy here was not a high minded paternalism, but a middle class exhortation to self-help. Chamberlain's other proposals included a revision and improvement of workmen's compensation, of arbitration courts for labor disputes, and the limitation of poor immigrants. Another important feature of his program called for amending the Artisans Dwelling Act to promote the purchase of houses by workingmen and to encourage slum clearance. He warned the working class against the acceptance of fallacious proposals "such as government supported schemes for unemployment relief". Instead he urged them "to press every Government in turn on the necessity for promoting the commercial interests of this country by seeking new markets and by developing and protecting old ones". If the working class would only turn its attention to India, Egypt, and the development of Africa "they

18Joseph Chamberlain, "The Labour Question", The Nineteenth Century XXXII (1892), 701. 33 would perhaps feel that the future condition of labour is mare dependent on the success of our all-prevading foreign enterprise 19 than on any artificial attempt to stimulate production". The message was clear: radical schemes of social reform were unnecessary and dangerous. Imperialism, on the other hand, would guarantee prosperity and thus provide the needed funds for moderate social reform. With the return of the Unionists to power in 1895, Chamberlain accepted the post of Colonial Secretary, leaving little time or energy for social legislation, but he was already more of an imperialist than a reformer. Earlier Chamberlain had argued that with tone Rule as a millstone around their necks, the Liberals would be incapable of passing a program of social legislation. 20 In reality imperialism and its child, the South African War, proved a more formidable obstacle to reform among the Unionists 21 than did Home Rule for the Liberals. After 1895 Chamberlain was able to press only one of his major proposals,

Workman's Compensation in 1897. The rest of his program languished while all available funds were needed to pursue imperial ambitions in South Africa. Imperialism did provide some positive impetus to reform, as we will see later, but there is no doubt that on balance

19Ibid., 70^-705. 20 Ibid., 708. 21After 1886 the Liberal Unionists under Chamberlain allied themselves with the Conservatives. Since then the official name of the Party has been Conservative and Unionist. After 1922 Conservative came back in general use except in . In this study both terms will be used interchangeably. 34 it proved a serious distraction to the forces of reform.

Reactionary Tendencies Imperialism and the failure of party leadership were not the only factors contributing to the rightward drift of the Party. There was also a question of class interest. The usual concep­ tion of the Conservative Party prior to 1900 is that it continued to be dominated by the traditional Tory landed aristocracy. It is true that this group continued to wield a disproportionate share of power in the ruling circles of the Party. In reality, this dominance was challenged as early as the 1830's when Robert Peel attempted to weld an alliance of the most conservative elements of the new urban middle class with the traditional landed interest. 22 He was partially successful. Business interests were widely represented in the Conservative Party in the 1840's 23 and sometimes aided in the defeat of social legislation. Peel's strategy was succeeding when Disraeli split the Party over the C o m Laws. The result was the shifting of many of Peel's middle class supporters into the Liberal ranks. The situation was stabilized by the dominance of Palmerston and his uncompromising opposition to any radical reform. After Palmerston's death in

22K. Clark, Peel and the Conservative Party (London, 1929), pp. 386-387. 23W. 0. Aydelotte, "Voting Patterns in the British House of Commons in the 1840's", Comparative Studies in Society and History V (1962-3), 158-60; W. 0. Aydelotte, "The House of Commons in the 1840's," History, n.s. XXXIX (1954), 258-260. 35 1865 the upper middle class began to move slcwly to the Conservative 24 fold. Their reasons were mixed, but many of them saw the Tories 25 as the only bulwark against Gladstone’s proposals for ref arm.

The Conservatives did manage to secure the votes of some of the newly enfranchised working class, but on the whole, the Conservatives made few gains outside the traditional areas of strength such as and South East Lancashire. 26 The Tories looked to the middle class voters for their most substantial gains after 1867. As early as 1874 they had gained control of most of the middle class London suburban consti­ tuencies. They used this advantage to expand their political power in the rapidly growing metropolis. After 1885 the Conserva­ tives had a clear predominance in London which they relinquished 27 only in opposition landslides such as 1906 and 1945. The middle class drift toward Conservatism was further stimulated by Liberal defectors over the Home Rule issue in 1886. Signifi­ cantly, most of these defectors were supporters of traditional

24 H. J. Hanham, Elections and Party Management: Politics in the Time of Disraeli and Gladstone (London, 1959), pp. 314-16, 318-19. ^Smith, Disraelian Conservatism, pp. 320-322. 26 Ibir., pp. 29, 314-316; Hanham, Elections and Party Management, p7 92. ^Kinnear, The British Voter, (Ithaca, New York, 1968), p. 14; Hanham, Elections and Party Management, pp. 225-226. 36 28 laissez faire rather than radical supporters of Chamberlain. Stability rather than reform was the chief interest of these new recruits and they saw little need to promote working class 29 radicalism. Another factor contributing to the stagnancy of Conserva­ tive reform efforts was the decline of the landed interest.

Falling farm prices after 1880 forced dcwn rental inccme drastically. The landed magnates had to either economize or seek alternate sources of income. By 1900 investments in colonial and overseas firms had become a major source of revenues for many large landowners. They further supplemented their incanes by collecting handsome fees while serving on boards of directors of companies anxious to have a peer’s name gracing their reports. By 1896 over a quarter of the whole peerage, 167 nobles, were serving as directors of companies. 30 Peers of both parties were involved, but the situation was bound to have a more serious impact on the Unionists. Unlike the Liberals, the Unionists lacked a radical wing which

28 Ronald Southgate, The Passing of the Whigs 1832-1886 (London, 1962) p. 392. 29 R.C.K. Ensor in "Some Political and Economic Interaction in Later Victorian England", in Robert L. Schuyler and Herman Ausubel (ed.), The Making of English History (New York, 1952), pp. 534-542, holds that a reaction to the spread of violence in Ireland was the major cause of the shift of many middle class voters from the Liberal to the Tory ranks in tine 1880's. 30F.M.L. Thorp son, English Landed Society in the Nineteenth Century (London, 1963), pp. 303-307. 37 might counteract the business influence on the right; moreover, the Tories had relied on this landed element to preserve their tradition of paternalistic Tory reform. One must reject therefore, the notion that the Conser­ vatives as a Party have always retained their tradition of Toryism and the spirit of noblesse oblige toward the working class. There is another strain of Conservatism that is often ignored by writers and politicians extolling the accomplishments 31 of Tory reform. As we have already seen there was always a body of Conservative opinion which opposed reform and in part this was based on principles of laissez faire. It was quite easy for the rural landowners to vote for the factory acts in the 1840's since no sacrifice of their interests was involved, but after 1870 reform was a different matter. Social reform was no longer a question of paying the salaries of a handful of inspectors. State intervention involved public education, slum clearance and public health measures, all involving substantial expenditures from the Exchequer as well as from the local rates. Conservative opponents of reform tended to view such proposals as leading only to costly increases in taxes and rates. After 1906 faced with the huge costs of state intervention

31For examples see Hailsham, The Conservative Case, pp. 58-59. 38 resulting from the Liberal reforms, even such paternalists as Lord Hugh Cecil were very suspicious of the cost of any further programs. He claimed that "however real the wants may be" they should be met by the entire community. "If this precaution were not taken", he warned the philanthropy of the state would soon "degenerate into thievery." 32

Another criticism of social reform by many Conservatives was its tendency to bring about an expansion of the civil service with a corresponding increase in the power of the Ministries at

the expense of local control. This hostility to centralization and increasing taxes formed the core of continuing opposition to social reform among Conservatives. When supplemented with large doses of middle class individualism and a growing fear of

socialism, advocates of reform found themselves increasingly isolated from any effective influence in the Party. 33 The Liberal landslide of 1906 and the enactment of a program of reform legislation which laid the foundations of the welfare state should have shaken the Unionists out of their lethargy. Instead Liberal reform seemed to provoke the Party

32 Lord Hugh Cecil, Conservatism, pp. 152-154. 33 John S. Saloma III, "British Conservatism and the Welfare State", unpublished dissertation Harvard University, Department of Government, 1961, pp. 81-84; David Roberts, "Tory Paternalism and Social Reform", American Historical Review LXII(1958) 333-35; Smith, Disraelian Conservatism, pp. 29-36. 39 into reaction. While the Conservatives in the Lords blocked a number of Liberal proposals including two education bills , clearly Labour measures including pensions, labour exchanges and trade boards were not opposed for fear of antagonizing the working class voters. By 1911, however, largely as a result of the curbing of the Lord's veto power, reactionary

31+ feelings gained strength within the party. A revival of tariff reform, along with an increase in business influence symbolized by the accession of Bonar Law to the Party leader­ ship, were further manifestations of the rightward drift of the Tory Party. Lloyd George's proposal in 1911 for a system of National Health Insurance was not initially resisted by 35 the Tories. In fact a group of Unionist backbenchers tried to strengthen its provisions even going as far as to have an actuary provide technical advice. 36 Only when they realized that the Bill would virtually reorganize the entire health establishment did the Conservatives oppose the bill. There were some five hundred Tory amendments but Lloyd George guided the

34For an excellent discussion of Uhionist mood see Gerald C Heberle, "The Predicament of the British 1906-1914" unpublished dissertation Ohio State University, Department of History, 1967. 35Parliamentary Debates (Caimans) XXV (, 1911), 609, hereafter cited as H of C Deb. 36 Henry N. Bunbury, (ed.), Lloyd George's Ambulance Wagpn, The Memoirs of William F. Braithwaite (London, 1957), pp. 171-173. no Bill with such ruthless skill and such frequent use of closure 37 that major parts of it were not discussed. Though Tory leadership decided not to risk a negative vote on the Bill's Third Reading, the issue was not allowed to die quietly. In a debate early in 1912 Asquith forced the new Party Leader, Bonar Law, to take a stand an the Insurance Act. Asked if he 38 planned to repeal it Bonar Law replied giving a nod, "certainly." This was a major blunder and under pressure from Unionist social reformers Bonar Law softened his position from repeal to 39 amendment. Bonar Law's ambiguous term "amend" was a signal for all the forces opposed to National Health Insurance to organize. In

April 1912 an Amend-the-Act League was established with Sir

Laming Worthington-Evans at its head. A staunch supporter of tariff reform, Worthington-Evans had earlier supported the Bill. Even after the medical profession surrendered to the Government and agreed to take part in the scheme the Unionists refused to accept it. Opposition centered around the compulsory features of the plan as well as the expense to the taxpayer and the employer. Arguements used reflected the widespread influence of the doctrines of individualism and self help. State intervention, the Unionists held, would bring with it hordes of officials and was, in any case,

37 Bentley B. Gilbert, The Origins of National Insurance in Great Britain (London, 1966), pp. 357-372, 377. 38H of C Deb. XXXIV, 351 39 Robert Blake, The Unknown Prime Minister (London, 1955), p. 138. 41 only justified when private enterprise had failed. Another major defect of a compulsory act was that it would bring everyone into the plan even those who"were not really insurable" or those who were "too improvident or too lazy" to be insured. As a result, total benefits would be reduced and the majority would suffer in order to encompass the "least deserving". The Unionists even argued that a voluntary contribution was a practice of thrift while a compulsory scheme was merely a tax. 40 The traditional relationship between the individual and the State would be placed on a "mere money basis with benefits in return for contri­ butions, with the inevitable result of constant and recurring 41 demands for benefits and contributions." Worthington-Evans made a motion at the 1913 Unionist Annual Conference denouncing the "loss of individual liberty" arising from the act, and calling for an inquiry into the situation with "a view to adopting a voluntary scheme administered by the approved societies and aided by at least equal subsidies from the 42 State". Although the resolution was warmly received Bonar Law was unwilling to commit the Party to any course beyond referring 43 the entire insurance question to a study conmittee. As Party

40National Union of Conservative and Liberal Unionist Associ­ ations, The r^mpaign Guide 1914; A Handbood for Unionist Speakers (, 1914) pp. 467-68. 41Lard Hugh Cecil, Conservatism, p. 325. no Conservative Conference Minutes 1913 (Norwich, 1913), p.37.

**3Ibid., p. 34. 42 leader, he saw little gain for the Unionists in embracing a program of social reform. He realized, however, that the Party could not afford to be branded as hopeless reactionaries over 44 such an issue. Furthermore, there were factions within the

Unionist Party which strongly resisted the drift to the right.

Roots of the New Social Reform

In spite of these reactionary tendencies there was a revival, at least in progressive sections of the Party, of the old spirit of Tory paternalism. Ironically, one source of this rebirth flowed from the revival of imperialism. The Boer War brought to the surface all the deplorable facts about the physical condition of the working class, as recruiters reported large numbers unfit for military service. The inter­ departmental Committee on Physical Deterioration of 1904 revealed that a large part of the nation’s children were suffering from malnutrition and other physical ailments which sapped their strength, stunted their growth and interf erred with their ability to concentrate on school work. 45 Advocates of imperial expansion, Liberals, Conservatives and Fabians were stunned into a realization of a fundamental weakness at the very heat of the Empire. Asquith, then one of the leading

44 Blake, The Unknown Prime Minister, p. 140. 45 Parliamentary Papers, Cmd. 2210, 1904, "Report of the Interdepartmental Committee an Physical Deterioration", pp. 19-22. 43 , asked: What is the use of an Empire if it does not heed and maintain in the truest and fullest sense of the word an Imperial race? What is the use of talking about Empire if here, at its very centre there is always to be found a mass of people,stinted in education, a prey to intemperance, huddled and congested beyond the possibility of realizing in any true sense either social or domestic life? 46 "National Efficiency" became a watchword for these imperialists. For both military and political reasons the condition of the masses had to be improved. Britain could not hope to compete with the new industrial and technical power of the United States and Germany unless there was an upgrading of the health and well 47 being of the working class. One of the most influential bodies of social-imperialists, at least in terms of membership, was called the "Coefficient Club". Organized under the wing of Beatrice and Sidney Webb in November, 1902, the Club brought together Fabians, Liberals and Tory imperi­ alists. Very quickly a rift developed between the Tories who favored tariff reform and the Liberals and Fabians who did not. It was clear from the Unionists standpoint that a program of social reform had little potential except as part of scrae larger scheme

Ufi Cited by Sidney Webb, "Lord Rosebery's Escape from Hound- sditch" The Nineteenth Century L (September 1901), 375. 47 For discussion of imperialist influence see Bernard Semnvel, Imperialism and Social Reform (New York, 1960). 44 observed that he could never "see any solution of our domestic social problems except in the framework of an expanding economy". If on the other hand the economy was stagnant or regressive:

With heavy and continuous unemployment, an increasing social conscience and a democratic vote combined would inevitably lead to an evergrowing burden of taxation which such an economy could not afford, and to a dependence on public support which would still weaken the mainspring of our productive effort. 48 Significantly, these ideas were to reemerge in the early 1920's as an important influence on Conservative social policy. Closely associated with Amery, but far more prominent, was the great proconsul of South Africa, Lord Milner. Although his reputation had suffered as a result of his apparent condoning of the Whipping of Chinese laborers in the Transvaal, Milner had virtually replaced Chamberlain as the leading advocate of imperi­ alism and Imperial unity. He lacked, however, the personality 49 and inclination for effective political leadership. Occasion­ ally Milner spoke out on social questions demonstrating that his social imperialism encompassed the tenets of Tory paternalism. In December, 1906, in a speech given in support of his friend, Amery, Milner defended a brand of socialism that he identified as "a genuine sympathy and a lofty and wise conception of what is meant by national life." This in itself was rather vague, but he

lift L. S. Amery, My Political Life (London, 1953), I p. 254. UQ A. M. Gollin, Proconsul in Politics (London, 1964), pp. 106, 119. 45 continued by restating the Tory conception of an organic society "that the different classes and sections of the conmunity are members of that body, and that when one member suffers all the

members suffer". He added a modern touch by stating that this

"concern for the well being and efficiency of the more backward of our people is not mere philanthropy; it is business." Granted that much public money was wasted on unnecessary programs, "no one can believe, for instance, that we have got to the end of our

expenditure on education." The same could be said of public 50 health. He termed old age pensions a "deplorable necessity". Milner recognized that low wages and irregular employment were keys to working class conditions. The real difficulty, he thought, was the lack of protection which kept wages unnecessarily low in order to compete with cheap foreign products. "It is surely better" he maintained "to pay a little more for your goods and have ultimately to devote what you have saved in the way to 51 relief of pauperism due to the loss of enployment." It was obvious from Milner's arguement that any real solution to social

problems could only ccme by way of tariff reform. Consequently,

the effectiveness of Unionist social-imperialists like Milner and Amery was blunted. Like Chamberlain before them, they allowed

"APblitical Ishmaelite", Wolverhampton, 12 December 1905 in Lord Milner, The Nation and the Empire (London, 1913), pp. 160-161.

51Ibid., p. 161

I 46 the image of imperialism to take precedence over domestic reform. Far more important than the social imperialists was a "ginger group" of young backbenchers under the leadership of F. E. Smith. As individuals, some members of this group did share the concepts of Tory imperialists, but as a group they were more pragmatic. They saw a definite need to counteract the reactionary tendencies within the Party and at the same time prepare a program which would allow the Unionists to compete with the Liberals for working class votes. Weekends at Cleveden, the country home of the Astors, as well as holidays in the academic setting of Oxford led to the fomation of the Unionist 52 Social Reform Comnittee in the summer of 1911. Between 1912 and 1916 the Committee turned out a number of important, but largely unnotioed reports on a series of questions. Among the topics investigated were industrial unrest, poor relief, public health, education and housing. Members of the Comnittee were mainly ambitious backbenchers, many of whom were to play key roles in the preparation of social legislation in the Coalition and the post-war Conservative Govern­ ments. Chief among the notables was Stanley Baldwin who helped prepare the report on industrial unrest and later aided Lord Aster's Committee on public health policy. Sir Arthur Griffith-Boscawen, later Minister of Agriculture in the Coalition and briefly Minister

52Amery, My Political Life I, p. 426; Earl Winterton, Orders of the Day (London, 1953), pp. 90-91. of Health under Bonar Law, chaired the subcommittee on housing. Closely associated with Boscawen was Sir A. Montague Barlow who was Parliamentary Secretary of the Minister of Labour and then Minister of Labour himself under Bonar Law and Baldwin. Philip Lloyd Greame (later Sir Philip Cunliffe-Lister) who aided in the

study on industrial unrest, was a figure in the Cabinet in almost all the Conservative or Coalition Governments between the Wars.

Another less known but influential figure was J. W. Hills who acted as chairman of the subcommittees on both the Poor Laws and industrial unrest. He later served briefly in the Bonar Law Government. Other important figures included Lard Henry Cavendish- Bentinck, a prominent social reformer and W. Ormsby-Gore (later Lord Harlech) who was associated with another Conservative "ginger" committee in the post war years. The first study to be completed was entitled Poor Law Reform: a Practical Programme. It tried to seek a solution to the relief question by separating those willing to work from the work shy. The former must be put on their feet again but the latter must be treated with "much greater severity than is meted out to

him under existing conditions. . . He is a curse to himself and a pest to society, and some kind of detention colony is the only 53 way of dealing with him." Reforms suggested were largely

53 Unionist Social Reform Committee, Poor Law Reform, A Practical Progranme (London, 1912), p. 11. administrative and the bias in the form of local control was obvious. This was an open concession to the right wing. However, there were provisions for tight control of all grants by Whitehall so that "no smaller authority [would] in consequence be able to play fast and loose with the principles practiced by its neighbors." Especially significant in view of postwar difficulties was the assignment to the State of complete responsibility for unemployment. Training and retraining of the unemployed and any similar schemes that might be developed were a responsibility that could not be 511 passed on to local authorities. The question did not then 55 seem pressing in view of the lew unemployment rates, but it did mark an important commitment, of at leat the Unionist left, to the concept of State intervention. Although the Poor Law report was marked by a tone of timidity and moderation it was supplemented by a much more innovative document known as The Health of the People which appeared during the War and consequently went unnoticed. It broke new ground by establishing the position that "a high standard of

5U Ibid., p. 14. 5^See B. R. Mitchell and Phyllis Dean, Abstract of British Historical Statistics (Cambridge, 1962), p. 65. The average rate of unemployment in the ten years prior to 1914 was 4.790, the highest annual rate was 7.890 in 1969, the lowest 2.190 in 1913. 49 health for its own sake must be one of the fundamental aims of 56 collective authority." To accomplish this task the study recommended a complete reorganization of health administration both national and local. It proposed the establishment of a

Ministry of Health which would coordinate the activities of 57 housing, slum clearance and public health. This recommendation anticipated the Ministry of Health Act of 1919. The Report's complete endorsement of National Health Insurance is especially

significant: No framework could be more capacious or elastic than this, and the system has from the first been adminis­ tered under the guidance of expansive ideals. But for the War it would already be equipped with the service of specialists, consultants, medical referees, with clinics for the use of panel practioners, with nursing staffs and with machinery of health propaganda. In addition the Committee recognized that National Health Insurance

"had lifted the curtain and disclosed the enormous amount of sickness which previously came under the observation neither of 58 public or private medical authority." The report was a signal victory for those who wished to steer the Party in the channel of collectivism. Another pressing issue that contributed to the atmosphere of crisis in the period just prior to the outbreak of war was industrial unrest. Crippling work stoppages and the possibility

56 Unionist Social Reform Comnittee, The Health of the People-A New National Policy (London, 1916), p. 6. 57Ibid., p. 44. 58Ibid., pp. 29, 18. 50 of a general strike organized by the newly formed Triple Alliance of Railwaymen, Transport Workers and Miners, presented a major problem that could not be ignored. The Unionist social reformers presented a study, but like everyone else they failed to produce a workable solution.

The chief proposal offered by John Hills1 subcommittee centered around the establishment of a three member board of conciliation with the representatives of management and labor jointly selecting the third member. This board was to have no powers of coercion. It would merely attempt to influence public opinion through its own prestige. The Report was not prepared to go beyond this rather mild suggestion, although it did not rule out mandatory measures "if they should ever seem both necessary and practicable and to be likely to obtain the required amount of public support." 59

The spirit of voluntarism also appeared in the reccnroen- dation opposing the establishment of a minimum wage. Instead they proposed making wage agreements binding in law, with any violations enforced by the Government. Each industry would establish a minimum standard wage in a manner not clearly described, but somewhat along the lines of the Boards that had been established

59Unionist Socialist Reform Comnittee, Industrial Unrest: A Practical Solution (London, 1914), p. 25. 51 by the Liberal Government in 1909. Violations of these agreements would result in penalties assessed against the companies in the form of wage increases. As for labor, the Report suggested that "careful provision must be made for reasonable efficiency and regularity on the worker's part" with lower pay rates to be fin "granted the young, old and infirm workers." Overall the Comnittee adopted a middle course trying not to offend management or labor, but making no attempt to grapple with the basic problem of industrial unrest.

Education also came under the scrutiny of this energetic group of social reformers. Schools and Social Reform, a report published in 1914, anticipated many of the reforms of the Fisher

Act of 1918. The Comnittee under the leadership of Sir Samuel

Hoare (subsequently Viscount Templewood) recognized the importance of health and food in education by recommending that Liberal legislation on these subjects be made compulsory. Of even greater importance was a statement maintaining: That the general leaving age in all elementary schools. . . shall be fourteen, that individual authorities should be empowered, with the Board of Education's approved to raise it, and that upon the leaving age . . . should be super­ imposed a system of part-time continuation classes to seventeen. 61 At the same time middle class taxpayers were reassured that this reform would make education profitable and end the

6QIbid., p. 29. 52 waste of unused talent. The Report was not all progressive, however; it continued the traditional elitist attitudes of the Conservative Party toward secondary education by stating:

The object of public assistance in the provision of secondary education is not for every child, but for the children who show exceptional merit. The state cannot and ought not to spend twenty or thirty pounds a year on children who cannot profit by secondary schooling. For the ordinary child a system of part-time continuation classes will provide the means of further education. 62 In terms of Party propaganda one of the most effective of all Unionist Social Reform Studies was in the field of housing. Instead of issuing a detailed study as they had on other questions they decided to take advantage of the inaction of the Liberal Government in this field by introducing a reform bill of their own in 1912. Carefully framed the Bill received the support of a number of housing reform organizations. Most of the members of the subcomnittee including its chairman, Sir Arthur Griffith

Boscawen, had extensive experience with housing while serving on local government bodies. The single most important element of the Boscawen Bill introduced in July, 1912 was a provision for a direct State subsidy to local authorities for the purpose of carrying out housing schemes. The aid was rather limited with an authorization of Li500,0Q0 in 1912 and tL,000,000 in the two following years.

62Ibid., p. 31. 53 The cost of any project was to be shared with the local authority, with the Local Government Board having the power to reluctant authorities to act and if necessary carry out 63 the work itself charging the cost to the local rates. This important feature later was incorporated into the Housing Act of

1919. This provision was a clear break with the prevailing Unionist opposition to State compulsion. Warned by the Govern­ ment Whips that the Bill was popular, it was not opposed on Second 64 Reading, but it was effectively destroyed in Cormuttee. Boscawen's Bill was significant because it demonstrated that a small group of Unionist Reformers could develop a creditable plan for dealing with one of the nation's major social ills. At the same time it provided the Unionists with much needed ammunition at the anticipated general election. F.E. Smith in a letter to claimed: We now know what the real attitude of Liberals on housing reform is, and the country will realize what their professions are worth. They have killed our Bill at the expense of the working class in a fit of party spite and jealousy. We shall remove the issue to the constituencies and ask them to decide which is the party of social reform-the men who introduced the Housing Bill or the men who kill it. 65 Another salutory feature of the Bill was its recognition that private enterprise alone was no longer able to cope with the housing problem. A party pamphlet expressed the position clearly:

63National Union of Conservative and Liberal Unionist Associ­ ations, A History of Housing R e f o m (London, 1913, pp. 32,25-28. 64The Times 2 July 1912; Sir Griffith Boscawen, Memories (London, 1925), pp. 154-55. 54

"The objection to private enterprise is merely as a fact and a matter of experience that when it is in no way controlled, regulated or aided by the State it is apt to lead to bad Housing conditions on one hand, or to the shorting of Housing accommodations on the other." 66 Unregulated private competition had failed, it was necessary on pragmatic grounds to involve the state in scrne farm of subsidy to meet the "imperative needs of the people." 67 In part the Unionist Housing Bill signaled a return to the tradition of the altruistic Tory reformers of the nineteenth century. It also reflected the pragmatism of the New Liberalism, but of course, the Unionists could never give formal recognition to this influence. Finally, it included a large measure of the Conservative tradition of opportunism, a factor that must always be oonsidered when dealing with Tory reforms. The general thesis that the First World War promoted social reform has been widely accepted. 68 While that position is not being challenged here one may well question its validity if it is applied to the Conservative Party. There is no doubt

66 National Unionist Organization, History of Housing Reform, p. 27. 67Ibid., p. 29. CO Arthur Marwick, Britain in the Century of Total War (, 1968), pp. 11-17; Stanley Andrejewski, Military Organization and Society (London, 1954), pp. 27-29, 74-75; Richard Titmuss, Problems of Social Policy (London, 1950), pp. 500-505. The opposing view is taken by Philip Abrams, "The Failure of Reform 1918-1920, "Past and Present" no. 24 (April, 1963), 43-64. that the Conservatives benefitted from the chauvinism and war propaganda that corresponded to the traditional Tory appeals

to patriotism. The Party was also obviously strengthened by the Liberal split and the general weakness of the left. The policy of collectivism received strong backing from the social- imperialists like Milner who occupied seats of power after the formation of the Lloyd George Coalition. On the other hand, Tories like Milner and Sir failed to inspire the trust of the working class. Similarly, the War Coalition brought into the Government an unprecedented number of business­ men. Jfany of these were only nominal Liberals who eventually entered the Tory camp by way of the Coalition. This trend toward increasing business influence in the Conservative Party was especially noticeable in the "Coupon" Election of 1918.

Over half of the newly elected Conservative members were businessmen. They far outdistanced the old ruling elite of the landed gentry. Since many of these old landed families had themselves already acquired considerable investments and influence in many companies, the interest of business was extremely well represented in the Party by 1918. 70 Such an

89 Gollin, Proconsul in Politics, pp. 351-52, 411-m2. 70 J. M. McEwen, "The Coupon Election of 1918 and Unionist Members of Parliament", Journal of Modern History XXXIV (September 1962), 302-306. 56 influence was not salutary to the forces of social reform. Always ready to support a drive for economy and retrenchment businessmen would actually reinforce the reactionary wing of the Party. Even in the middle of the war when forces making for collectivism were strongest, tendencies toward obstructionism and laissez faire occasionally surfaced. Much opposition was evident during the debates on the establishment of a Ministry of Reconstruction. In part it was directed at the multiplication of bureaucratic Government departments but it also reflected the influence of Conservative tariff reformers led by W. A. S. Hewins 71 who feared the ministry might direct trade and industrial policy. In line with the recommendations of the Lewis Report of 1916, the Fisher Bill provided for the raising of the school leaving age to fourteen with the institution of part-time classes for those between the ages of fourteen and eighteen. Sane Tory reformers and especially Lord Henry Cavendish-Bentinck strongly supported the reform, but diehard Unionist reactionaries like Sir Frederick

Banbury attacked the whole concept of working class education. Leading the opposition and a powerful ally for the Unionist right was the newly organized Federation of British Industries. Fearing

•Si of C Deb. XCVI, 161*4-18, 1636-38 (27 ); 2367- 2377 (2 Ausust 1917); W. A. S. Hewins, Apologia of an Imperialist (London, 1929), II, pp. 152-158. 57

a loss of unskilled labor the Federation claimed that the Bill would provide a large class of overeducated persons for whom no positions oould be found. Even with official Coalition support there remained a number of Conservatives who saw education reforms as among the most easily expendable after the end of the 72 War. These trends were kept in the background by the general spirit of wartime cooperation. Conservative collectivists and social-imperialists in the Coalition were reinforced by same of

the remaining Tory paternalists. One of the best examples of this type of individual was the fourth Marquis of Salisbury, son of the prime minister, who had an extremely influential role in promoting housing reform. Salisbury had a keen interest in tcwn planning and housing having served as the president of the Garden Cities and Town Planning Association. 73 While serving on the housing panel of the Second Reconstruction Committee, he insisted that the postwar goal be at least a program for 300,000 houses. Further­ more, the legislation was to be framed in such a way that reluctant local authorities could be compelled to begin construction. In later stages of housing planning Salisbury strongly backed Christopher Addison, Liberal Minister of Reconstruction, against

H. A. L. Fisher, Unfinished Autobiography (London, 19*+0) pp. 92, . i i.

73Paul B. Johnson, Land Fit for Heroes (, 1968), p. 60. 58 the obstructionist tactics of another Conservative, Hayes Fisher, 74 head of the local Government Board. The forces of patriotism, imperialism and the quest for victory coalesced at least briefly, creating a Conservative constituency for social reconstruction. The Coalition itself with its close working arrangements produced a cross fertilization of political philosophies and attitudes so that each Party 75 absorbed a little of the other's viewpoint. The Unionists benefited from an infusion of Lloyd George radicalism or "New Liberalism" with its recent background of constructive social reform. With the backing of Bonar Law, Milner and especially Salisbury who had close connections with the right wing of the

Unionist Party, open opposition to reform programs was often muted. Thus when Lloyd George and Bonar Law decided to continue the Coalition after the Armistice, the Tories accepted a joint election manifesto that went far beyond anything the Party had previously considered. A few crumbs were no longer adequate. A greatly enlarged electorate wanted action on a number of major problems including housing, employment and education. In their joint manifesto of December, 1918, both leaders announced that their "principal concern" was "and must be the conditions of the people who live by annual toil." The

74 Ibid., pp. 65, 114. 75See for example, Christopher Mdison, Four and a Half Years (London, 1934) II, pp. 493-494. 59 sacrifices of the War had to be rewarded by a Government program which could deal on broad and comprehensive lines with "the housing of the people". In addition they premised large opportu­ nities &r "education, improved material conditions and the preven­ tion of degrading standards of unemployment" and measures to secure 76 the "employment of the workers of the country". These and other measures pointed the way, or so it seemed, to a virtual welfare state. One major question remained: had the Conservative Party really committed itself to a policy of democratic social reform or would it waver in the face of obstacles or opposition?

76 The Times 22 . CHAPTER II THE TORY SPECTRUM

Any evaluation of the social or economic policies pursued by the Conservative Party or its factions must take into account the national mood of the early postwar years. Even before the cheering and shouting died out many observers sensed a strong undercurrent of apprehension and uncertainty. captured this spirit with an entry in her diary dated 4 November 1918:

Burdened with a huge public debt, living under the shadow of swollen Government departments, with a working class seething with discontent, and a ruling class with all its traditions and standards topsy­ turvy, with civil servants suspecting businessmen conspiring to protect profits, and all alike abusing the politician, no citizen knows what is going to happen to himself or his children, or his own social circle or to the state or to the Empire. All that he does know is that the old order is seriously threatened with dissolution without any new order being in sight...1 In the midst of this unsettled situation with the ink hardly dry on the surrender documents Lloyd George and the Conservative leaders plunged the nation into the "Coupon" Election of 1918.

■^Margaret I. Cole (ed.) Beatrice Webb's Diaries 1912-1924 (London, 1952), pp. 133-134.

60 While the landslide in favor of the Coalition in the election may be considered a personal triumph for Lloyd George it was also a smashing victory for the Conservatives. Of the 322 Conservative candidates offered the "coupon" some 294 were returned. In addition, some 41 Conservatives were returned unopposed including such Party stalwarts as Arthur Balfour and Austen Chamberlain. Some 47 others were returned as independent

Conservatives. Thus the total strength of Conservatives of all shades was 382, over 100 more than they had won in December 1910. When the Coalition Liberals were added to the Tories the effective 2 Coalition majority was well over 400. With a victory of this scope it is not surprising that Party attitudes on social as well as other questions reflected a wide spectrum of opinion from arch-reactionary on the right to positions quite close to the moderate wing of the Labour Party on the left. Obviously the Whips could not expect to exercise close control over such a diverse group, nor was there any real need, since the opposition was pitifully weak. The situation was further complicated by the general preoccupation of most influ­ ential figures with foreign and imperial questions. The Peace Treaty, Germany, Russia, India and especially Ireland were so important that they overshadowed the seemingly mundane questions

2 Kinnear, The British Voter, p. 38; McEwen, "The Coupon Election of 1918,""Journal of Modem History, XXXIV, 294-296. 62 of industrial relations, unemployment and housing except during occasional crisis situations. Of course, Conservative attitudes about foreign or imperial matters often reflected similar values on domestic issues. The Die-Hards who demanded a return to "law and order" in Ireland at any cost, were often ready if necessary to use similar tactics at home, although they usually refrained from expressing their views in public.

Even though the traditional political categories of left, right, and center are often confusing in the early inter-war period they are still useful in helping to sort out the general trend of social thought in the Party. There are a few figures who are very difficult to classify. For instance, Lord Salisbury and his brother, Lord Robert Cecil, shared a common hatred of Lloyd George and Coalition policies, but often for opposite reasons. It has been already noted that Lord Salisbury was far from reac­ tionary on the housing issue during the War; yet his leadership of the Die-Hard movement places him clearly on the right. Family ties and an aristocratic sense of moral righteousness kept the brothers together even when they were poles apart on social issues. With the end of the Coalition in 1922 and the return of the Conservatives to power on their own, it became imperative that the Party develop an alternative social policy. Many of the policies first adopted by the Coalition became part of Conservative social policy for the entire inter-war period. Thus in the turmoil 63 of these postwar year’s temporary solutions were often accepted as the nucleus of Tory social and economic policies. This brief progressive interval was however soon overwhelmed by the rightward movement of Party opinion. The increased influence of business and a revival of imperialism and protection were manifestations of this trend.

The Tory Reformers One factor must be kept in mind when considering the Conservative left, it was remarkably weak. Most of the former members of the Unionist Social Reform Committee were absorbed into the Coalition where they often played influential roles. While it is true that reform is sometimes carried out effectively from within a Government or a Ministry it also requires innovation, intelligent criticism, and even agitation from the outside. Both the opposition and the Conservative left were so insignificant that this valuable cross-current was missing. Concurrently, the strength of the right did much to stifle and abort seme of the major programs the Coalition had begun. Moreover, the Tory left lacked coherence or leadership. Men like Lord Robert Cecil and

Lord Henry Bentinck were political mavericks unwilling to follow any lead except their own conscience. In a period when the press lard exercised unprecedented political influence, the Conservative left lacked the support of a paper or even a journal. Only when 64

the Coalition was nearing its demise in 1922 did J. St. Loe Strachey's Spectator begin to take on a progressive viewpoint as a journal of the moderate Tory left. A few of the more important figures of the Conservative left embodied the tradi­ tions of the old Tory evangelicals. Perhaps the most prominent

example of this group was Lord Henry Cavendish Bentinck. Half-

brother of the Duke of Portland, Bentinck's forty-five year career in the House of Commons was marked by great independence of mind. So great was his independence that he never served

3 in any Government although he had great ability. Bentinck was especially concerned about industrial relations and working conditions. He perceived that the British working man suspected any innovation in management or technology as a threat to his job or his pay. His solution lay in the direction of a system of industrial cooperation along the lines of the Whitley Councils formed during the War to promote collaboration between industry and the trade unions. This in itself was not radical, however, Lord Henry wanted to go much further. He proposed that

these joint industrial councils regulate the flow of production; meanwhile the State would intervene to see that the workers and

taxpayers were protected from exploitation. Industry and the

^The Times 7 October 1931. 4 For a discussion of the Whitley Movement see Johnson, Land Fit For Heroes, pp. 154-174. 65

State must expect to work in a new partnership, "a form of National Service - a service in which every individual [would] 5 be expected to play his part for the sake of the community." In keeping with the tradition of early nineteenth century Tory radicals, Bentinck continued to pursue the case for shorter hours, better working conditions and wages. He called for a new Truck Act to protect workingmen and women from unfair fines and deductions that still occurred because of legal loopholes. A shortening of the working day was in his opinion, by far the most important needed reform. "The legal working day is practically the same as it was seventy years ago," he noted notwithstanding the fact that the speed of the machine, the consequent strain, the wear and tear of the workers have been doubled; notwithstanding the fact also that experience has proved that the legal day is wasteful of wealth and destruc­ tive to health." ® Lord Henry's advocacy of a forty-four hour week drew a sharp rebuke from one right wing Tory publication. He was quite harmless so long as he was "stringing together quotations from Disraeli and Carlyle and labelling them Tory Democracy," commented the Saturday Review. But when he descends into the arena and

^Lord Henry Bentinck, Tory Democracy (London, 1918), p. 97.

6Ibid., pp. 100-101. 66 lends his great name to the forty-four hours-a-week men and their anarchist associates, he is more mischievious than he knows." The editor claimed that such a shortened work week would be dangerous to the British economy unless it was adopted on a world-wide basis. Foreign competitors would maintain work weeks of forty- 7 eight hours or longer thus killing the nation’s export trade. Such accusations placing Bentinck in the category of a well meaning, but somewhat eccentric figure did much to limit his influence. His effectiveness was also diminished by his consistent support of Labour rather than his own Party on any controversial social question. Despite his independence the Conservative Central Office decided not to run a candidate g against him in any future general election. It had much less to fear from a radical peer on the left than from dissidents on the right. Following his resignation from the Cabinet in early 1921 Lord Milner passed into political obscurity seldom even expressing himself in the Lords. In early 1923 he broke his silence to write a series of articles that appeared in the Q Observer. These articles together with a number of other essays

^The Saturday Review CXXVII (15 ), 146. 9Cecil of Chelwood Papers British Museum Aid MSS 51163, Cecil to Lord Cowdray, 9 .

97, 14, 21, 28 . 67 on social and economic topics were published as a book several months later. While some of the issues raised by Milner concern the period after the end of the Coalition most of it ranges over the entire period covered by this study. Milner was clearly aware that in social and economic matters he occupied an isolated position. He remarked candidly that he was "separated from one political party" by his "advanced views on social questions, still more widely separated from others" by his "faith in the Empire and my attachment to national rather than cosmopolitan ideals." It seemed to Milner that he was "ploughing a lonely furrow." 10

Milner reaffirmed his basic belief in imperialism. He claimed that it was a high minded and altruistic system in which the attitude towards the subject races "is the conception of ourselves as their guardians and trustees, bound to exercise our power not for our cwn advantage but for their good and to spare no effort in training them for self-government." British authority in countries such as Nigeria, Malaya or the could be justified as insuring that the peoples of these countries enjoyed "primary blessings or order and justice." The withdrawal of British power "would be a disaster for them and, on our part a dereliction of duty." 11

■^Viscount Milner, Questions of the Hour (London, 1923), p. vii.

11Ibid., pp. 100-101. 68

As Milner saw it, the nation need not wait until Central and had recovered to regain trade lost during the War. Britain had European responsibilities, true, but he looked to the Empire and Imperial development "as the ecancmic salvation of Great Britain." 12 Milner's arguments revealed that he was an even stronger supporter of tariff reform than before the War. He argued that Labour's proposal for a "national minimum" was unattainable unless there were an increase in national productivity. This in itself was impossible unless industry and workers could be protected from the goods of countries with much lower standards of living. The end result would be either a reduction in the standard of the "national minimum" or the adoption of seme form of protection. Nevertheless he was not as willing as he had been some sixteen years earlier to subordinate all reform to protection. In this respect Milner took a much more progressive view than many other Conservatives. The Coalition program of reconstruction was "no fantastic dream. It was really a modest programme that could be carried out, not indeed without sustained effort, but without making excessive demands either on our resources or our virtue." 13 Yet he was unwilling to allow the reformers or Socialists forget that defense and the Empire were far more important in preserving the Nation than any vague international

12Ibid., p. 34.

13Ibid., pp. 121-122. 69

bodies or leagues which he dismissed out of hand. Milner saw no

conflict between the aims of Imperial defense and social reform, but others might suggest that it was a question of priorities. On the question of industrial peace Lord Milner proved to

be well in advance of others on the subject. He lamented the increasing bitterness of relations between capital and labor which he contrasted with the spirit of national unity during the War. The lion's share of the blame could be traced, not to the excessive demands of labor, but to the inefficiency of the structure of British industry. He attacked the "excessive competition, bad management, inadequate use of mechanical aids and the failure to profit by systematic research derived from Science." The system of distribution was even more inefficient than that of production. The immense number of middlemen, salesmen, brokers, advertisers

and commission agents were unproductive in terms of the national wealth. This system would continue "as long as the investment of capital, determining as it does, the nature and distribution of employment, is governed wholly by considerations of individual

gain." 14 With such a situation it was no wonder that Labour was revolting against the existing economic system. What, then, was Lord Milner's solution? Like Lord Henry Bentinck he advocated a widespread extension of the system of Whitley councils to all industries. Milner saw their main purpose

14Ibid., pp. 58-59, 62. 70 to be the promotion of common interests of "masters and men." Their scope would go far beyond mere conciliation but would lead to a mutual sharing of views including financial information.

Beyond this he looked to a form of Guild Socialism, based on the concept that Labour should hire capital. Milner was no Socialist, but he was willing to adopt some forms of Socialism to the existing society. Guild Socialism was a long term goal, but like the Webbs, he was willing to accept the doctrine of "gradualness": That the area of public ownership of the means and instruments of production is destined to extend, may be regarded, humanely speaking, as certain. It was also certain in Milner's view that capitalism would 15 hold its own as the major economic system for some time to cane. One reviewer, Sir Lyden Macassey, an economist, saw a contradiction in these proposals. He questioned the possibility of the extension of Whitleyism with its emphasis on labor management cooperation when this would merely be a holding action until capitalism 16 could be abolished and Guild Socialism substituted.

Milner did not, however, confine his interest to long range solutions. He attacked the rabid advocates of economy for destroying needed social expenditures especially in education. He was willing to grant that there was some waste, but he claimed

15Ibid., p. 78. ^Sir Lyden Macassey, "Lord Milner's Essays I" The Spectator CXXXI (11 ), 18*4. 71 that it was "hard to see how public expenditure can for many years be lower than it is at present'.1 With taxes already high, the question of sufficient revenue "will be the great problem confronting every Ministry for years to come." Such solutions as the Labour Party's " of wealth" were impractical for pragmatic reasons. They would lead to a destruction of the incentive system and the wealthy class itself because "you cannot both confiscate wealth and continue to raise money by the differential taxation 17 of wealthy people." Milner's solution to the problem of increased state revenues was a novel one. Rather than nationalize all large industries, he proposed a sort of half-way house between universal State owner­ ship and private control. The State would be made a "sleeping partner" through stock ownership in industry leaving the initiative and the management under private control. For its investments the State would reserve for itself the surplus profits after the ordinary shareholder received his dividend. Lord Milner argued that this scheme "would involve no interference whatever in the 18 conduct of business." Again Sir Lyden Macassey presented a number of technical objections particularly the danger of the State's purchase of deliberately overvalued stock. Macassey claimed that such a system would lead to bureaucratic control over

^Milner, Questions of the Hour, pp. 135-136. 139. 1 ft Ibid., pp. 141-143. 72 all joint-stock companies. These difficulties Macassey implied, would make the plan unworkable. 19 From his experience in the Cabinet, Milner saw that the mechanism of bureaucracy was blocking social reform. Certainly it was proper for the Treasury to cut waste and inefficient procedures but "there is always a danger that Financial Control will overstep its proper limits." The determination of social policy was not the business of the Treasury. He complained bitterly that in the final analysis it was in the power of two or three permanent officials to give in many cases, a decisive trend to National Policy "by cutting from the estimates expenditures they disliked." 20 Unfortunately, Milner was unable to offer any real solution to this problem. As in the entire collection of essays he seems more interested in provoking comment than in offering detailed blueprints. His role was that of an elder statesman who by standing above politics could give an unbiased view of the existing social and economic problems. Milner, however, was far out of tune with his own Party. His approach was much too radical for the 1920's and seemed a strange mixture of capitalism and socialism in some respects anticipating the development of the modem mixed economies of the Western industrial states.

^Sir Lyden Macassey, "Lord Milner's Essays-II". The Spectator CXXE (18 August 1923), 215. 20 Milner, Questions of the Hour, pp. 132-133. 73

Even the more conventional reformers in the Conservative Party were rebuffed. Perhaps one of the best examples of the frustration and disgust most Tory Reformers were forced to endure in the face of the existing reactionary tendencies is to be found in the case of Lord Robert Cecil. A brilliant and outspoken younger brother of the Marquis of Salisbury, Cecil had achieved his promi­ nence as Britain's leading advocate of the League of Nations. In the years before the War, however, Cecil had not been a prominent social reformer. In fact he revealed a deep attachment to liberal individualism rather than Tory collectivism. He stated this position clearly during the debate over National Health Insurance in 1911: I have a fanatical belief in individual freedom. I believe it is a vital thing for this country and I believe it is the cornerstone upon which our prosperity and our existence is built, and for my part, I believe that the civic qualities of self-control, self-reliance and self-respect depend upon individual liberty and freedom and independence of the people of this country... For those two reasons I am strongly opposed to a compulsory scheme. 21 After wartime service in the Coalition Cabinet, as Minister of Blockade and Undersecretary at the Foreign Office, Cecil became convinced that only through some form of domestic and international cooperation would European civilization survive. In a letter to his elder brother Cecil explained this change in his political outlook:

21H of C Deb. XXXII, (7 December 1911) 1476-m77. Even if things simply do not improve we are in for great difficulties. Another war must in all human probability destroy all of us. Therefore some active policy seems to be the only alternative to despair. Passive conservatism does not meet the case. If we want to preserve society we must be prepared for changes and as far as can be seen the League is the only plausible way out. But Hie Lambeth Conference was not far from wrong when it said that the League would only succeed by a miracle...And we have no right to expect miracles if we do nothing to help ourselves. In Cecil's view the question of the League and inter­ national cooperation was directly related to the social and industrial questions at home: The war has shattered the classes. It was a terrible "show-up" of the wisdom by which we were governed, and was so regarded by millions. Now the Government have asked them to trust them once more and to try this new experiment. If this too fails the disillusionment may be fatal...Class suspicion has grown prodigiously. Governments especially our own-are regarded as fraudulent conspiracies to bolster up the existing order of things with all its evils. Here again the damages are too great to be dealt with by passive inaction...22 He feared that growing antagonism between capital and labor would lead ultimately to class warfare. One had only to look "at present condition of Russia, where chaos and stagnation, rapine and murder, famine and starvation enable the ruthless 23 faction to dominate the unhappy population," in order to understand these damages. This is not to say that Cecil was a

^Viscount Cecil of Chelwood Papers BM Add MSS51085 Cecil to Lord Salisbury, 13 Jfay 1921. ^3Ibid., Add MSS51162 Address to the Electors of North Hertfordshire, 26 November 1918. 75

Red-baiter. On the contrary, he had great respect for the British working class and saw no immediate danger from Bolshevism.

What was needed was a fundamental change in the industrial system. However, he rejected State control and nationalization as leading to increased bureaucracy. "The better plan would be to take existing units, individuals, classes, nations and try to induce them freely to combine to discourage competition and self­ aggrandisement as the dominant motives of civilized life and substitute co-operation and self-sacrifice." Echoing the Tory evangelicals Robert Cecil based his appeal on a return to Christian morality. If Britain along with Europe and most of the rest of the world, were to be saved from "hideous disaster" there had to be a return to "first Principles." 2H Rejecting wage boards and industrial councils of the Whitley schemes as palliatives Cecil called for a system of "Co-Partnership" between workman and master. Instead of treating the workers like machines an attempt should be made to enlist their willing cooperation. His plan went beyond mere profit sharing arrangements. The workers had to share in profits, the capital, if possible, but above all else they must share in the management of the industry. Profit sharing by itself "will be shorn of half and more than half, its advantages if it was not coupled with a share in the management." This share was not to be confined to

Cecil Papers of Chelwood BM Add MSS51085 Cecil to Lord Salisbury, 13 . 76

questions of labor and wages because business policies often

determine these factors. Without a knowledge of the inner workings of the company it would be almost impossible for the worker to "obtain as a right, authorative information as to the

economic position of the undertaking." Cecil insisted that the exclusion of "wage earners from a share in the general management 25 destroyed the chief psychological value of the proposal." Cecil denied that the workers would betray industrial secrets. He pointed to the example of the printers to whom large quantities of very confidential material were entrusted with few leaks or indiscretions. He granted that in some industries, agriculture in particular, the proposal might have

to be modified, but the general principle in any case should be

carried out. "Co-Partnership" was especially important in industries performing services of public utility such as the

railways. In these industries no time should be wasted in putting the scheme into operation. Strikes in industries such as railways and coal threatened the very prosperity of the country. Although he generally was favorable to the interests of

labor, Cecil viewed the threat of a general strike under the leadership of the Triple Alliance, as intolerable. He advised that some restraining action should be taken along the lines of the League of Nations Charter to prevent or delay the initiation

^Lord Robert Cecil, The New Outlook (London, 1919), pp. 21-23. 77 of such a strike. Only in cases where labor was politically powerless could a general strike be justified, but in Britain 26 this situation had "long since passed away."

Since Lord Robert Cecil's position was certainly less radical than Milner's it might be assumed that he would have been able to gather significant support for his point of view.

Such was not the case. A continuing dissatisfaction with Coalition attitudes on Ireland, the League and on industrial policy widened the growing alienation of Lord Robert Cecil and his younger brother, Hugh Cecil, from their own Party. Finally in early 1921, both brothers dramatized their utter disgust with Lloyd George and the Coalition by taking up seats on the opposition front bench. The Cecils insisted that they remained good Conservatives but in conscience they could no longer support the Coalition. 22 Faced with a growing reactionary trend on the right (which was organized in part by his own brother, Lord Salisbury) and what he considered immoral political opportunism in the Coalition, Robert Cecil began to seek a political opening to the left. The performance of the Asquith Liberals since the return of Asquith to Caimans in March, 1920 was not very impressive nor did

26Ibid., pp. 24-28. 22Cecil of Chelwood Papers BM Add MSS51162 Lord Hugh Cecil to Edmund Talbot, Lord Fitzlan, . 78

Cecil see any prospect of a Liberal-Labour alliance. He proposed instead to build a political movement around the personage of

Lord Grey of Fallodon, the former Liberal . In addition to the normal Liberal supporters he assumed that "the great mass of non-political voters" and "the non-reactionary Conservative voters who passionately desire clean government 28 would also provide support." This seemed a hopeless cause, Grey, an essentially ineffective figure, had been out of politics for over five years and was nearly blind. In a difficult situation men are sometimes prepared to grasp at straws. Cecil interested C. P. Scott, editor of the Manchester Guardian, in his proposal. A meeting of Party leaders was held in early July, but Asquith insisted a change in leadership would be disheartening and devitalizing to the Liberal 29 Party. In order to salvage sanething for the movement Grey agreed to reenter active politics while Lord Robert would rally be­ hind him publicly supporting a Liberal program. It was not clear whether this agreement looked forward to Cecil joining the Liberal Party or whether Grey was to serve as a rallying point to those of all parties who wanted some substitute for the Coalition. 30 The

28 J. A. Spender Papers British Museum Add MSS46,393 Robert Cecil to Spender, 30 . 29 Trevor Wilson, The Downfall of the Liberal Party 1914-1935 (London, 1968), p. 234. qn C. P. Scott Papers British Museum MSS50906 Political Memoranda, 9 August 1921. 79 chief stumbling block appears to have been financial. Cecil put out an appeal to the voters of his constituency announcing that he would hereafter take an even more independent line. He called for a "statesmanlike policy designed to impress on workmen or employers alike that prosperity depends on the recog­ nition by both that they must stand or fall together." This was merely a reassertion of his doctrine of "Co-Partnership". He also called for economy in government and for successful peace negotiations in Ireland. 31 This rather mild manifesto proved very disappointing in terms of financial support. Despite the lukewarm response, Cecil was convinced that Grey was the only man who could rally the moderate left against the forces of reaction. He even wrote a memorandum to the King suggesting that if the Coalition fell and Lloyd George was unable to organize another Government, Grey should be summoned as the only alternative figure who could logically command a broad 32 enough base of support to remain in power any length of time. The attempt to rally behind Grey as a "super-party" figure met with dismal failure. Following a speech made by Grey at Berwick- on-Tweed Cecil released a statement in the form of a letter to his constituency party chairman. It was a summary of his earlier

31Cecil of Chelwood Papers BM Add MSS51075 "Letter to Supporters," July 1921. 3^Ibid., Add MSS51163 Memorandum to , 11 . 80 views with a denunciation of the Coalition for its failures in domestic and foreign policies. It was framed in such a way as to appeal both to the right and the left. He called for an administration that "would have a clear and definite programme and will pursue the even tenor of the way undisturbed by passing 33 gusts of popular excitement." If Grey was to be the man of the hour few were willing to acknowledge it. Liberals divided, though they were, preferred the lackluster leadership of Asquith, while Conservatives ignored the call for a new party. Earlier in 1921 Cecil hoped to rally to his side a number of moderately progressive Tory reformers known collectively as the "Group". Such men as John Hills, Sir Samuel Hoare, Ormsby-Gore,

Walter Elliott and Lord Winterton might respond to an all-Party appeal, but they would never join the Liberal Party. New Cecil appeared like a general without troops. The demand for retrenchment was so strong that these moderates could no longer 35 be counted on to support a program of reform. Only a few close associates, like young , could be depended on as unquestioned supporters.

^ Ibid., "Letter to Heaton Ellis for Publication" 12 . 3U Ibid., Add MSS51163 Cecil to Lord Cowdray, 9 July 1921. 35Ibid., Cecil to Viscount Herbert Gladstone, 10 . 81

In this situation Lord Robert faced a bitter dilemma: either he remained with the Conservative Party and its social and political philosophy for which he had little sympathy, or he could cut his ties and go over to the Liberals. He admitted in a letter to Lord Gladstone that he found many of the old land owning Conservatives "often militaristic". He deplored their readiness to "accept the present distribution of property as entirely just". Furthermore, they would also oppose his views on industrial organization, as well as his ambigious attitude on economy, and free trade. 36 On the other hand, he was unwilling to accept Asquith as Party leader even though Lord Ccwdray, a prominent Liberal industrialist and major contributor to Cecil's , promised to finance his campaign if Cecil's own constituency should reject him as a Liberal candidate. While Lord Robert Cecil continued to plan a "Second Coalition" of the moderate left cooperating with the 37 Liberals on a local level, the entire project was discouraging. In the end ties of bood and tradition kept Lord Robert in the Conservative Party, although not without a feeling of increasing dismay about the negative attitudes expressed by many Tories 38 about the League of Nations and social reform.

^ Ibid., Robert Cecil to Herbert Gladstone, 11 . ^Robert Cecil, All the Way (London, 1949), pp. 174-175. 82

Sir Oswald Mosley in recent years has speculated on Lord Robert's concern for a movement centered around Lord Grey:

Cecil, by himself would have been much more generally acceptable than in the company of Grey. It seemed to me a strange complex that he should desire the shelter of this name, for he was in every respect ten times the man Grey was, and his relatively advanced ideas of social reform together with the considerable international standing acquired by his able and ardent advocacy of the League made a far wider appeal. 39 Mosley suggested that Robert Cecil's most effective ally would have been Lloyd George. Between these two there was an unbridgeable gap based mainly on Lloyd George's lack of "deep moral feeling either in impulse or inhibition." Mosley claimed it was this lack combined with the general incompatibility of temperament which

separated Lloyd George fromnen like Cecil, who might have accom- plxshed much had they worked together. As for Mosley himself, he was then a young war hero with

a brilliant quality for invective. Gradually he drifted away from his association with the Cecils and the Conservative Party, finally standing as an Independent in the 1922 Election. Few of his speeches were concentrated on social or domestic issues but he shared with Robert Cecil, a belief in the need for "Co-Partnership", profit sharing, and the full panoply of social reforms promised by the Coalition, but truncated in the wave of economy of the early 1920's. ^ Mosley found it easier to cut his ties with the

^ S i r Oswald Mosley, My Life (London, 1968), p. 145.

U0Ibid., p. 146.

41Ibid., pp. 90-91, 136. 83

Conservative Party than Robert Cecil and Henry Bentinck but he shared with them the realization of the ineffectiveness of the Conservative left.

Die Hards and Reactionaries The decade between 1911 and 1921 saw a transfer of land unprecedented since the time of the Reformation. Rising land taxes and the declining profitability of farming was leading to the sale of large estates even prior to 1914, but huge increases in direct taxes during the War brought about an avalanche of sales. When the peace did not immediately bring about a return to pre-war conditions many of the old landed families complained 42 bitterly about their desertion by the Coalition. In addition to a greatly enlarged national debt and swollen military expen­ ditures, the social programs of the Coalition would require Government expenditures on an almost wartime level with a contin­ uing level of high taxes. This more than anything else served to enrage the Conservative right. Bonar Law received frequent complaints from businessmen and landed magnates. According to the Duke of Rutland, "nearly every measure introduced by the Government contains provisions which entail new highly paid and 43 numerous staff, and in consequence more taxation and rating."

42 Thompson, English Landed Society, pp. 322-330. 43 Andrew Bonar Law Papers, Beaverbrook Library, Box 100/1/1, Duke of Rutland to Bonar Law, 1 . 8*+ Another element in the growth of the right wing was their fear of nationalization. Even the hint of Government control of the coal mines as recommended by seven members of the Sanky Conmission, raised hackles among the wealthy. Revenues derived from mining investments and mineral rights formed a substantial part of the income of England's elite. To take an extreme case, the Duke of 's income from coal royalties was L82,450 in 1918, but he netted only fc-23,890 of this after payment of mineral and income taxes. Thus it is not surprising that Northumberland was a leading spokesman for the reactionary forces. In a speech delivered before the National Union of Manu­ facturers the Duke called nationalization "a camouflage for those varieties of one and the same gospel which is known at different periods and in different circumstances as Communism, Syndicalism, and Bolshevism." Nationalization was the chief weapon of the

Labour Party which, to the Duke was "not a Party at all, but a collection of groups which differ fundamentally as to policy, but are combined for the sole purpose of destroying the existing 45 society, industry and government." Extreme Die-Hards were more than ready to meet the "direct action threat" of the more militant trades union. In the words of

44 Thompson, English Landed Society, p. 336. 45 Delivered at Birmingham 18 and reprinted as "Nationalization" in the National Review LXXV (June 1920), 639. 85

Northumberland the unions had no legitimate purpose, they were merely "machines organized for fighting Capital." He compared the newly organized general council of the Trades Union Council to the German General Staff. This sinister body "represented all the evils of Prussianism," but was even worse because it lacked "the authority, power and responsibility" of the Prussian system. The issues involved in the continuing wave of strikes were not economic, but revolutionary "however carefully it is hidden." These industrial crises were not isolated events, but "merely engagements in a large relentless war between the forces of disruption and those of law and order." 46 The Duke was only the most vocal spokesman of right wing opinion. Facing a situation in which the reactionaries believed the nation and the Empire were threatened by a world-wide conspiracy, they lashed out at stirrings of nationalism wherever it appeared.

In doing so they readopted an unbending spirit of imperialism more suited to the nineteenth century than to the 1920's. Mild reforms in India were viewed by Northumberland as the insane "forcing of democracy upon a people who have never asked for or desired it and who will only be miserable when they get it..." These movements in India as well as in Ireland, Egypt and at hone were "part of a much greater world-wide Movement which" had "its

46Ibid., 644-645. 86

centre in ” and "was in fact the Revolutionary Government 47 of the World."

Perhaps the most important influence on the growth of the

Die-Hard movement was the Coalition's policy in Ireland. From the

Die-Hards point of view not oily were the negotiations with Hie Sinn Fein a surrender to the worst elements of the "tribal Irishmen" but the entire military campaign had been conducted in an incompetent fashion. According to the National Review there had not been "one intelligent or intelligible effort to tackle the anarchy organized from abroad— there was not unity of command on the Irish front— no soldier was given a free hand, indeed a chance of smashing the terrorists, though the contains any number of capable officers who excell in guerilla warfare." It was suggested that General Dyer who had been responsible for the massacre of Indian demonstrators at Amritsar, India in 1919, might have been a suitable candidate.

In the eyes of the Die-Hards the conciliation of the Irish rebels was an unforgiveable betrayal of traditional Unionist policy.

The National Review warned that in "patriotic constituencies" (meaning rural or upper class constituencies that could be depended upon to return reactionary candidates) it was no longer possible

47Duke of Northumberland, "The Future of Conservatism," The National Review LXXVIII (), 782. 4ft The National Review LXXVIII (), 2. 49 to adopt the "unsavory label" of Coalition candidate. This remark was no idle threat. As early as 1919 independent Conser­ vative candidates were being put up against regular Coalition candidates in by-elections with increasing success. By 1921 the situation was so serious that the Unionist Central Office asked Bonar Law to endorse special letters of support for threatened Coalition Conservatives. Such letters outlining the Government's efforts at economy or in dealing with foreign problems were often insufficient to prevent the election of an anti-waste or Die-Hard candidate. 50 Another factor contributing to the rise of the Conservative right was the large increase in the salaried middle class. From 1.7 million in 1911, this group had increased to over 2.7 million.

According to Bowley and Stamp in ten years the middle class had grown from fifteeen to twenty-two per cent of the employed popula- 51 tion. Many of these were civil servants, clerks and others an fixed incomes who were particularly susceptible to appeals for

See for example, Bonar Law Papers Box 9617 Letter of support to Major Astor in Dover by-election 4 January 1921. Astor lost to an anti-waste candidate. In by-elections between 1919 and 1922 the Coalition Conservatives lost 4 seats to anti-waste, independent Con­ servative and Die-Hard candidates. Only one of these was lost prior to grcwth of strong right wing sentiment in 1921. See F.N.S. Craig, British Parliamentary Election Statistics 1918-1968 (Glasgow, 1968), p. 21. 51 A. L. Bowley and J. Stamp, The National Income (London, 1924), pp. 11-12. 88 economy after a wave of inflation. While not all were Conservative voters, it seemed an ideal group to mobilize as an effective counter to the trades unions. Some of the leading Die-Hard figures, along with the Harmsworth brothers, attempted to appeal to what appeared to be a potent source of reactionary sentiment. To cite one example, Lord Salisbury in the spring of 1921, attempted to gain control of an organization known as the Middle Class Union and merge it with another group called the People’s Union for Economy. Salisbury insisted, however, that the name Middle Class Union be dropped upon amalgamation "as it would be fatal from our point of view to be associated specifically with the Middle Classes." He suggested something like "Citizens 52 Union" in an attempt to broaden the base of the organization.

Salisbury proposed to modify some of the narrow aims of the group in order to make it palatable to a wider audience. Even Salisbury's modifications left definite implications of class conflict. For example, some of the group's aims included support for "the middle interests of moderate labour against exploitation either by profiteers or by Bolsheviks." The creation of "an effective bulwark against the excessive as distinguished from the reasonable demands of labour which merely serve to enlarge the 'vicious circle* and do provide a remedy for the high cost of living." It also called for the organization of the "mass of

^2Cecil of Chelwood Papers Add MSS51085 Lord Salisbury to Lord Robert Cecil, 5 May 1921. 89 tax paying citizens for self-defense in the event [that] the suspension from other than legitimate causes of essential public utility services by transport, food, supply, heating, lighting, etc." To an earlier appeal from his brother that he join or at least cooperate with the objectives of the Middle Class Union, Robert Cecil replied that the aims of the organization probably meant "a resistance to demands of higher wages and the provision of volunteers to break strikes." Lord Robert also called his brother's attention to part of the organization's leaflet entitled "What the Union had Done:" You will see that it had fought strikes in North , in Southampton and in and has prevented a strike of omnibus conductors. It has further resisted a Free Library and represented the middle interest point of view in regard to a number of measures which would have meant further expense including however, a Clergy Tithe Rent Change Act. None of these things are bad in themselves, but they seem to me, I confess, a rather one sided view of the general social and political problems of the day, if the Union is to [be] considered as formulating a common platform for political effort...The M.C.U. wishes to crystallise around the middle interests and I am rather afraid that their propaganda is so drawn as to be chiefly acceptable to the employing classes or capitalists. 54 Lord Salisbury, along with the Hanmsworth's interests, was involved in the organization of another extra Parliamentary pressure

Ibid., Lord Salisbury to Lord Robert Cecil 13 May 1921 (original emphasis).

mi Ibid., Lord Robert Cecil to Lord Salisbury 6 May 1921. 90 group known as the London Municipal Society, earlier in 1921. The purpose of this organization was blatantly anti-democratic: "The reform of municipal franchise in order to secure votes for

the representation of limited liability companies and other incorporated bodies paying rates." Other aims included opposition "to the growth of Socialism to combat the doctrine that there are vast and unlimited resources of wealth upon which to draw for the purpose of public expenditure." ^ This was clearly aimed at those Labour controlled London boroughs like Poplar which granted larger benefits of poor relief and greater public services than those controlled by other parties. Both the Die-Hards and anti­ wasters were anxious to check the resulting rise in local rates by any means possible including the awarding of the franchise to limited liability corporations. While these organizations and other similar groups were often ineffective, they demonstrated the willingness of the Conservatives on the right to foment class conflict if it served their interests. The Die-Hard movement could count upon the support of H. A. Qwynne’s Morning Post and Leopold Maxse's monthly, the National Review. In addition, the Harmsworth Press provided erratic support especially in its "anti-waste" campaign aimed at reducing government expenditures and taxation. Maxse was undoubtedly

^ The Morning Post, 10 February 1921. 91 one of the most fanatical of the leading figures of the Conservative right wing. Maxse's father, Admiral Frederick A. Maxse, had pur­

chased the National Review as an outlet for his son's talents when ill health prevented the younger Maxse from following his father in a military career. Maxse developed a reputation as something of 56 a crank and an eccentric well before 1914. The War merely rein­ forced his already intensely Germanophobic, imperialistic and chauvinistic tendencies to which he added an intense hatred of the Coalition. So biting were his attacks on the Government that Maxse virtually cut himself off from anyone of influence in the Conservative center. Family ties, however, kept Maxse from 57 attacking Lord Robert Cecil. Instead of being classified with Coalition "opportunists" and "duds" or the opposition Bolsheviks, Lord Robert was merely chided by Maxse for "most unwittingly" playing "Mr. Lloyd George's game by making himself impossible for the very position he should have filled." This position was, of course, "leader of the Constitutional Party." 58

56 See H. W. Wilson, "L. J. Maxse as Editor" and Lord Newton, "L. J. Maxse as I Knew Him" in National Review C (February 1933), 175-187. 57 Maxse's sister, Violet, was married to the youngest of the four sons of the Prime Minister, (third Marquis of Salisbury), Lord Edward Cecil. After his death in 1918 she later married Lord Milner. CO The National Review LXXV () 167-168. 92

It is not clear if Maxse believed that Lord Robert Cecil would make an able Party leader or whether he was merely keeping

in the good graces of the Cecils. In any case this special treat­ ment was reserved only for family connections. He labeled the

Coalition a "Lloyd George Dictatorship" or the "Old Gang"

including in his attacks, Balfour, Bonar Law, Austen Chamberlain, 59 Curzon and Birkenhead. Earlier than most Die-Hards Maxse per­ ceived that the Coalition might become permanent. If a basic

reorganization of British politics along the lines of Lloyd George's proposed Centre Party should take place the Conservative right would be reduced to an insignificant splinter group without influence on 60 the political scene. Consequently, Maxse used the National Review as a rallying point for all the disaffected elements of the right in order to bring about the downfall of the Coalition. This unbending opposition can be observed in a letter Maxse sent out to prospective subscribers:

...If you regard the Coalition Government or any alter­ native Government that might be formed by the present combination of Radical or Labour parties, as capable of managing our affairs-there are plenty of other organs, daily, weekly and monthly to tell you what you wish to hear.

But if you are thoroughly "fed up" with our present day Politicians and believe that as great a country as Great Britain showed herself to be during the Great War,

See The National Review LXXII (February 1919), 692; LXXII (), 7M-3. 60 See for example The National Review LXXII (), 551-552. 93 deserves something better than what we have now got-you would find much to interest you in every issue of the National Review...It is whole heartedly devoted to the maintenance ofBritish interests wherever they may be, using the word in its large and enlightened sense. 61

Maxse's venom was directed at all the traditional targets of the British right with a few personal idiosyncrasies thrown in for good measure. The Government itself was termed a "corrupt and consciousless Cabal", with Lloyd George, as the "self consti- tuded Despot of Dcwning Street" who was permitting the sinister influence of the "International Jew" to direct foreign and domestic policies. The Executive of the Miner's Union was "directed from abroad by Bolsheviks and the Red International" while the Unionist leadership prefered "office to Honor and Honesty" in agreeing to 62 negotiate ("surrender") to the "Irish murder gang" (Sinn Fein). With such obvious topics for vituperation it is not surprising that Maxse found little time to deal with purely eoonanic or social questions. Indeed from reading the National Review one might question the existence of any social problems outside of the "Red Peril" of trade unions and the Labour Party as described by the EXike of Northumberland and others. The tone of the magazine's articles was consistently and bitterly anti-labor

6'*'Papers of Leopold James Maxse West Sussex Record Office Letter sent to solicit subscribers, 2 February 1921. ^ S e e the National Review DXXIV (), 5-6; D O V (), 577-578; LXXVII (), 468-469; LXXVII (August 1921), 750; LXXVIII (September 1921), 2; LXXIX (), 25-26. 94 reflecting both a fear and a basic animosity toward a militant working class. In the mind of one of Maxse’s contributors, the Miners strike of 1921 was not a strike at all "but simply an attempt at revolution on Russian methods." The problem of unemployment could be solved by harsh measures, reducing wages, at least twenty per cent on the railways for instance, or forcing all labor disputes under binding arbitration thereby treating any strikers "as conspirators against the State". Weakening of the unions would be followed by abolition of both the Labour Ministry and Labour Exchanges which would soon eliminate the professional loafers to whom these institutions "were a godsend." ^ Another complaint echoed throughout the right-wing press was the refusal of young working class girls to take up their traditional occupation as indoor servants. These uppity girls, one National Review writer reported, would never take up this much needed occupation as long as they could draw 12s a week on the dole. After all "it accustoms her to living at other folk's expense, and thus fosters any leaning she may have toward a parasite's life rather than a worker's." These girls were being raised with "false notions of gentility." Instead they should be trained in school to accept their lot and fit themselves to be

63 Tynside, "Manufacture of the 'Work Shy'", National Review LXXIX (), 756-762. 95 good domestic workers. If the individual girl does not like this "she has at any rate been made to realize it is work that she must do, whether she likes it or not." These and similar articles reflected a spirit of class animosity that the Die-Hards were willing to promote. Going beyond the mere editorial support of the Die-Hard movement, H. A. Gwynne's Morning Post organized a campaign in the late spring of 1922 to solicit contributions from its readers. Entitled an "Appeal to the National Honor", the campaign was directed "at the contemptible and corrupt system" of Coalition Government. The Morning Post claimed that the Die-Hards sentiment represented some seventy-five per cent of the electorate in Con­ servative constituencies. In order to mobilize this dissident strength the Die-Hards would broaden the already existing policy of running candidates against Coalition candidates in by-elections, 65 extending it to the anticipated fall general election. Contri­ butions poured in from retired Army officers, civil servants, landowners and Irish refugees, so that the goal of H20,000 assigned in early June was met by late August. 66 The campaign itself was precipitated by an open split of the Die-Hards from the party leadership. Dissident right-wing

64Ibid., LXXVII Edith Sellers, "Manufacture of Girl- Loafers", 128-132. 65The Morning Post, 16, 18, 21, 23 June 1922.

66Ibid., 1 . 96

M.P.s and peers first issued a manifesto on March 7, 1922 which successfully combined in one statement all their grievances against the Coalition. A preamble stated that "the dangerthreatening the maintenance of law and social order" made it necessary to reaffirm

"traditional Conservative and Unionist principles." These turned out to be a summary of the reactionary Die-Hard ideology. From a social and economic point of view most significant was the call for an end to "excessive taxation and meddlesome regulations" joined with a demand for strict economy. The full implication of this "principle" was elaborated in a further statement: "Hasty and grandiose schemes of so-called reconstruction are always objectionable. They are impossible under present conditions and 67 can only lead to national bankruptcy." A more generalized manifesto to unify all factions was issued on 1 June under the name of the Conservative and Unionist movement. It condemned the Coalition, as usual, extended to it the blame for "unemployment on an unprecedented scale." It called upon all loyal Party members to rally behind the "true Conservative and Unionist principles" but these were left so vague as to make the statement meaningless. 68

^ Gleanings and Memoranda LV (April 1922), *+01. CO The Morning Post 2 June 1922. 97

Considering the distaste, even hate much of the Conservative

right had demonstrated for the Coalition, it may be asked why the Die-Hards were so long in organizing. In part the answer can be traced to lack of leadership. In the Lords the Die-Hards had an able and persistent spokesman in Lord Salisbury, but in Commons the block of some thirty to fifty members lacked an effective spokesman. Colonel John Grettan was the most able of the group but he was not a great parliamentary figure. Joynson-Hicks, Rupert Gwynne and arch Die-Hard, Sir Frederick Banbury were no match for the leadership of Austen Chamberlain in a major debate. 69 Up to the time of the passage of the Irish Treaty many expected Bonar Law to come out of his retirement and either lead the Party out of the Coalition, or join the Die-Hards and split it, but his support of 70 Coalition policy quashed any hopes the Die-Hards might have had. As late as , the Morning Post almost in desperation, appealed to the Die-Hards to select a leader, "it matters not greatly on whose shoulders the mantle of authority is laid if he be one who 71 has proved strong and true". With no suitable candidate available in the Commons, Salisbury was selected as leader. This choice did not satisfy everyone. The Duke of Buccleuch cofimented in a letter to Maxse:

69 A. G. Boscawen, Memories, p. 226. 70 Blake, Unknown Prime Minister, pp. 431-435. 7lThe Morning Post, 13 May 1922. 98

I see Salisbury has been elected leader of the Conser­ vatives [sic] but I am afraid he will not do much good until we can get some good men who can stir public opinion...I do not think any of the Cecil's have the remotest idea of organization, so I hope some good practical man will be put in charge. Even in the House of Lords Salisbury could do a deal more if he had even a tolerably efficient Whip. 72 It was not only a question of Salisbury's organizational ability; his political views also served to divide the Die-Hards. Salisbury was a confirmed free trader while many of the Die-Hards led by Gretton were moving toward the reintroduction of tariff reform as a political program. Few among them had any real knowledge of social and economic questions except for Gretton and he could not approach Salisbury's prestige in the Party. Pre­ occupied with the Irish question most of the Die-Hard members were unprepared for the shift in political emphasis to domestic 73 problems. Without a major figure in the Party to act as leader, the

Die-Hards could not hope to bring down the Coalition. They could only weaken or split the Party. Beyond a general attack on the character and morality of the Lloyd George Government, the Conservative right exercised a negative influence on social and economic policy. Their virtual neglect of major problems such as unemployment and industrial strife except in terms of repression and retrenchment, gave greater

72 Maxse Papers, Duke of Buccluech to L. Maxse, 15 July 1922. ^3Hewins, Apologia of an Imperialist I, pp. 248, 253. 99 impetus to the rightward drift of the Coalition social policies.

Eventually the reactionaries succeeded in forcing the Coalition to drop its much heralded plans for social reform and reconstruc­ tion as announced in the election manifesto of 1918. As a group, the Die-Hards were only the most outspoken and independent element of a large reactionary faction of the Conservative Party both in

Parliament and in the country.

The Coalitionists The vast center of the Conservative majority represented almost as many diverse points of view as did the fringes. In this group one must include, in addition to the Government itself, all those who did not challenge the general lines of Coalition policy. Initially the Coalition provided the Conservative Party with an opportunity to grapple with major social problems on a wide scale. Those members who were fortunate enough to serve in the Government gained invaluable experience in dealing with the leading domestic problems in a pragmatic, non-ideological manner.

In the Cabinet there was little evidence of anything like a "party line". Differences that did appear were usually based on personality conflicts or longstanding departmental feuds rather than on Party friction. Most of the key ministries dealing directly with the formulation of social policy were in the hands of Liberals: H.A.L. Fisher at the Board of Education, Addison and later Sir Alfred Mond at the Ministry of Health, at the Home Office, Robert Munro, Secretary for , and

after , J. J. Macnamara at the Ministry of Labour.

Consequently, Conservatives were left with little opportunity to initiate social programs or legislation. There were only a few exceptions to this rule. Sir Arthur Griffith Boscawen, as Minister of Agriculture and Fisheries, exercised a peripheral role in the formulation of unemployment policy. Moire important were two junior ministers, Sir A. Montague Barlow under Macnamara at the Ministry of Labour, and Leopold Amery, at the Colonial Office and the Admiralty. Both were influential in presenting distinctive approaches to social problems, especially unemployment. Montague Barlow served his chief as a virtual alter ego. After the Coalition's fall, Macnamara was replaced by Montague Barlow as Minister of Labour but this did not alter their cordial relationship.

They continued to make favorable references to one another in the 74 Commons despite party differences. One of Montague Barlow's more important achievements was the inauguration of a program of public works projects undertaken by local authorities under 75 Treasury subsidies to relieve unemployment. Amery, continuing in the imperialist tradition, directed his attention toward

^ F o r example, see H of C Deb. XLXIX (30 November 1922),965. 7^C.U. (Unemployment Committee) 2 (16 ), "Memorandum by Sir Montague Barlow", Cab. 27/115. 101

imperial development and colonization as a means of alleviating 76 unemployment. Among those Conservatives holding positions less directly concerned with social questions little can be said of the taciturn

Stanley Baldwin, who served as President of the Board of Trade after . He was usually ready to accept the consensus of the Cabinet on a particular issue, but seldom offered an opinion of his own either during a Cabinet meeting or in the form of a memorandum. On the rare occasion when Baldwin did commit himself on a social issue, his views seemed to reflect an aristocratic sense of responsibility, rather than those of the son of an ironmaster. In one instance, when dealing with the case of two proposed privately controlled water power projects he insisted that the bills authorizing them must contain provi­

sions for State royalties "and a revision of the undertaking 77 to the State after a period of years." As Chancellor of the Exchequer, Sir Robert Horne (April 1921-) and Austen Chamberlain (January 1919-April 1921) exercised a rather excessive zeal for placing restraints on the major social programs of the Coalition. No doubt, they reflected the deep seated resistance of Treasury officials to further

76 See especially T.D. (Coiunittee on Trade Policy) 45 (6 October 1922), "A Programme of Empire Development by Mr. L. S. Amery", Cab. 27/179. 77C.P. 2820 (9 April 1921), "Memorandum on Lochhaber Water Power Bill and the Grampian Electricity Supply Bill," Cab. 24/122. expenditures in a time of financial stringency. Moreover, it is one of the duties of the Chancellor, regardless of party, to counsel fiscal restraint, but there is no question that they were more than eager to carry out a policy of "fiscal responsibility". Chamberlain, in particular, created a sense of panic with his dire predictions of impending financial disaster. For example, in , he told the Cabinet that the predicted deficit for the year would be nearer b400 million than the tr250 million upon which he had reckoned. "Furthermore, with the proposals now before the Cabinet costing KL2 million and for a full year between L20 million and i»29 million...we should be faced in 1920-1921 with a deficit of t20 million." 78 By in another memorandum Chamberlain anticipated a deficit of t95 million. To meet the situation he asked that all wartime agencies be closed, training schemes ended and all grants for education, health and insurance 79 be limited to 1919 levels. Only two weeks later Chamberlain had to report that revenues would be sufficient and that the on budget would be balanced for 1919-1920. Sir Robert Home was perhaps less culpable of this type of alarmism since by April 1921 when he entered the Treasury the Government was already in full retreat in the face of the fully

78W.C. 600 (26 July 1919), Cab. 23/11 78Finance Committee (12 October 1919), "Note on the National Balance Sheet", Cab. 27/72. 80F.C. (29 October 1919), CAb. 27/72. 103

aroused forces of retrenchment. He merely insisted that the program

of economies adopted by the Cabinet and the Geddes Comnission be

carried out. Home's position on social problems is particularly difficult to discern. As Minister of Labour he seemed an acute and even sensitive interpreter of the trade union position. Horne

explained that the labor discontent was not a product of the doc­ trines of revolutionary intellectuals, but instead grew out of widespread suspicion of the owners, the wealthy and the profit system itself. There was a sourness of mind among the workers reflecting the disillusionment and disappointment with the post war world after having labored under such high ideals during the War. He warned that unless there was a limitation placed on profiteering and free and frank discussions between labor and management took place such as envisaged in the Whitley Plan, there 81 could be no real solution to the problem of industrial unrest. Home's fair mindedness was also reflected in his dealings with 82 trade union leaders. Other evidence can be produced, however, to shew that H o m e was far from being a spokesman for the working class. In a letter to Leo Maxse, Sir Philip Lloyd Greane suggested that Home opposed any renewal of the emergency unemployment donation. Lloyd Greane also intimated to Maxse that Home could be relied

81G.T. 8388 (22 October 1919), CAb. 24/90. OO Middlemas (ed.), Whitehall Diary I, p. 82. 104 on to oppose the miner’s demands for any pay increase. 83 In another instance, during the coal strike of 1921, Home became furious at the miners for abandoning the pumps and allowing the mines to be flooded. In Home's view this was an unforgivable attack on property and the miners should suffer for the evils 84 they brought upon themselves. In addition, Deputy Cabinet Secretary, Thomas Jones reported in that Home exaggerated "the dangerof social upheaval" to his colleagues in 85 the Cabinet. As Party leaders, Chamberlain and Bonar Law were extremely loyal supporters of the Coalition and its social policy, but they, no less than most of the Cabinet, were ready to cut back or abandon the ambitious plans for reconstruction. Bonar Law's loyalty was rooted at least in part, in a fear that without a continued Coalition Lloyd George would split the Tories or perhaps even gain the Party leadership. 86 Thus when the Coalition Liberals rejected Lloyd George's overtures for the formation of a "Centre Party" in 1920, Bonar Law was "not sorry at the turn events have taken". He told Balfour that as far as he was concerned fusion 87 was "more important from L-G's point of view than from ours."

83 Maxse Papers, P. Lloyd Greane to Maxse 18 January 1919. ®V.U. Meeting 27 (13 September 1921), Cab. 27/114. ^Middlemas (ed.), Whitehall Diary I, p. 98. 86 Balfour Papers, Add MSS 49693 Bonar Law to Balfour, 5 . 87 Bonar Law Papers Box 96/4 Bonar Law to Balfour, 24 March 1920. 105 Despite his private misgivings Bonar Law vigorously de­ fended the Coalition and its policies against an ever increasing flow of Unionist criticism. As early as October 1919, Bonar Law drafted a letter to be sent out by the Party chairman, Sir George Younger, to those who criticized Unionist acceptance of Coalition policies. Bonar Law began by admitting frankly that there were difficulties in the Coalition; however, these were "not confined to the Unionist Party but are common to all Parties to the Coalition and I would remind those who see our difficulties that the other Parties also have their points of friction." He held that "the condition of the Nation after the War required the unity of all Parties to solve the great problems that the War bequeathed to us." Taking the offensive, the Party leader gave a long list of accomplishments of the Coalition. Obviously, the strongest criticism had been directed at social policy since he went to great length to defend these decisions: The Ministry of Health Act makes one Minister responsible for the Nation's Health. It sweeps away the maze of conflicting authorities formerly existing and I trust that by it we shall be a country rich in the asset of healthy men, women and children without which no State can be in a satisfactory condition. Health requires good houses: and our Housing Act is intended not alone to meet the present shortage which is a temporary condition, but to remove the slums and to give the nation the dwellings in pleasant surroundings which it deserves. Are we to be criticised by our supporters in the Party for our action in pressing forward a solution of these two problems? Let us not forget the first housing and health reformer was Lord Beacansfield. 106 In an earlier draft of the letter the Party leader welcomed construc­

tive criticism since it was "invaluable in helping the Government to arrive at a solution." He added to this a note of annoyance: "but I take exception to unmerited detraction of the Government's labours..." In the final letter this was deleted in favor of softer language merely announcing it was the: duty of the Government and of our Party to carry into effect as rapidly as possible the themes in the programme announced at the time of the Election which had not yet been dealt with such as Reform of the Second Chamber and to deal, as in the case of the recent strike with any emergencies which must arise. 88 Bonar Law continued to defend the Coalition against mounting criticism until his resignation for reasons of health in March 1921. Austen Chamberlain proved even more loyal to Lloyd George than

Bonar Law. He took the position that unless the Coalition were maintained the Socialists would cone to power, an eventwhich implied all sorts of dire consequences for the nation. Consequently, Chamberlain was prepared to defend the Coalition against the most vehement Tory criticism. 89 So great was his loyalty to Lloyd George that he was ready to reject the possibility of his own premiership rather than desert his chief. Outside the Party leadership and the Government itself, the rank and file of the huge Conservative majority could not be

88 Bonar Law Papers Box 96/1 Bonar Law to Younger 15 October 1919, "Letter to be sent out by Younger to meet queries about future Unionist policy" marked "private and confidential." 89 Sir Charles Petrie, The Life and Letters of the Right Hon. Sir Austen Chamberlain (London, 1940), II, pp. 147-148. 107 depended upon to support Coalition social policy much beyond the first euphoric years of "reconstruction." As Griffith-Boscawen observed, "so far as the House of Commons went we got on well enough, the Coupon Parliament would in fact pass anything which the Government proposed and was equally ready to repeal the same measures two or three years later." 90 Spearheading the drive for progressive legislation was a small reform or ginger group composed of young Conservative M.P.s, some of whom had served on thepre-War Unionist Social Reform Conmittee. Known simply as "the Group" it included Walter

Elliot, Ormsby-Gore, Earl Winterton, Sir Samuel Hoare, J. W. Hills, and Edward Wood (subsequently Lord Halifax), among its original members. In all there were perhaps two dozen members. Their purpose was the promotion of the Government's program of social 91 reform, while still maintaining an independent position. In 1919, at least, they were able to counter the reactionaries effectively. After the first year they ceased to be an effective body and only occasionally spoke out against cuts in vital social schemes. Well in the background, but making a name for himself on Parliamentary Committees was Neville Chamberlain. Although not a member of "the Group", he developed with them similar views on

90 Griffith-Boscawan, Memories, p. 216.

^Winterton, Orders of the Day, pp. 91-92. 108 social issues. 92 Neville Chamberlain's most important work was as chairman of the Unhealthy Areas Conmittee, set up by the Ministry of Health. In this work he carried on in the tradition of his father, recommending that cleared slums be replaced by housing available for purchase by owner-occupiers. Chamberlain also recognized that slums would not be removed overnight. Thus he recommended that local authorities be empowered to buy up slum properties and repair them to satisfy the immediate needs for 93 healthy housing. Another outspoken proponent of reform was Lady Astor, the first woman to enter Parliament. Although she mainly concerned herself with women's rights and the drink question, she consistently upheld legislation for working class housing and slum clearance. Unfortunately, her patronizing manner often directed to labour Party members made her less effective as an ally of social reform. 94

This snail progressive wing of the Party's left and center was not strong enough to counteract the forces of retrenchment and reaction. Beginning in 1920, cries from the Northcliffe press and from "reactionaries" such as Sir Frederick Banbury calling for an end to excessive taxation and expenditure, touched a sensitive nerve among Conservative supporters not only in Parliament but in

92 William R. Rock, Neville Chamberlain (New York, 1969), pp. 56-57; Ian MacLeod, Neville-Chamberlain (London, 1961), pp. 80-82. 93 Neville Chamberlain, "Problems of the Day: Slum Areas and Their Treatment," Home and Politics no. 10 n.s. (February 1922),5-6. 94 See H of C Deb. CLI (13 March 1922), 1852-1854. the country as well. 95 There is no doubt that much of "tire force behind these demands reflected an increased influence of business in the Party. 96 A merging of Die-Hard and business influences can be observed in the Unionist War Conmittee and its successor, the Unionist Business Committee. In late October 1918, with a prospect of an election in the air, the Conmittee adopted a series of resolutions calling for a "National Economic Policy." This Policy they desired included an expansion of the wartime McKenna tariffs as well as the establishment of a system of Imperial preferences.

Although there was no direct reference 1d social policy, a request for Imperial and allied assistance "to lighten the financial burden inposed by the War" was a veiled warning that the continuance of wartime taxes into peace-time would not long be tolerated by the business interests. ^ Continuing inflation, industrial unrest and high taxes caused increasing disillusionment among business interests with Coalition premises of a "new heaven and a new ." Late in 1920 this same group of backbenchers now styled, the Unionist Business Conmittee, submitted a series of wide ranging proposals

95 For examples of anti-waste . leaders see Daily . Mail 14 , 27 and for Banbury H of C Deb. CXLI (25 April 1921), 103. ^ S e e p. 30 above. ^Bonar Law Papers Box 84/3 Salisbury to Law 2 November 1918, Enclosures a copy of resolutions passed by Meeting of Unionist War Conmittee, 30 October 1918. 110 on economic and social policy to Bonar Law. Central to these memoranda was the fear that the continued high level of Government expenditures with their corresponding high taxes were leading to a business depression. Any decline in the volume of business and industry would further reduce the national revenue, thus increasing the possibility of a large budget deficit, an unthinkable proposi­ tion in terms of 1920 economics. To forestall possible disaster the Conmittee recommended widespread cuts in Government spending, but these were not to extend to the armed services since the Conmittee held the view that "whatever expenditure is necessary for National safety is at least as obligatory and must be faced as unreducible charge, equally with the interest on the National Debt." 98 Drastic reductions were proposed in all social programs including education, housing and unemployment. They even questioned the need for war pensions and suggested stiff er rules for applicants. The Conmittee stated flatly: No Government is competent, or can be competent, to deal efficiently with industrial conditions. The Government necessarily lacks knowledge and training, and the politicians in control are moved by conflicting considerations in which the political aspect of every question ultimately predominates. In contrast to the hands-off attitude of the Government in industrial matters the Committee recommended active participation

98Bonar Law Papers Box 95/5 Col. John Gretton to Bonar Law 2 . Ill of the State in matters of trade policy. Imperial trade preference, and at least a partial tariff over key industries of national importance such as dyes, optical glass and chemicals were requested. 99 Such thinking reflects a renewed impetus of the tariff reform move­ ment which had such an adverse influence on the Unionist Party prior to 191*+. When this trend is coupled with the growing demands for economy from the middle class and the Die-Hards it is not difficult to explain the rightward thrust of the Conservatives after 1919. It was impossible for the Coalition Government to ignore the growth of Tory disenchantment with the policies of reconstruction and reform. Despite the efforts of a small number of social reformers the Conservative Party, as it was then constituted, proved unready and unwilling to be transformed into a vehicle for social reform.

99Ibid., "Memorandum of the Uhionist Business Committee" 5 November 1920, marked "Confidential". CHAPTER III

THE LLOYD GEORGE PROGRAM, NOVEMBER, 1918-MAY, 1921: PROMISE

In the wake of a general and costly war few governments have promised such a sweeping program of reform as did the Lloyd

George Coalition in the election of 1918. Yet in the atmosphere of euphoria surrounding the Armistice, no great technical or political difficulties seemed to bar the way. Only a few voices warned of the dangers of incompetent management or bureaucratic dealy. T. J. Macnamara (then Parliamentary Secretary to the Admiralty) wrote to Lloyd George in December before the results of the "Coupon Election" had been announced, "the people are

ardent to see social problems tackled with a determination, a

largeness of grasp and imagination. If this were not done the Coalition's life will be short not merry and you will be faced with another Election at a very horrible time for the country."

Macnamara warned that the pledges made to the service men had

to be kept: The more I listened to these men's questions the more I was convinced that Delays, Departmental hanky panky Giving with one hand-and taking with the other have a lot

112 113

to do with their utterly irreconciliable attitude. You have got to be prompt to see that these practices are removed or this agitation will be serious. 1 In the wake of the electoral landslide this sage advice was forgotten. With only a small ineffective opposition, the Coalition had little fear of being called to account for its failure to fulfill campaign pledges. When the optimism of early 1919 quickly faded, only the threat of widespread working class discontent kept the Government from abandoning its coirmit- ment to social reform. Later as this threat diminished a sense of disillusionment and reaction made the entire program seem hopelessly overambitious.

Housing Heading the list of Coalition reforms was a program of state subsidized housing for working class families. It was a bold experiment - virtually the first of its kind to be inaugurated by a government anywhere. A shortage of housing already had existed before the War, but wartime conditions had added enormously to the shortage. Reconstruction planners led by Addison and Lord Salisbury had recommended a program of some 300,000 houses backed by the power of state compulsion if local authorities failed to take action. A similar provision had been included in the Boscawen

^David Lloyd George Papers Beaverbrook Library F/36/1/10 Macnamara to Lloyd George, 15 (original emphasis). 114 Housing Bill of 1912 as we have already seen. Nevertheless, many Tory reactionaries found any type of compulsion anathema.

In , two right wing Conservative ministers, Hayes Fisher and Walter Long (then Colonial Secretary) attempted to push a bill which omnitted any provision for the compulsory implementation 2 of housing construction. Addison responded by asserting that if some 300,000 working class houses were to be built immediately after the War it "must be made clear that where the Local Authority or County Council is required to prepare adequate schemes, the State will act in default and impose a rate upon the authority 3 in the event of default." Despite initial reverses Addison's view was eventually incorporated into the Government's Housing Bill. More important than the question of compulsion was that of finance. Since the local authorities could not expect to break even on their investment, it was necessary to provide a

State subsidy to cover all or a part of the local authority's loss. The size, and method of computing this subsidy was usually the center of controversy in all Government housing schemes between the Wars. With the aid of the Second Reconstruction

Conmittee, Addison had devised a system of subsidies that allowed

o GT5231 (26 July 1918) Memorandum on Housing by Long and Fisher, Cab. 24/59; GT5314 (2 ) Memorandum by Hayes Fisher regarding GT5282, Cab. 54/60. ^GT 5282 (1 August 1918) "Memorandum on Working Class Housing after the War" by Addison, Cab. 24/59. 115 for postwar inflation and provided incentives for economies. 4

Hayes Fisher and the inflexible Local Government Board would have none of it. Instead, they submitted a circular to the local authorities in promising the state would pay

75 per cent of cost or 100 per cent in the case of poorer authorities. In cases where the cost of housing forced an increase in local rates above a penny in the pound, an 5 additional grant could be made up to perhaps 100 per cent. The circular was a failure since only 225 of seme 1800 local authorities agreed to its terms. The willing support of the local authorities was badly needed if the housing program was to succeed, since the building societies and private builders were considered capable of only a marginal role at best. Led by the Association of Municipal Corporations, the local authorities lobbied for more generous terms. They demanded that all losses in excess of a penny in the pound be absorbed by the Treasury. Although denounced by Hayes Fisher and Addison alike as removing the incentive to economy on the part of the local authorities the scheme was eventually adopted by the C Government.

k Johnson, Land Fit for Heroes, pp. 60-65, 90-91. 5WC 364 (12 March 1918), Cab. 23/5. 6GT 5231 (26 July 1918), Cab. 24/59; GT 5282 (1 August 1918), Cab. 24/59. 116 Sir Auckland Geddes, the younger of the two Geddes brothers and a Conservative businessman, who had replaced the incompetent Hayes Fisher in November 1918, reported to his colleagues that the Association of Municipal Corporations had adamantly stuck to their demand that their losses be limited to "the produce of a penny rate." If this were not conceded, Geddes argued that even the most progressive urban authorities would not consent to the Government's housing program. Conse­ quently, he recommended that the Exchequer subsidize everything above the penny rate. This became the most controversial feature of the housing program and in Conservative mythology Addison was to blame for a provision really initiated by

Auckland Geddes. Geddes1 proposal was received by the Cabinet in March

1919 without a dissent. The probable cost was some L20 million to L40 million a year while the total cost of the entire Coalition reform program was put at L71 million. Lloyd George remarked that "even if it cost LI00 million, what was that compared with the stability of the State?" Even Austen Chamberlain who was the Cabinet's foremost advocate of economy heartily approved of the program and suggested improvements in the

^GT 6497 (17 December 1918) "Housing of the Working Class," Memorandum by A. C. Geddes, Cab. 24/71 117 provisions for rural housing. 8 A similar situation prevailed in the Commons. During the second reading of the Housing Bill the reactionaries remained silent. Only Josiah Wedgewood, a Liberal in transit to the Labour

Party spoke out for free trade and private enterprise. E. G.

Pretyman, a Conservative right winger, attacked Wedgewood's con­ tention that private enterprise could solve the housing problem: "at the present moment private enterprise is dead as far as building houses for the working classes is concerned." Repre­ senting "the Group", Ormsby-Gore asserted, "the housing condi­ tions have in many districts become intolerable," they repre­ sented a "legitimate cause of discontent among the people." He expressed no fear of Dr. Addison's powers of coercion; indeed he wanted to see them extended particularly in the field of town . . 9 planning. The Bill passed without a division. The press in general was very sympathetic, leaving the Saturday Review to bewail provisions for baths in the new working class houses. It demanded to knew why the working class could not use the "palatial bathing establishment" already provided at the ratepayer's expense rather than add the cost of baths to

8WC 539 (3 ); WC 541 (4 March 1919), Cab. 23/9 CT 6556 (26 December 1918) "Memorandum on Housing Schemes" by A. Chamberlain Cab. 24/172. 9H of C Deb. CXIV (7 April 1919), 1767-1769, 1772-1773, 1798-1801. 118 already expensive houses. A leader in the Liberal Nation was more to the point. It noted that despite the Housing Bill "hardly one local authority had begun to build and no real preparation had been made to make building possible." ^

While the criticism was somewhat unfair it went to the crux of the matter: proper preparations had not been made to secure the materials with a system of priorities so that housing needs would not be neglected for commercial building. Ironically it was another Geddes brother, , in charge of demobili- zation who killed this plan. 12 Certainly the Ministry of Health deserves some criticism for not exercising broad administrative control over the local authorities by establishing some sort of closer control over extravagant building practices and by requiring adherence to a definite timetable for construction. 13 There was a great deal of impatience with the progress of the scheme, most of it appearing in Conservative publications. By the end of 1919 J. St. Loe Strachey's Spectator representing moderate Conservative opinion asserted that "it would be difficult to imagine anything more unsatisfactory than the Government's new

10The Saturday Review CXXVII (31 (fay 1919), 519.

“ a * Nation XXV (12 April 1919), 35. ■^Christopher Addison, Politics From Within, 1911-1918 (London, 192*1) II, p. 219. 13 Marian Bowley, Housing and the State 1919-1944 (London, 1945), p. 21 119

Housing Scheme." As for a proposed amendment to the existing act allowing private builders to participate this merely "showed with an intensity positively appalling the sterility and confusion of mind from which the Government are suffering and exhibited the total inability to produce either houses or even workable schemes 14 for the construction of houses." This unrealistic sense of impatience was a major source of criticism not only of the housing scheme but of the entire Coalition program of reforms. The criticism had the salutary result of speeding up bureaucratic machinery and hastening construction. For example, the Ministry of Health approved the 's program of some 10,000 houses but it was made clear "that there should be no doubt as to the prac­ ticality of the London County Council providing a considerably larger number of houses than that which they at present contemplate.""^

Exhortations and pressure brought to bear on the local authorities were ultimately successful. At the end of March 1920, only eight months after the Bill had received the royal assent, the Ministry of Healthhad approved plans for 161,837 houses. By the end of 1921 some 17,597 houses had been completed, a much better start than the 16 Conservative Chamberlain porgram of 1923.

"^The Spectator CXXIII (13 ), 800. 15 Housing and Local Government, hereafter HLG, 48129 Letter of Ministry of Health to Clerk of LCC 18 .

1C Bowley, Housing and the State, p. 24; Ministry of Health Annual Report 1919/20, II, p. 14. 120

Addison's scheme was not a failure. In fact it was

beginning to provide the badly needed working class housing, but

its cost to the Treasury was skyrocketing. The program became the victim of the inflationary postwar building boom and its accompanying shortages of skilled workers and materials. Efforts by the Government to initiate a system of ’dilution", that is, adding partly trained construction workers to the existing force, met with continued resistance despite protracted negotiations. The unions were given generous terms including a guaranteed work week and a Government contribution to their unions' insurance fund but they refused. Certainly the construction unions were obstinate and shortsighted in their position, but the refusal of the Government to coirmit itself to a pledge against unemployment if these additional men were added made it impossible 17 for the unions to agree. A more sympathetic view of the union's position was given

by Sir Alfred Mend, First Conmissioner of Works, a prominent industrialist and a Liberal who threatened to resign if the Government proceeded with the plan of dilution in spite of labor opposition. Mond wrote Lloyd George that it was:

^Conference of Ministers 30 (30 April 1920), Cab. 23/27; Conference of Ministers 56 (21 October 1920); 70 (15 December 1920); 72 (18 December 1920); 77 (25 January 1921), Cab. 23/38; CP 2396 (31 December 1920) "Correspondence with the National Federation of Building Trade Operatives," Cab. 24/117. 121 unreasonable to expect the Building Trades Unions to accept such a great dilution of their members and to assist in training ex-Service men when no endeavour is made by the Government to meet their difficulties regarding future unemployment which may be intensified by such action. To carry out these building schemes on the scale required to train 50,000 ex-Service men without the cordial help of the trade unions, would be, in my opinion and in the opinion of my advisers, so costly, so difficult, and so likely to result in failure as to make its trial a more than doubtful venture...the dislocation which would be likely to result either by strikes or by the general hostility of the building operatives...would far outweigh the advantages gained in respect of finding employment for ex-Service men or training them. The Prime Minister ^reed and Mond's resignation was unnecessary but the union's position came under constant attack by all the Tory forces wishing to discredit the trade . 18 Another troubling feature of the housing problem stemmed from runaway inflation. Professor Johnson has pointed out that the Government was caught in the horns of a dilemma. Either it could continue inflation thereby guaranteeing full employment but at the same time increasing the total cost and criticism of the housing program, or it could allow deflation and bring about widespread unemployment andvith it the threat of mass working class unrest. The Coalition held back the demands for deflation but in the spring of 1920 the bank rate was raised to seven per cent. 19

I Q Lloyd George Papers F/37/1/17 Sir Alfred Mond to Lloyd George 8 December 1920; Ibid., F/37/1/18 Mond to Lloyd George 15 December 1920. 19Johnson, Land Fit for Heroes, pp. 495-497. 122

Meanwhile, wages in the building industry had risen rapidly. In January 1919, laborers’ wages were already 107 per cent over the prewar level but by the fall of 1920, at their peak, they were 203 per cent above 1914. Rates for skilled workers did not rise quite so rapidly but bricklayers’ wages peaked at 137 per cent of prewar rates. Decreased productivity and the length of the work week must also be taken in account when considering the effect of inflation on the housing program. Furthermore, increases in wages were matched and even surpassed by corresponding rises in building materials and expenses caused by transport delays and shortages of skilled labor. 20 These inflationary trends brought about demands for cheaper methods of construction. Some of this criticism did bring about some positive counter-proposals. J. St. Loe Strachey’s Spectator suggested that the adobe or pise de terre method widely used in

Southern Europe might be adopted to Britain. The advantages * cited for pise were numerous. Since the earth itself was used there was little requirement for expensive materials and transport.

Unskilled men, especially unemployed veterans could be employed in construction with little training at much lower rates than skilled tradesmen and this was an immense improvement over the system of paying doles to the unemployed for doing nothing.

O f) HLG 49/5 "House Building Cost Comnittee Report 1920-1921," (9 August 1921), pp. 31,44,46; M. Bowley, Housing and the State, p. 29. 123 The Spectator went further than mere advocacy. A small cottage was constructed during the sunnier of 1919 as a demonstration of the feasibility of the pise system and then Government depart­ ments were approached directly with a request for an experimental program. Only the Ministry of Agriculture which had responsibility for housing a small number of tenant farmers showed enough interest to begin such a program. A private builder was also interested and tests were conducted to study the system. Ultimately these tests showed serious shortcomings in the pise system. It could not be used in the winter time unless there was some system of artificial drying since the walls were much weaker when moist. This was a serious shortcoming in the damp climate of the British

Isles, but this did not deter the Spectator from accusing the

Government, trade unions and the construction industry of obscurantism for failing to give the pise system a fair hearing. 21 Much of the general tone of the Spectator’s criticism was valid, the Government had not thoroughly investigated the possibility of alternate and cheaper methods of construction prior to embarking on such a gigantic project. On the other hand, outside of the Spectator the general tone of Conservative criticism seemed to be mere carping at the Government's mishandling of the scheme. Many of the complaints were directed against what was considered to be the extravagant quality of the housing. A correspondent in the

21The Spectator CXXIII (22 ), 682-683; (3 April 1920), 447-448; (8 ), 608. Morning Post claimed that this "Bond Street standard of housing" was adding t»125 to kl50 for each extra bedroom (up to three) as well as for the bathroom and parlor. These facts alone, he maintained, called for some curtailment in the design standards. 22 The Government's own committee appointed to investigate the cost of the housing program came to an opposite conclusion: "the standard type of house adopted is not extravagant and we do not think that anything more could have been done to secure economy in connection with plans, specifications or otherwise of a 23 technical nature." Underneath a thin veneer of paternalism many of these critics were prepared to consign the working class to any type of substandard housing as long as it was not expensive The Duke of Rutland was even ready to use surplus Army huts. Rutland explained to Bonar Law that "two good huts - nearly weather proof Bungelows can be easily erected at the cost of one Government built cottage" and "the people flock to them and like them very much." Such a solution need not be a stopgap. He argued that the "life of such huts is quite 20 years and these 24 would at any rate relieve the present pressure."

2212 January 1921. 23HLG 49/5 "House Building Costs Committee Report 1920-1921 p. 54. 24 Bonar Law Papers 100/1/1 Duke of Rutland to Bonar Law 1 January 1921. 125

Such suggestions were merely a prelude to demands that the entire scheme be curtailed because of its cost and general mishandling by the Government. Addison as the responsible minister became the scapegoat of all the failings of the housing program. As early as March 1920, Lloyd George offered Addison the post of Minister without Portfolio, if he wanted to get out. Addison refused, blaming criticism of the Government and himself on the natural state of reaction resulting from the War, hostile press criticism and the lack of central organization to direct Government propaganda. He was determined "to finish 25 the housing program despite Press criticism." By late 1920 the housing program was becoming a definite political liability. A number of well placed Tories, particularly in the constituency organizations, began to demand an explanation of the housing imbroglio. There was a definite fear that the Conservative Party might suffer in the eyes of the electorate if the situation was not corrected. 26 In Parliament only a well reasoned business-like defense by Bonar Law was able to stem right wing demands for cuts in the 27 program. The political repercussions of this hostility to

25Lloyd George Papers F/l/6/4 Addison to Lloyd George 3 March 1920. 26See for example Bonar Law Papers Box 100/1/5 William P. Neal to Bonar Law 3 January 1921.

27H of C Deb. CXXXIV (15 November 1920), 1561-1563. 126 the housing program did not go unnoticed in the Cabinet. Earlier in the year Austen Chamberlain had warned that housing costs were rising so fast that the nation's financial stability was being endangered. Moreover, the Government's program was causing such heavy inflationary pressures in the construction industry that Chamberlain predicted it would be impossible to build unsub- sidized houses at all after 1922. 28

As the financial picture grew worse Chamberlain sought to place a ceiling on the total number of houses to be constructed while Addison insisted on 300,000 as the minimum program. With the housing program coming under hostile fire from even the friendly Conservative Press, Addison along with the entire housing program was becoming a liability for Lloyd George and the Coalition. 29 At the end of March 1921, Addison was forced out as Minister of Health and reluctantly accepted the post of Minister without Portfolio which he had rejected only a year earlier. In this new position Lloyd George promised Addison that "you will be able to afford me the kind of assistance which I really stand very much in need of in co-ordinating political effort of the Government and adjusting it to the needs and sympathies of the new electorate."30

28 CP 1330 (20 May 1920) "Memorandum on Housing Liabilities by A. Chamberlain," Cab. 24/106. 29 R. J. Minney, Viscount Addison; Leader of the Lords (London, 1958) pp. 172-182; Daily Telegraph 3 January 1921. 30 Lloyd George Papers F/l/620 Lloyd George to Addison 31 March 1921. 127

Despite this note of reassurance the Prime Minister took little advice from Addison. His replacement at the Ministry of Health,

Sir Alfred Mond, was no reactionary but he did not share with

Addison and other Liberal reformers a belief in the urgent necessity for housing reform. Lloyd George had assured Addison that when he left the Ministry of Health that the housing policy would not be altered but like so many of the Prime Minister's premises it was easily forgotten when Conservative demands made it politically unwise to keep. 31

Industrial Relations The Coalition's program for a new era. in labor-management relations was doomed from the start. The plan for a series of Whitley Councils embracing all major industries such as existed during the War was never implemented. The failure may be ultimately traced to a breakdown in understanding. Both the Labor leaders and the Lloyd George Government recognized that a program of major social reforms was necessary if the unrest among the more militant working class was to be checked. The problem centered around the ambigious meaning of reconstruction. As A.J.P. Taylor has observed: "the aim was to return to 1914 and to build a better country at the same time." 32 Lloyd George and his colleagues

^ C P 3108 (4 July 1921), "Memorandum by Dr. Addison on Housing Policy," Cab. 24/28. 39 A.J.P. Taylor, English History 1914-1945 (New York, 1965), p. 139. 128 accepted the commitment to reform, but not any of the underlying changes in the economic system that might be required by circum­ stances of a very changed post war world. For example, they were unwilling to accept any modification of capitalism in the form of nationalization of the coal mines or railways as a remedy for the problems of these industries. Trade union representatives, on the other hand, had identified nationalization and a measure of democratic control as one of the chief sources of industrial unrest. In a special report submitted to the Government by the labor representatives of the Provisional Joint Committee of the National Industrial Conference this position was clearly set forth:

The mass of the working class is now firmly convinced that production for private profit is not an equitable basis on which to build, and that a vast extension of public ownership and democratic control of industry is urgently necessary. It is no longer possible for organized Labour to be controlled by force or compulsion of any kind. In addition to the major problem of the reorganization of industry there were a number of other reforms which the leaders believed would reassure the workers of the Government's good will. These reforms included a minimum wage, a maximum hours system, price control, a state housing program, prevention of unemployment by the spreading out of state contracts and a system of non- contributory out-of-work donations. 33 Similar assessments were

33GT 7057 (26 March 1919) "Appendix-the Causes of Unrest," Cab. 2U/77. 129 given to the Cabinet by Sir Robert Home, Minister of Labour and 34 Deputy Cabinet Secretary, Thomas Jones. While there was an appreciation of the basic sources of industrial unrest within the Government a feeling of mutual distrust developed only months after the election which permanently damaged the chances of cooperation between Labour and the Coalition. It seemedat first a system of joint industrial councils along the lines of the Whitley Report would certainly be introduced.

A National Industrial Council with representatives from labor and industry had met in London on 27 February 1919, under the chairman­ ship of Sir Robert Home. Although there were some critical speeches by labor representatives directed against the Government's reconstruction policy, the majority at the Conference came down on 35 the side of continued cooperation and negotiation. To implement this decision a Provisional Joint Council was established with equal representation from management and labor. The result was a unanimous joint report incorporating many of the reforms that the labor leaders had identified as being necessary to curb industrial unrest. Special emphasis was placed on the need for wages and hours 36 legislation as well as some provision for unemployment. Home

34GT 8388 (22 October 1919) Cab. 24/90; Middlemas (ed.) Whitehall Diary I, pp. 73-74. 35The Times 28 February 1919. ^ Parliamentary Papers, Cmd. 139, 1919, "Report of the Provisional Joint Committee Presented to the Meeting of the National Industrial Conference, 4 April 1919." 130 approved of these reoonmendations and told the Conference that the Prime Minister promised that "the Government would give their 37 immediate and sympathetic considerations." Negotiations continued with the labor members of the

Committee throughout the summer of 1919. It was at this point

that the cooperation between labor and the Government broke down. The Sankey Report followed by the Government’s refusal to sanction coal nationalization was viewed by the miners as a betrayal. It seemed that the Government was moving away from compromise or appeasement of moderate trade union elements. Feeling that public opinion was on their side especially after the strikes of the London Police and the Yorkshire coal miners, the Cabinet was less ready to press forward with the maximum reforms urged by the labor leaders. For their part, the labor representatives refused to proceed with the establishment of a National Industrial Council unless the Government agreed to accept all of the reforms and especially the demand for a 48 hour 38 week which would include agricultural workers. At this point negotiations broke down. The Government introduced a minimum 39 wages bill in October only to withdraw it in December.

37GT 7057 (31 March 1919), Cab. 24/77; The Times 5 April 1919. 38 The Times 19, 21 August 1919. OQ H of C Deb. CXIX (18 August 1919), 119; CXXII (22 ), 1319. 131

Whitleyism as a nationwide program was dead. Labor leaders were willing to proceed with this new experiment in industrial relations if the Government had demonstrated its good faith in producing basic reforms in working conditions. Subsequently the good will that had prevailed between the unions and the Government vanished to be replaced by bitterness and disillusionment on both sides. From the standpoint of the Government there is no doubt that it acted in the wake of a growing rightward drift.

The Cabinet had becane increasingly aware that it was enacting a program of progressive legislation which a majority of Conservatives probably did not approve. In regard to the nationalization of the coal mines, Lord Birkenhead () reported that the Unionist Party would not follow the Government. Even if enough votes were dragooned in the Commons the Conservative peers would 41 block it.

By late 1919 there was widespread Conservative opposition to further new programs. Even J.C.C. Davidson, private secretary to both Bonar Law and Baldwin, and essentially a moderate, complained in December 1919 that the Government had produced too much legislation.

"My belief is that unless the Government slows down all round (with obvious exceptions of course) in their legislative progranme, the

40 Johnson, Land Fit for Heroes, pp. 476-477. 41WC 607A (7 August 1919), Cab. 23/11. 132

H2 country will react against i t " This change was reflected in the Cabinet as well. Early in 1920 the Government became alarmed over the possibility of a general strike led by the

Triple Alliance, which appeared to some to be an occasion for an attempt to overthrew the State. Sir Robert Horne who had been the voice of conciliation and moderation talked seriously 43 about the threat of Red revolution. Troops were called heme, orders for reserves were readied, and propaganda was prepared, all steps that any Government might reasonably take when con­ fronted with a nationwide work stoppage. There was, however, a note of stridency and an exaggerated fear of strife and revolution in the Cabinet. Some of it may be written off as the mere bantering or "leg-pulling" by Lloyd George who apparently really did not believe in the imminence of revolution, at least not in 1920. Many of the Conservative ministers appeared to be deadly serious. Bonar Law wanted weapons "available for dis­ tribution to the friends of the Government" and talked about stockholders and clerks as a "loyal and fighting class." Austen Chamberlain referred to the job of keeping the railways running 44 as a "defense of the foundations of civilisation." Certainly

42 J.C.C. Davidson to Lord Stanfordham (26 December 1919) as cited in , Memoirs of a Conservative (London, 1969), p. 97. Middlemas (ed.), Whitehall Diary I, p. 97. 44 Ibid., pp. 99-103. 133 these were reactions to a situation in which trade union militancy and talk of "direct action" was at a peak, but they seemed over eager to take the sort of action that would lead to even greater working class hostility, perhaps even to class war. The situation was repeated in March 1921 when Government control of the mines expired and the coal industry attempted to make economies by wholesale cuts in the miner’s wages. To protect themselves the miners called for a national wages pool in which the profitable mines would subsidize those which had become uneconomical. When the owners refused to accept this condition the miners called upon the other members of the Triple Alliance for support. Again preparations were made for a general strike, but this time they went beyond 1920. Troops were recalled, citizen volunteers were recruited and a state of national emergency was proclaimed. Lloyd George claimed in the Commons that "the country is confronted by an attempt to coerce it into capitulation by the destruction of its resources." From the standpoint of industrial relations what is remarkable is not the emergency preparations for a strike or even for revolution, but the Government's insistence that the miners were clearly in the wrong while the owners were justified in demanding cuts in wages

^SH of C Deb. CXL (8 April 1921), 696. 134 amounting to fifty per cent or more a week. The Cabinet took great pains to place all the responsibility on the miners. The proposal to pool wages was interpreted by Lloyd George as

"another way of getting nationalisation." Home was particularly insistent that there could be no pooling - the owners could not afford it. ^ All this was in marked contrast to the Government's earlier approach in which business was often accused of profiteering 47 and selfishness. Now it seemed that Lloyd George was seeking "an opening to the right" or at least an appeasement of his more moderate critics. Consequently, peace making offers from the Conservative left were rebuffed and deeply resented. In the midst of the crisis of April 1921, Lloyd George remarked that "if we have a debate in the House today we shall hear the voice of reason— the cooing voice of Clynes and Bob Cecil will deliver his League of Nations speech again." Chamberlain replied, "He [Cecil] is the worst type— the sentimentalist with some of the wisdom of the serpent." ^

After a meeting had been held between Frank Hodges,

Secretary of the miner's union, and a group of M.P.s, a number of the members including Lord Robert Cecil were impressed by the reasonableness of the miner's case. Chamberlain attempted to

UR Middlemas (ed.) Whitehall Diary I, pp. 132-133, 145-146. U7 GT 8388 (22 October 1919), Cab. 24/90; WC 606A (5 August 1919), Cab. 23/15. 4ft Middlemas (ed.), Whitehall Diary I, pp. 148-150. 135 counter this favorable impression by writing to Cecil stating

the Government's position: "We offered a rational settlement and refused a national pool because a pool indicates control and re-control leads inevitably to nationalisation." Chamberlain

claimed that the members were favorably impressed only because they were not familiar enough with the situation to "disentangle the false from the true issues." He maintained a temporary settlement would postpone the ultimate showdown. Even if the Cabinet had made concessions Chamberlain held that the strike would have taken place and the Government would "have been maneuvered into fighting on wages instead of upon a great principle." Only a permanent settlement could give any chance to industry. "The nation cannot live or thrive with a knife at llQ its throat." Robert Cecil denied that he was attempting to interfere with the negotiations but felt that Hodge's meeting with the Members of the House did nothing but good. It appeared to Cecil that the Government was not assuming the role of mediator, but rather was one of the combatant parties: They the [Government] are anxious for a clear issue, they are perpetually considering plans for putting the miners in the wrong. They fear lest the latter should obtain better figures, ground and so on. This is party is it not? Because most unfortunately they regard Labour as their chief political antagonists, and though no doubt they are anxious for a settlement, it would be preferable to have a settlement which would discredit Labour.

49 Cecil of Chelwood Papers Add MSS 51078 Austen Chamberlain to Cecil, 16 April 1921. 136 Cecil believed that the approach of the M.P.s had been positive and that their friendliness had prevented "anything like a general strike." He concluded that Chamberlain might regard "this as all part of my uneradicable prejudice but you must remember that I was brought up to think that a class war, whether the class attacked be landowners or Labour is the most insidious 50 form of national disintegration." Chamberlain replied somewhat indignantly, denying that any member of the Government had an intention of discrediting Labor but if they had "he would have carefully concealed it from you." He admitted, however, that the Government wanted a clear issue in case there should be a national strike. Chamberlain added that "we never for a moment had as our object to discredit Labour except in so far as the strikers would necessarily be discredited by fighting on ground which public opinion would not 51 justify." This was in itself a virtual admission by Chamerlain that Cecil's charges were accurate since the Government was clearly attempting to manipulate public opinion by creating an exaggerated state of crisis by circulating Government propaganda 52 through the newspapers. Significantly, Austen Chamberlain who had been leader of

50Ibid., Cecil to A. Chamberlain 20 April 1921. ^Ibid., A. Chamberlain to Cecil 26 April 1921. ^Middlemas (ed.), Whitehall Diary I, p. 139. 137 the Conservative Party since the retirement of Bonar Law in

March 1921 was conmitted to a policy that could only further

alienate working class sentiment. The general strike failed to materialize because the other two members of the Triple Alliance, the Railwayman and the Transport workers, failed to support the miners. Continuing alone the miners remained out until they were eventually forced to return on terms calling for substantial cuts in their wages. In such circumstances the implementing of Whitley Councils or schemes of Co-Partner­ ship were simply out of the question. In the background throughout this whole period, the Conservative right contributed to the mood of mutual distrust by keeping up a constant barrage of attacks on trade union leaders and even the working class itself. In one such diatribe the editor of Blackwoods maintained that the working class was losing its old sense of independence and was rapidly being pauperized: They will accept whatever doles are offered them. Their children are fed and educated, their parents are pensioned in old age with money provided by others - provided chiefly by the middle class, which is no better off than they, but more easily amenable to the tax collector. And this is not all, many of them receive higher wages than the industry in which they labour can afford, and food is sold to them under cost price, the deficiency being made up by the Taxpayer...It is not surprising that the working classes pocket their pride and accept whatever is given them without gratitude as their right. 138 This ingratitude was transformed into arrogance when trade union leaders made economic demands or threats to the Government. "A nation that submits to threats of a minority deserves the revolution and the ruin that will surely overtake it." 53

Leo Maxse's National Review cultivated the conspiracy theory implying that many of the leaders of British trade unions, especially of the miners, were agents of the Bolsheviks. One leader claimed that "Lenin is the Tsar of Russia, Smillie [then head of the miners] is to be Tsar of England until he is assisted by a rival Tsar..." It opened its pages to the Duke of Northumber­ land who made repeated attacks on the Miner's Executive. The Duke claimed that they had "openly worked in the interests of the enemy during the War" and "after the Russian Revolution they constituted themselves in the most literal sense the agents of Lenin in this country" and as might be expected the Miner's Executive was also implicated with the Sein Fein "murder conspiracy" in Ireland. Finally, the Triple Alliance had not collapsed because of the moderation of the trade union leaders, "but because the working men declined to led into a trap by the creatures of 54 an alien conspiracy." Talk of the "Red Peril" was common. Sir Ernest Wild, a Unionist supporter of the Coalition, in a speech before a

Blackwoods Magazine CCVL (October 1919), 573-574. 44 National Review LXXVI (), 16; LXXVII (June 1921), 468-470. 139

Conservative group in early 1921, reassured his audience that the "Red Peril" was not a bogey..." For my part I believe from my soul that whether in the form of Cormtunism, Bolshevism, Socialism or Direct-Action— call it what you will— the peril is as real today as was the German menace. Now as then the social order is threatened; now as then autocracy imperiled our industrial existence." ^ Even the more moderate Spectator attacked the "British Bolsheviks" who had attempted to dictate to the majority and "blackmail it into submission." On a more optimistic note the Spectator asserted that Bolshevism was "on the run" in Britain and that the experience of Russia had demonstrated that Communism brought only ruin and starvation. It was time for Labor to throw off the bonds of the extremists and join with Capital in intro- 56 ducing schemes of profit sharing or payments by results. How the men could be induced to accept such innovations in a period when unemployment was rising and substantial wage cuts imminent was not explained. Like so much of the Conservative thinking of this period there was little appreciation of the social and economic realities.

Unemployment Insurance One of the crowning achievements of the Lloyd George

^ The Morning Post , 1921. ^ The Spectator CXXV (November 27, 1920) 695-696. mo Coalition was the extension of unemployment insurance to the majority of the working population. Introduced as an experimental scheme with National Health Insurance in 1911, unemployment

insurance was extended to various war industries. To facilitate demobilization an out-of-work Donation was instituted in 1917

for war workers and ex-servicemen. Without having to contribute anything they were entitled to 29s a week in the event of unemployment and supplementary benefits of 5s for the first child under fifteen and 3s for each additional child. These benefits were restricted to twenty-six weeks in any year following discharge or unemployment. Labor representatives wanted this scheme or some modification of it as the basis for the Government's promised plan for unemployment relief. 57 Even this system of unemployment relief had its drawbacks. In a period of rapidly increasing inflation the payments were inadequate to allow a workman and his family to live under reasonable conditions. As a result of

observations in his own constituency in Swansea, Sir Alfred Mond 58 recommended that the payments be increased by 10s to 15s a week. Another inportant issue in the question of unemployment assistance concerned the role of private enterprise. In March 1919,

Lloyd George suggested that each industry devise a plan to cope

^ G T 7057 (26 March 1919) Appendix "The Causes of Unrest", Cab. 24/77. 58 GT 6440 (5 December 1918) "Memorandum on Unemployment Benefits" by Mond Cab. 24/71. 141 with the unemployment that oomes with the fluctuations of trade. Whether this plan would be independent of the Government's own 59 scheme was not clear. Widespread support for sane sort of industry-wide unemployment system was voiced by both employers and trade unions. The , for instance, reported, that the Transport Workers put forth a proposal whereby all dockers would be entitled to work or a payment according to an established nation minimum. This system of "industrial maintenance" would provide an incentive for each industry to make full use of its labor force since unemployed workers would be a direct charge on its operations. The New Statesman held that this scheme, by increasing home demand, would reduce sane- what the effect of trade fluctuations. 60 Eventually a clause was inserted in the Government's Bill to permit any industry to establish its own scheme provided that it was superior to the State's plan. This provision took on greater significance later on because many Conservatives saw in it a solution to the problem of financing the State scheme.

Meanwhile demands for economy, and the movement away from appeasement of the trades unions that had characterized the Government's industrial policy, caused major modifications in

59The Liberal Magazine XXVII (April 1919), 114. ^ T h e New Statesman XVI (16 October 1920), 38-39. 142 the unemployment scheme. By late 1919 the concept of out-of-work donation was cast aside for an insurance scheme very much along the lines of the already existing system introduced by the

Liberals in 1911. In addition, serious economies were introduced. The weekly benefit was cut to 15s from 29s under the Government's 61 emergency scheme. Although it made no provision for dependents it did provide an expansion of the coverage from four to twelve million, including everyone except agricultural workers and domestics and civil servants. The total cost of the Government's share in the scheme was estimated to be LI4 million, a serious addition to the already overburdened Exchequer, but the experts 62 reported that the system was sound. It was anticipated that there might be brief trade fluctuations but that the annual rate of unemployment would average out to be four or five per cent as it had been before the War. 63 When the postwar boon suddenly collapsed in the summer of 1920, the scheme had hardly begun to function and all the well prepared plans for a system of unemployment insurance were destroyed in a wave of unemployment for which there had been no precedent. There were immediate cries of dismay from Austen Chamberlain who thought the Cabinet had

^ C P 177 (2 December 1919) Memorandum by Home, Cab. 24/93. 62CP 24 (30 October 1919), Cab. 24/92; CP 177 (2 December 1919), CAb. 24/93. CO R. C. Davidson, The Unemployed (London, 1929), p. 99. m 3 been deceived by the over-optimistic statistics supplied by the 64 Ministry of Labour. Inevitably, the insurance scheme had to be bailed out by the first of what was to be a long series of Treasury loans. Even before the Unemployment Bill was introduced, demands for economy especially fron the Treasury forced the elimination of civilians from the temporary out-of-work donation in November

1919. Strong opposition to this cut was voiced by a number of Members including such diverse figures as Sir Edward Carson and Sir Samuel Hoare. Bonar Law was forced to allow a free vote, but the Government had more than enough strength to beat back this attack with a majority of 217 to 123. Only Robert Cecil, Henry Cavendish Bentinck and a few other backbenchers on the 65 Conservative side voted against the Government. As in the case of the initial housing bill there was remarkably little opposition to Unemployment Insurance. Critics on the left disliked the entire concept of a contributory system as well as the reduction in overall benefits. Josiah Wedgewood, now a Labour supporter, claimed the bill was merely a hypocritical effort "to make it a little less horrible, so that the public conscience may not rise up against it." 66 On the right

G|i CP 2917 (4 May 1921) Memorandum by Chamberlain, Cab. 24/123. H of C Deb. CXXI (19 November 1919), 977, 1023, 1096. ^Th e New Statesman XIV (3 January 1920), 367; H of C Deb. CXXV (25 February 1920) 1807-1808. 144 opposition was confined to a handful of Die-Hards who wanted private enterprise to play a role in the administration of unemployment insurance. An amendment was offered by G. Locker-Lampson that would have combined the unemployment insurance with the National Health Insurance so that the insurance companies and friendly societies might act as more efficient and economical operatives of both schemes. This motion elicited so little support that it was withdrawn before a vote could be taken. During the Committee stage these same advocates of economy tried to limit the adminis­ trative costs of the Bill to fa500,000 a year, but again the motion 67 lost easily by a vote of 104 to 26. With the enactment of unemployment insurance Britain became a pioneer in the field of social welfare legislation, far ahead of other democracies. An almost universal system, it provided the Government with an accurate monthly picture of the state of unemployment in the nation. This was not an unmixed blessing. The dismal weekly figures of the twenties and thirties probably had the depressing effect of creating a spirit of helplessness or resignation among Government officials. As these conditions continued tire official reaction was usually apathy rather than urgency. 68 The existence of a system of unemployment insurance

67 Ibid., 1774-1780, 1865; Ibid., CXXVI (4 March 1920), 797-804.

^Donald Winch, Economies and Policy (New York, 1969), p. 103. l*+5 while a great social advance provided a necessary minimum level of subsistence thereby taking the edge off social discontent. Successive Governments between the Wars tended to rely on this crutch; consequently they were not forced by an emergency situation into developing imaginative alternative programs that might have proved to be a remedy, rather than a palliative for large scale unemployment.

Unemployment Although not a part of the original Coalition program of social reform, unemployment became one of the central concerns of the Government after the summer of 1920. It was expected, as in housing and industrial policy, that the Lloyd George Government would break with existing precedents and deal vigorously with the unemployment problem. As in these other areas demands for economy coincided with the need for greater funds for social purposes. Ultimately the advocates of retrenchment were successful thereby limiting or nullifying the effectiveness of even the limited programs adopted by the Government. Perhaps the most significant features of the Coalition's unemployment policy involved the implementation, or at least the study, of almost every variety of unemployment program undertaken by Governments during the inter­ war period.

Early warning of the impending crisis was provided in a joint memorandum by Addison and Macnamara on 6 August 1920. Even 146 though the current unemployment rate was only 2 per cent (one

of the lowest on record) it was obvious that the boom had collapsed. Some 200,000 ex-service men were already unemployed, rapid lay offs were taking place, contracts were being cancelled and new orders were coming in at a much slower pace than only three months earlier. With the new Unemployment Insurance Act caning into operation in November, some immediate effects of the slump could

be blunted, moreover, many of these newly unemployed would not

have contributed to the fund for the minimum period of four weeks

in order to qualify for benefits. To remedy this serious situation they recommended expansion of insurance benefits including rates

and length of eligibility. There was also a need to spread employment by introducing short time in many industries, perhaps on a compulsory basis. ^ After receiving no reply to the joint memorandum Macnamara pressed Bonar Law, who was virtual vice premier in Lloyd George's absence, to take some action before Parliament reconvened in October. He insisted that something had to be

done to assist the local authorities in meeting the crisis and warned of still greater trouble: The more I examine the matter on the spot, the more I am oonvinced that it is not right for us to separate without real effective plans for facing a situation which may

69CP 1747 (6 August 1920), "Joint Memorandum on Unemployment," Cab. 24/110. 147 rapidly arise in various big towns, and which believe me, if left unhindered until it is upon us will present a problem of the gravest difficulty certainly involving the expenditure of many millions or more or less un­ productive and rapidly extemporized expedients and probably involving in certain areas, outbreaks of violence and lawlessness. 70 Hacnamara's arguments were convincing and at the following day's meeting of the Cabinet, a special Cabinet Committee on Unemployment was appointed with Sir Laming Worthington-Evans as its chairman. 71 This body became responsible for the formulation of all unemployment policy and was continued by successive Governments until the summer of 1925 when some of its functions were transfered to Baldwin's newly reorganized Committee on Civil Research. As a cabinet committee it relied heavily on the advice of civil servants, seldom seeking outside counsel. Eventually this became a major limiting factor since the civil servants in their bureaucratic way did not welcome radical departures from accepted policies. Couple this with the Treasury's reluctance to sanction large scale Government unemployment projects, and it is not surprising that the Committee was unable to produce any significant new proposals once it became apparent that the slump was a chronic, not a temporary, condition. At the initial meeting of the Committee, Worthington-Evans outlined a possible agenda for the study of unemployment which

70 Bonar Law Papers 9914117 T. J. Macnamara to Bonar Law, 12 August 1920, marked "secret".

71C.U. 1 (13 August 1920), Cab. 27/115. 148 included: unemployment insurance, training of ex-service men, and emigration. 72 The list made no mention of monetary measures as a possible method of dealing with unemployment. A lack of economic sophistication may be cited as one reason for this, but there is no doubt that the Government had approved the rise in the bank rate as a method of checking inflation. In early August a Tory backbencher brought the sudden increase in unemployment to Bonar Law's attention. He asked for a reduction in the bank rate as a means of preventing unemployment, assisting industry and promoting housing construction. Bonar Law replied that:

The rate of money could only be reduced by artificial means and though undoubtedly cheap money does for the time help industry yet if it adds to the inflation it would in the long run make things worse. In present conditions, I would doubt whether it would be wise to attempt to lower the rate. 73 With monetary policies ruled out in advance, the principle possibilities would be some sort of public works program and unemployment insurance. Even before the first meeting of the Committee Sir C. A. Montague Barlow, a former member of the Unionist Social Reform Committee, circulated a memorandum pressing the case for public works projects. With some 150,000 embittered ex-service men facing starvation he foresaw the possibility of broken windows in Downing Street and elsewhere in the coming

^C.U. meeting 1 (7 September 1920), Cab. 27/114. 73 Bonar Law Papers 99/4/2 W. Greenwood to Bonar Law 3 August 1920; Ibid., Box 101/4/78, Bonar Law to W. Greenwood 9 August 1920. 149 winter if the Government took no action. Since it was obvious that the same money would be spent, why not use it for the best possible purpose? Roads, bridges, and drainage projects were the kind of work that these men might perform if the local authorities were given substantial assistance. Montague Barlow emphasized the need for matching grants "to secure the local interest not only in securing a good product, but also on economical terms as possible." To distinguish these projects from the old type of unemployment project every effort should be made to see that some type of skilled training be given with the 74 jobs along with a standard wage.

The Committee accepted the memorandum but asked Montague Barlow to elaborate on his proposal. Again he stressed the urgency and danger of the situation: These men are trained soldiers, most of them with service in , accustomed, as a result of their war experiences, to using arms and taking life without much consideration of consequences. Should any trouble arise it must be borne in mind that these ex-soldiers will have much more fighting experience than any troops that might be used for purposes of keeping order. There was no one answer to the problem of unemployment but, from his own experience on official visits for the Ministry of Labour, public works had proved an excellent means of employing

74C.U. 2 (16 August 1920) Memorandum by Montague Barlow Cab. 27/115. 150 these ex-service men within a matter of weeks. 75 This was a definite advantage over the proposal for a scheme of arterial roads submitted by Arthur Neal, Parliamentary Secretary of the Minister of Transport. Neal admitted that there would be considerable delay involved in negotiations with local author­ ities who considered these new arterial roads as much less important than the existing network. He did premise that there was considerable work available on local roads that could 76 use unskilled labor almost at once. Both proposals ultimately became the core of the Govern­ ment's program of public works. The use of public works as a method of dealing with unemployment was not new, but it had never been attempted on a large scale. The Conservatives had passed an Unemployed Workmen's Act in 1905 establishing machinery for distress committees in every locality which would provide work for the unemployed. The provisions of the Act were never implemented, but Walter Long (First Lord of the Admiralty) who had originally sponsored the Act proposed that these distress committees be reactivated and put to work. Montague Barlow disagreed holding that the Unemployed Workman's Act had served no real purpose and that the functions of the distress committees

^C.U. Meeting 1 (7 September 1920), Cab. 27/111*; C.U. 9 (10 September 1920) Memorandum by Montague Barlow, Cab. 27/115. 76 C. U. 10 (9 September, 1920) Memorandum by A. Neal, Cab. 27/115. 151

77 could be more effectively assumed by the local authorities. The question of wage rates proved to be a thorny issue for the Committee. Headed by Montague Barlow a subcommittee of civil servants recommended that the standard rate of wages already paid by the local authorities for unskilled work would be paid with the exception that there would be a three month probationary period when the workers would receive only 75 per cent of the local rate. Addison and Arthur Neal, both Liberals, opposed the probationary period altogether while Worthington- Evans wanted payment at 90 per cent of the agricultural wages— a much lower rate than that paid by local authorities. Ultimately a decision was made in favor of Montague Barlow's recommendations to assure the cooperation of the largest number of local authorities. 78 Almost from the start the Committee was faced with the problem of finance. With calm assurance Worthington-Evans informed his colleagues that they should proceed on the assumption 79 that sufficient money would be forthcoming. In view of the growing demand for economy, and the heavy comnitment to the housing program this was a far too optimistic statement. An even

77CP 2117 (17 November 1920), Memorandum by W. Long Cab. 24/115; C.U. 9 (10 September 1920), Cab. 27/115. 78C.U. 35 (29 September 1920) Memorandum by Sir M. Barlow, Cab. 27/115; CP 1907 (1 October 1920) "Report of Unemployment Committee," Cab. 24/112.

^9C.U. meeting 3 (21 September, 1920), Cab. 27/114. 152 more important obstacle centered around the financial orthodoxy of the Treasury which ultimately hindered all efforts to deal with the unemployment question between the Wars. Not only were Chancellors of the Exchequer expected to balance their annual budget estimates, but a significant part of the revenues had to be allocated for debt service and retirement. In 1920 some 20 per cent of total government expenditure was used for interest payments and this rose steadily to almost 30 per cent by 1924. 80 This severe limitation was compounded by what came to be known as the "Treasury view". Holding that all public expenditure such as housing and unemployment works were not productive, even if laudable for social reasons, the Treasury attempted to block any large new expenditues. To make sure that the Unemployment Committee understood this position Austen Chamberlain circulated an extract of the work of a

Swedish economist, Gustav Cassell, who provided scholarly support for the Treasury. In Cassell's view a government should not attempt to subsidize workers through unemployment doles or by undertaking public works projects since this merely limits the amount of capital avail­ able for private enterprise. The inevitable result is the wast of use­ ful capital and a destructive inflation, both of which were seemingly 8X less desirable than deflation and unemployment.

80 A. T. Peacock and J. Wisenan, The Growth of Public Expenditure in the U.K. (London, 1961), p. 184. 81 C.U. 26 (23 September 1920), Memorandum by Treasury on Relief Works, Cab. 27/115. 153 Another element entering the question of public works projects stenmed from the expected limited duration of the crisis. Large scale schemes were usually vetoed by the Treasury if they extended over six months since it was assumed that the crisis would soon be over and the Government would have to support an uneconomical project that had lost its social purpose. 82 Thus needed work was ignored and small projects that might be postponed were undertaken. Implementation of the schemes was vested in an interde­ partmental body known as the Unemployment Grants Committee under the chairmanship of Viscount St. Davids, a City financier. The St. Davids Committee, as it became known, was given authority to approve public works and roads schemes submitted by the local authorities as unemployment relief projects. Initially the central government was to pay 50 per cent of major road projects and 30 83 per cent of the wage cost of other schemes. As a result most of the burden of the relief schemes was shifted away from the central government into the hands of the local authorities many of whom were already overburdened with high property taxes. It was precisely those localities which had the greatest concentration of unemployment that could least afford to initiate work relief projects.

QO See for example C.U. 142 (5 March 1921) Memorandum by the Treasury, Cab. 27/117.

83CP 1907 (1 October 1920) Cab. 24/112; C.U. meeting 15 (29 November 1920) Cab. 27/114. 15*+ One of the oldest remedies for unemployment, emigration, was brought before the Committee by the energetic Tory imperialist,

Leopold Amery, who was then Parliamentary Under Secretary for the Colonies. As a starter, Amery urged the extension and expansion of a program of Government subsidized passages for ex-service men desiring to emigrate to the . The Committee approved this request although Macnamara had submitted a lukewarm report demonstrating some need for emigration, but denying that it was a panacea for unemployment. The Empire could no longer be the dumping ground of the socially or economically maladjusted. Macnamara warned, "even if they could be induced or compelled to go, the Dominions would not accept them." Item a political point of view this type of program was 85 popular with the Unionist majority. It was inexpensive appeasement of the right involving only L600,000 while providing the Prime Minister with an opportunity to deliver some rhetoric about imperial unity. In the process of the first unemployment debate in the Commons Lloyd George proclaimed: There was one thing that the War proved, and that was that men who leave us are not lost to us. The most remarkable fact was that they were there when we wanted them...86

RU C.U. meeting 6 (15 October 1920), Cab. 27/114 C.U. 14 (11 September 1920), Memorandum by Macnamara, Cab. 27/115. 88See The National Review LXXVI (November 1920), 304-305.

86H of C Deb. CXXXVI (21 December 1920), 1672. 155 This little nod to Empire might have drawn a

patriotic response from Tory backbenchers, but it did almost nothing for the unemployed. Some more solid measures were required as the situation was worsening. In late November, Macnamara in concerned tones described the situation to Lloyd George as "very gloomy". There had been an upturn after the settlement of the coal strike in October but now it appeared they were on the verge of a very rapid drop in unemployment. Macnamara lauded the work of Worthington-Evans and the Unemploy­ ment Committee while expressing disappointment at their meager accomplishments: For instance, the total number of men actually at work on the Arterial Road Schemes at the close of last week was 125 in London, and 706 in the Provinces... I confess I hoped that this number could have been ten times as many... Refusing to censure anyone for personal failure the Minister of Labour reminded his Chief of the seriousness of the

situation. "I need not point out to you how acutely grim present prices make the situation for men out of work and 87 particularly the men with dependents." With the failure of relief works to fill the gap the Government had one major program to fall back upon— unemployment insurance. Acting upon Macnamara1s recommendation an Amending

87 Lloyd George Papers F/36/33 T. J. Macnamara to Lloyd George 22 November 1920 marked "secret and personal". 156 Act was rushed through Parliament to permit all those who had not worked the minimum of four weeks under the original act to receive benefits. 88 Thus even before the Unemployment Insurance Act came into operation it was stripped of its insurance principles and converted into an out-of-work donation. Of course, this was never acknowledged publicly and throughout the twenties there were repeated amendments attempting to restore the insurance principle. There was no planning in all this, just a matter of "muddling through" until the next crisis required further legislatiwn. From the standpoint of many observers on the right the onset of the depression seemed an almost salutary event. According to Strachey's Spectator, the slump was actually "a blessing in disguise because, as if by a surgical operation it will cut away what was poisoning the community." The poison to be eliminated was inflation. Anything that blocked or delayed "the reduction 89 of prices which we all long for" must be condemned. Inflation had priced the country out of many of its former export markets while losing stiffer competition from imported goods.

Who was to blame for this situation? The moderate and independent Economist was willing to spread the blame to include all classes. It sympathized with the claims of Labor which "had to fight with

OO C.U. 38 (29 September 1920), Memorandum by Macnamara Cab. 27/115. 89The Spectator CXXVI (1 January 1921), 7; Ibid., (8 January 1920), 37-38. 157 might and main against any attempt to put it back to pre-war 90 conditions." Others were ready to hurl accusations of greed and irresponsibility at the working class. In one article appearing in the Fortnightly Review the trade unions were accused of practicing "extortion on the consumer in the most shameless manner." The recklessness of the unions in demanding high wages, "coupled with an extraordinary reduction of output" had destroyed British trade. Since coal the leading export prior to the War had declined to one-third of its pre-war level, it followed that "the wicked policy of the coal miners, or rather of their leaders is very largely to blame for the stagnation of British trade and general unemployment." The miners were not acting out of any economic self-interest but were plainly doing the "bidding of their Socialist and Communist leaders, who desire to create confusion and ruin in the hope of bringing about a revolution."

The only solution was a drastic cut in wages so that British 91 products could become competitive in an impoverished world.

Few business leaders would take this harsh position, at least not in public. While agreeing that a measure of deflation might be necessary they tried at first to avoid making direct demands for reductions in wages. One of the most influential

on XCI (25 December 1920), 1121. 9\j. Ellis Barker "Unemployment-Its Cause and Its Only Remedy." Fortnightly Review CX (1921), 869-879. 158 Conservative business leaders, Sir Allan Smith, chairman of the Engineering Employer's National Federation attacked all Government interference and regulation. Management and the unions, he maintained must be left alone to wcrk out their problems including a change in work rules ending limitations on production. 92 To many in the trade union movement this suggestion seemed to be only a disguised wage cut. Most Conservative critics who placed a large part of the responsibility for the slump in the hands of the unions did express sympathy for the individual unemployed, particularly those who were veterans. Such was not the case of the reactionary Saturday Review which denigrated the phrase "Debt of Honour" as mere "journalistic claptrap". It called the 200,000 unplaced ex-service men: The residiuum that is they are those who in normal times are generally unemployed, they are the poor who are always with us and who for the last years of the war were swept into the military service, where they had the time of their lives. 93 Most intelligent observers of the right and center realized that unemployment was a potential source of unrest, perhaps even revolution. At the same time they worried lest continued dependence on Government schemes particularly unemployment insurance, would have a demoralizing effect on the working class. The Spectator

92H of C Deb. CXXXVI (21 December 1920) 1605-1610.

The Saturday Review CXXX (21 August 1920) 151. 159 suggested that the unemployed now might choose to remain unemployed 94 at 15s rather than work part time at 30s. Serious objections were raised in the House of Lords to the Government's proposal to increase the unemployment allowance from 15s to 20s on the grounds that the unemployed would receive almost as much as the employed worker when union benefits were added to unemployment insurance. This view was not confined to reactionaries, but was widely shared by respectable members of the Conservative Center like Lord Burnham, publisher of and a consistent supporter of the Coalition. Echoing this opinion within the Cabinet was Arthur Balfour (then Lord President of the Council) who in one of his rare pronouncements on social policy argued that it was unwise to raise the unemployment benefit to 20s since prices and wages would soon begin to break. When this occurred the "lazy and the thriftless" would prefer the idleness of the unemployment benefit to work at reduced wages. 95 Very clearly most influential Conser­ vatives feared the growth of a gigantic, demoralized client class dependent on unemployment insurance (or the dole as it came to be called) for its existence. As the unemployment rate skyrocketed these fears were rapidly becoming a reality. In June of 1920 the unemployment rate

94 The Spectator CXXVI (8 January 1921), 37. 95H of L Deb. XLIV (1 March 1921), 198-205; UN 1 (Unemployment Insurance Conriittee) 1 (12 February 1921), note by A. J. Balfour, Cab. 27/135. had been at the extremely low figure of 1.2 per cent, but in December it had risen to 6 per cent and by February 1921 had 96 reached 8.5 per cent and was still climbing. Realizing the critical situation Macnamara used his close working relationship with Lloyd George to urge further unemployment assistance for the hard pressed local authorities. Public works schemes were not being submitted to the St. Davids Committee because the local authorities found that the 30 per cent contribution of the central government was insufficient incentive for them to begin relief work. Macnamara warned that the situation was reaching an emergency level with total unemployment approaching a million. Nothing less than at least 50 per cent of the wages 97 cost would persuade the local authorities to undertake the work. Although the Prime Minister was on his way to a conference in , he responded to Macnamara*s urgent appeal by having Bonar Law hold a special meeting of the Cabinet to deal with the problem. Within four days of Macnamara*s letter of

22 January, an increase was authorized in the grants to local 98 authorities from 30 to 60 per cent of the wages cost.

36 The Economist XCIV (21 January 1922), 83. 97 Lloyd George Papers, F/36/1/37 Macnamara to Lloyd George 21 January 1921, marked "confidential and immediate." QO Conference of Ministers, 25 January 1921, C&b. 23/24. 161 With the rise in unemployment there was a corresponding grcwth in the opposition of business interests to the Government's unemployment schemes. In February 1921 during the debate on the increased unemployment benefit Conservative business spokesmen openly opposed the measure. In the minds of these businessmen the Government schemes for unemployment would be costly, resulting in increased taxes and a further decrease in profits. It seemed to them that these futile schemes were being carried on at their expense while measures that would assist business were being ignored. 99 Most of the public works schemes were unattractive to businessmen because they were thought to involve unproductive and unnecessary work. Another less publicized reason for business opposition to these relief schemes centered around the nature of the work. Since the schemes were aimed at providing relief work for a cross section of the unemployed most of the projects required only a strong back and a few simple hand tools. This left little scope for substantial government contracts for materials or machinery from private manufacturers. Such was the view expressed by the chairman of the Metropolitan Carriage Wagon and Finance

Company, a major builder of railway rolling stock, in a letter forwarded to Bonar Law by an interested Conservative backbencher,

99 H of C Deb. CXXXVIII (17 February 1921), 179-183, 356-365, 379-382. 162 Sir Edward Goulding. Rather than carry out these expensive unneeded public works "it could be better to stimulate trade as to keep men employed in their cwn industries." The company's board of directors considered it much "better to employ the rolling stock makers in Great Britain full time as to meet the needs of the devasted areas of Europe than to drive the men either to go on half time or to work on Government relief schemes..."

As an alternative the company favored some sort of direct Government financing of overseas orders placed with British firms. The Coalition had initiated an exports credit scheme as part of its unemployment proposals in December 1920, but the terms were so cautious that most companies were unable to take advantage of it and still make a profit. It was suggested by the directors that with some sort of direct Government participation foreign competition could be met in European markets. Facing the conflicting demands for special aid versus economy and retrenchment the Government decided to favor the latter as the more popular cause while throwing a bone to the business interests in the form of the Safeguarding of Industries Bill, which made permanent the wartime tariff on selected defense related products. Nevertheless, only eight

Bonar Law Papers, 100/1/7 3 January 1921, Sir Ernest Hindley to Sir Edward Goulding M.P., forwarded to Bonar Law 5 January 1921. 163 months later the idea of Government finance to business interests

had been revived as a remedy for unemployment. With the collapse of the Triple Alliance in April 1921, much of the fear of a militant working class movement died with it.

Conciliation of the left seemed less immediately necessary than appeasement of the angry Conservative right. Responding to the demands for economy, the new Chancellorcf the Exchequer, Sir Robert Home, refused to consider Macnamara's appeal for further

Treasury loans to bail out the virtually bankrupt Unemployment Fund. Financial conditions did not permit any further loans to the Fund and instead Home recommended that benefits which had been increased only two months earlier be slashed from 20s to 13s for men, and from 16s to 10s for women. Macnamara1 s objections were so strong that a special Cabinet Committee was organized to decide the question. Over a strong dissent from the Minister of Labour, the majority composed of Home, Mond and Munro reported

that the country's financial condition was so serious that benefits had to be reduced. In a partial compromise the reduction was limited to 15s instead of 13s for men, and 15s rather than 10s

for women, as proposed by Home, but the rate of contribution was to be increased by Id for both employer and employed. Paralyzed by Home's predictions of financial disaster the majority of the Committee even refused to allow the extension of benefits to 500,000 working men and women whose payments were to expire in July 1921. 164

The Cabinet could not allow considerations for economy to go beyond the limits of political reality— they were already planning drastic cuts in other social areas— and consequently it approved continued payments to the unemployed, contrary to the wishes of the Camnittee. All other recommendations were accepted and pushed through Parliament despite vehement opposition from Labour and left wing Tories. The unemployed, like other beneficiaries of the Lloyd George program, became victims of a fanatical demand for economy, much of which had been fostered by Conservative interests. Certainly the Conservatives were not alone in the demand for economy— the

Liberals and to a lesser extent even Labour must share the responsibility— but the Die-Hards, a good part of the business community and, as we have seen, many members of the Government were more than ready to cut social expenditures even if it resulted in considerable hardship for the working class.

101CP 2975 (26 May 1921) memo by Macnamara; CP 2987 (28 May 1921) memo by Home, Cab. 25/123; CP 2993 (30 May 1921) "Report of Committee on Unemployed Insurance", Cab. 24/123; Cabinet meeting 48 (3 June 1921), CAb. 23/26. CHAPTER IV THE LLOYD GEORGE PROGRAM, MAY, 1921-OCTOBER, 1922: DISILLUSIONMENT

Economy By the early summer of 1921 with the popularity of the Coalition and its leader much diminished, the demands for economy rose to a crescendo. No longer was it merely a matter of news­ paper criticism, Die-Hard speeches or pressure from business interests. Organized public feeling especially among the middle class in the stronger Unionist constituencies of the South and

West demanded cuts in all Government spending and in taxes. Feelings ran especially high in the local Conservative constituency organizations and in their corresponding national bodies. As early as October 1919 the Unionist Central Council had carried a resolution calling on the Cabinet for the "strictest economy in public expenditure" and asking that further legislation involving heavy additions to both Imperial taxes and local rates should not be introduced. 1 To be sure, in the Conservative Party's political tradition the rank and file usually defer to the wishes of the leader, but with the retirement of Bonar Law

^Lloyd George Papers F/31/36 Sir George Younger to Bonar Law 14 June 1920 "marked private"; Manuscript Minutes of the Unionist Central Council, 14 October 1920, Conservative Central Office. 165 166 and his replacement by Austen Chamberlain, the Party no longer had a strong leader. Bonar Law commanded such great respect within the Party that he was able to blunt, or at least mollify all but the most fanatic advocates of retrenchment. Austen Chamberlain never was really able to exert the same kind of leadership. 2 Consequently, resolutions passed by constituency organizations or drawn up by backbenchers took on greater importance then they would have formerly. Lloyd George soon discovered how precarious a foundation the Coalition really had— the Conservative majority could easily desert him if the Government was not prepared to trim on the issue of public expenditure.

The danger of Conservative disaffection was brought home with the victory of an Anti-Waste candidate over a Coalition Conservative. This was the by-election in the wealthy Westminister- St. George constituency of London on 7 June 1921. Organized in

January 1921 to support candidates pledged to the "wholesale reduction of expenditures", the Anti-Waste League had been regarded as the harmless plaything of the Harmsworth Press. Allied with the Die-Hards the movement gained some support among one or two of the more reactionary Conservative constituency organizations, but 3 seemed to be gaining little headway among Conservative voters.

2 Lord Beaverbrook, The Decline and Fall of Lloyd George, (New York, 1963), pp. 17, 53-54. ^Gleanings and Memoranda LII (February 1921), 220. 167 Thus the victory at Westminister on 7 June came as a real shock to supporters of the Coalition. The Spectator called the event an "electoral revolution among the Unionists against the Coalition and Lloyd George." It blamed mismanagement by the Government and fear of national bankruptcy as the chief cause of the Coalition defeat. Expressing deep concern Lloyd George wrote to Austen Chamerlain that "this election represents the real sentiment which may very well overwhelm us if we do not deal with it in time." The situation was further complicated by the loss of a Coalition Liberal seat to a Labour candidate only a day later. The Prime Minister warned Chamberlain of the danger to the Coalition,

"we must take counsul lest we find ourselves caught between Labour 5 in the North and anti-waste in the South." Facing the prospect of the weakening of his base of power Lloyd George was much more concerned with the immediate threat from the right than a more distant menace from the left. Much of this advocacy of retrenchment and reform was little more than a thinly disguised attack on the concept of State supported social services. Reactionaries like Sir Frederick Banbury strongly opposed any attempt to reduce the Armed Services. Instead the "Government should wake up to the fact that they must... abandon all their ideas of social reform, health ministries, the

HThe Spectator CXXVI (18 June 1921), 768-769. 5 Lloyd George Papers F/7/476 Lloyd George to Austen Chamberlain, 9 June 1921. 168 enormous increase in education and every other kind of increase of expenditure..." Banbury conceded that these reforms might have had some validity "in an ideal state or if we had not been 0 at war" but for the present "had no foundation at all." A similar view was expressed by Harold Cox, editor of the Edinburgh Review and one of the co-founders of the Anti-Waste League. He denounced "the theory that the State ought to be a fairy-god- mother to everybody" as a blueprint for national disaster: First the citizen is taught not to be self-supporting; he is taught to look to the State for a dole instead of looking to his own hard work and his own careful spending for his salvation. Such teaching ultimately involves the mental and moral degradation of the whole race. These evils could only be prevented "by abandoning the present-day delusion that the State can act as a universal provi­ dence" and by insisting "that the individual must rely upon himself for his cwn maintenance and for the upbringing of his 7 cwn children." What is most remarkable about this return to fundamental nineteenth century individualism was that it coincided with a severe economic depression and two million unemployed. This lack of sympathy for the working class plight reflected a growing chasm between right and left in British politics. Few Conservative politicians could be as outspoken as Banbury who held a safe seat in the City, but there is no doubt that many Tories were convinced

6H of C Deb. CXLI (20 April 1921), 103, 192. ^"The Public Purse", The Edinburgh Review CCXXXIV (July 1921), 194-195, 208. 169 that social reforms could safely be abandoned without too great a risk of political repercussions at the polls. Pressures for retrenchment were not all the result of right wing political influence. The Government had already begun to dismantle the structure of social reforms that had been so recently enacted. Persistent advocates of economy such as Chamberlain and Home were already planning substantial cuts in social expenditure. Operation of the major features of the Fisher Act including continuaticnclasses had been suspended in December 1920 at Chamberlain's urging. Politically this action provoked little response except from the teacher's union. It had issued a statement complaining that "any curtailment would disastrously affect the educational development imperatively 0 necessary for the national well being." Much more drastic cuts were called for in the spring of 1921 when a squeeze developed over the refinancing of the American war loan. Treasury officials estimated that this operation would probably require id.00 million to be allocated to the sinking fund and from this might not be sufficient if there was a fall in revenue. To insure that sufficient funds would be available for debt service the Treasury circulated a memorandum demanding a

Q CP 2344 (21 December 1920) Memorandum by Chamberlain, Cab. 24/117; The Liberal Magazine XXIX (June 1921), 320. 170 g 20 per cent reduction from all departments. Housing was next to feel the axe, but not before the Tories had found a scapegoat in the person of Dr. Addison. Rising costs and the slow pace of construction had made the housing pro­ gram and its architect prime targets of the growing economy campaign. In early June, an attack was mounted against Addison's salary as Minister Without Portfolio by a large number of Tory M.P.s. Support for this ill-disguised censure motion went far beyond the three or four dozen Die-Hards who were the most vocal critics of the Coali­ tion's social and economic policy. Chamberlain reported to Lloyd George that "even men who had never voted against us before declare that they will not vote with us on this occasion." With a large number of others planning to abstain, Chamberlain warned, "an undoubted majority of Unionists is likely to go into against. us." „ 10 Undoubtedly many Conservatives looked upon Addison's posi­ tion as a reward for a Minister who had failed, but the most impor­ tant element seemed to be what Chamberlain described as "a genuine movement for economy." Sensing a drift in public opinion toward retrenchment in public spending, Tory opportunists who had formerly been willing to support the Coalition's program of social reforms

q P. J. Grigg, Prejudice and Judgement (London, 19M-8), p. 63; CP 2919 (4 May 1921) Menor by Home, CAb. 24/123.

^Lloyd George Papers F/7/4/5 Chamberlain to Lloyd George 9 June 1921. 171 now wanted to be recorded in favor of some measure of economy.^ It waspolitically unwise for Lloyd George to admit that such a wide rift existed in the Coalition by directly giving in to the demands for Addison’s resignation. In an appearance before the House on 23 June, Lloyd George shrewdly defended his Minister, but announced that Addison's salary would be cut fcr2500 and that his position would be abolished at the end of the Session only two months away. This performance was too much for an Irish Nationalist Member, Joseph Devlin, who, disgusted at the hypocrisy of the

Prime Minister, accused Lloyd George and the Tories of making a scapegoat of Addison. Devlin observed that the advocates of economy had directed their attention against the few causes with which this Government had been "credited, the housing of the people, the health of the people, and the education of the people." As for Lloyd Goerge's defense of Addison, Devlin commented that he knew nothing of the value of the Minister's services but "the Prime Minister does, and if the Minister Without Portfolio possesses only one twentieth of the qualities which were so splendidly recited by the Prime Minister a more disgraceful 13 betrayal I have never heard." Disgraceful or not, the maneuver

^Ibid., F/7/4/9, Chamberlain to Lloyd George, 15 June 1921 "marked secret." 12H of C Deb. CXLIII (23 June 1921), 159»*-1602.

13Ibid., 1620-1621 172 seemed to satisfy the majority of Conservatives but the lesson was clear: both Addison and the housing program were political millstones to the Coalition. Thus by a combination of internal and external pressure the Cabinet decided on the "suspension" of the housing program 14 despite final and bitter protests by Addison. All construction would be limited to those houses approved by 1 July 1921 and in no case were local authority houses to exceed 176,000. In the Government's statement much stress was placed on the "very grave financial difficulties which will confront the nation for the remainder of the present and throughout the next financial year," but nothing was said about remedies to the existing housing shortage except vague references to keeping the "problem closely under review." ^ Denouncing the step as a "betrayal 16 of our solemn pledges to the people", Addison resigned. It was a victory for the forces of economy and recognized as such. The Government, however, made itself appear ridiculous denying that any large shortage of housing existed. Even worse,

W F.C. meeting 35 (30 June 1921), Cab. 27/71; CP 3108 (4 July 1921) "Memorandum by Dr. Addison on Housing Policy," Cab. 24/26. 15CP 3133 (14 July 1921) "Cabinet Housing Policy Statement," Cab. 24/26. 16H of C Deb. CXLIV (14 July 1921), 1488-1491; Lloyd George Papers F/l/6/30, Addison to Lloyd George, 14 July 1921; H of C Deb. CXLIV (21 July 1921), 2470-2473. 173 virtually all planning for future housing schemes was stopped for over a year, at a time when building costs were declining sharply. The average bid for a local authority house dropped from 17 L93Q in August 1920 to L463 in March 1922. Ironically, the Government’s housing scheme was dropped just when it was proving successful. Most critics were blind to this fact. They would probably agree with Neville Chamberlain’s estimate: "you are faced with one of two alternatives— either to press upon the taxpayers a burden heavier than they can bear, or else receive for your house rent which is heavier than the working classes can pay."„ 18 From the short run political standpoint the abandonment of the housing program was a convincing demonstration to economy- minded Conservatives that the Government meant business. As a concluding measure in the campaign for economy the Government appointed the Committee for National Expenditure composed of businessmen and headed by Sir Eric Geddes, in early August, to

seek out other possible sources of further economies in Government expenditure. These measures gave the Coalition time to regroup 19 and even rekindled interest in some sort of center party,

"^M. Bcwley, Housing and the State , p. 278. 18H of C Deb. CXLIV (21 June 1921), 2521. I Q See for example, The Spectator CXXVII (16 July 1921), 68-70. 174 but in a longer perspective this kind of appeasement was to leave enemies on both the left and the right unsatisfied.

The Gairlock Scheme and Unemployment By late summer of 1921 it was clear that unemployment had become the most important domestic problem. As the result of the coal strike unemployment passed the two million mark in June and although it declined with the gradual return of the miners, there were still over a million and a half out of work and another 500,000 on half time by the middle of August. To make matters worse, over 400,000 unemployed men and women would exhaust their supple­ mentary benefits under unemployment insurance before the end of October when they could again draw benefits under a new unemploy­ ment provision. Those who had been drawing additional assistance from trade union funds nowfound this source exhausted leaving no recourse but to ask for relief from the Poor Law guardians. From both a political and a social point of view the situation was potentially explosive. In mid-August disorders had not yet erupted but there was much talk of Communist agitation among the unemployed. 20 It was also an issue that was bound to be exploited by the opposition, especially the rapidly expanding

20C.U. meeting 25 (16 August 1921), . 27/114. 175

Labour Party. Earlier in the year Lloyd George had been steering the Government's social policy sharply to the right; now perhaps it was time to move back to the left or at least to a center position. If the Irish question were settled it was very likely that an election might quickly follow. Consequently it would be wise for the Government to have some solid new approach to unemployment, going beyond the rather limited program drawn up in the fall of 1920. With adjournment of Parliament in August, Lloyd George spent his holiday at Gairlock in the far north of Scotland where he continued to grapple with the two major issues facing his Administration: Ireland and unemployment. Periodically he summoned Ministers and experts North for consultation. One of those called to Gairlock was E. Hilton Young (subsequently Lord Kenmet),

Financial Secretary to the Treasury and a Liberal. The Prime

Minister informed Young that seme sort of bold program was required "to save the country from suffering civil tumult and possibly worse." Young was given the task of seeking the opinions of leading financial and business leaders about the possibility of using the Government's credit on a large scale to stimulate trade and employ­ ment. Just exactly what Lloyd George had in mind is not quite clear, 176 but he spoke of "Lr250 million of honest inflation" (by ’honest' I mean frank and unconcealed). He held that "this was not too large for a country with a revenue of L900 million "and especially if we have something really substantial to show for our lr250 million-roads, trains, light railways, canals and especially land settlements." Apparently he wanted some sort of massive injection of Government credit through the issue of Treasury bills or other Government notes which would then be used to finance a gigantic program of public relief works. The Prime Minister sent off his emissary with a final word of caution: "pray do not be too easily frightened by city potentates who are as stuffedvith stale orthodoxies as old McKinnon, the Wee Free Minister who afflicted me yesterday with his theological banking principles." 21 If Lloyd George was really seriousebout his proposal, Hilton Young was the wrong man to send on such a mission. Completely indoctrinated with the "Treasury view" of economic affairs, he was convinced that inflation would only raise prices and depress the living standard. If wage earners were supported from inflationary spending it would only "teach them to believe that the country can consume more than it produces, a mischievous lesson." 22

21Lloyd George Papers F/28/8/2 Lloyd George to Hilton Young 26 September 1921. ^E. Hilton Young, "The Trade Facilities Act," The Nineteenth Century XCV (), 514. 177 It may be doubted then whether Young was a convincing advocate of innovation when he posed his hypothetical question to financial leaders of the city: Suppose that we had to contemplate having a million unemployed on our hands for several years to come. We could not let them starve. It would cost something like trlOO million to keep them alive. Granted that the money cannot be had for fresh taxation or from loans to the Government by investors of real savings, then it must be got by seme form of inflation. But when got, how can it best be applied? After meeting with representatives from the City's leading investment houses and several large shipping firms, as well as Lord Norman, Governor of the , Young reported to his Chief that he found less than enthusiastic response for any 23 large scheme of inflation. Supporting the general viewpoint of the bankers and industrialists, economist Josiah Stamp predicted that seme inflation was coming in any case, but that a adoption of a "bold" policy of inflation of the size proposed by Young would make British goods more expensive on foreign markets. While Stamp and some of the bankers agreed that a certain amount of inflation was desirable the best way of producing it would be indirectly by "letting up" on taxation. Another source of the business leader's opposition to an inflationary policy stemmed from a fear that it would halt the fall in wages already in progress. In a rather sophisticated argument Stamp maintained that the deflation of wages belew prewar

23 Lloyd George Papers F/28/8/2 Hilton Young to Lloyd George 26 September 1921. 178

levels was essential before the economy could begin to recover. If this were not done, inflation would begin again at a higher 24 level and very quickly get out of hand. It was clear, however, that an announced plan of inflation would destroy all pressure on trade unions to accept lcwer wage rates. With the major proposal for inflation vetoed by business interests, Young continued negotiations for sane sort of scaled down proposal that would relieve unemployment. Suggestions for expansion of the Government's program of export insurance met with little success. Young commented that "the banker's mouth, as one knows is open wide. The sort of export credit scheme which he is prepared to assist is one by which he will take half 25 the profits and the Government will take all the risk." The consensus of experts agreed that the best form of palliative would be assistance to new capital investments both at home and abroad. Direct loans could be made to foreign governments particularly in Europe or in the Dominions for required capital goods which in turn would produce orders thereby reducing unemployment. Hone projects could also qualify for this assistance especially those schemes requiring large capital expenditure such as railway 26 electrification and the expansion of the London tubes. The

94 Ibid., F/28/8/6 J. C. Stamp to Hilton Young 28 September 1921. ^ Ibid,, F/28/8/4 Hilton Young to Lloyd George 27 September 1921. ^Ibid., F/28/8/5 Hilton Young to Lloyd George 29 September 1921. 179 major feature of the plan was its use of private enterprise rather than public works projects as a counter to unemployment. This, of course, accounted for the support given the plan by an influential segment of the business community. At the beginning of October, Hilton Young accompanied by Sir James Hope Simpson of Martin's Bank, W. L. Hichens of Came11 Laird shipbuilders, W. T. Layton, director of the finan­ cial section of the League of Nations and Sir Allan Smith of Engineer Employers Federation, journeyed to Gairloch to discuss the proposal with Lloyd George. 27 In their draft report the Committee warned that there could be "no short cut for avoiding the necessary process of adjusting costs to those of our competitors." In the meantime they recognized the necessity of some sort of doles or relief for the unemployed while keeping the bulk of the work force employed in their own industry. To give impulse to industrial revival a scheme of Government credit would be extended to public authorities, private companies or foreign governments for major capital projects that could not be financed by private enterprise. Although in most cases the assistance would be limited to a Treasury guarantee of the loan, the Committee also suggested the the raising of a "National Development Loan" to finance grants

27 Sir Allan Smith was also a Conservative M.P. with close connections with the Unionist Business Ccmmittee (or Industrial Group as it was later called) and was often called in by Lloyd George as a representative for business interest. 180 and guarantees that had been approved. 28 Even as it stood the Gairloch scheme had a good deal to recommend it and might well have had some impact on unemployment and the depression, but demands for economy immediately began to trim it down. Pressure from the Treasury led to the deletion of the provision for a development loan. It was supported by Stanley Baldwin who contended that a loan was not necessary since the bankers had assured him that a Government guarantee 29 would be sufficient inducement for the financing of new works.

Although no actual figure was mentioned this National Development Loan was to be quite large, at least L-100 million. It was thought by its supporters that the loan would appeal ,lto a wide class of investors and would be stimulated by patriotic propaganda" similar to that used in the War. In an unprecedented step the Unemployment Committee with Baldwin and Hilton Young dissenting, recommended that the provision for a National Development Loan be reconsidered. 30 Ironically, Young had voted against his own proposal, probably because he had subsequently accepted the Treasury's position that the loan would make it difficult to raise money for its regular issues to meet current

28 Lloyd George Papers, F/25/2/26 "Draft Proposals of Commander Hilton Young's Committee Submitted to the Prime Minister at Gairloch" 2 October 1921. 9Q C.U. Meeting 33 (6 October 1921), Appendix, Cab. 2U/114. 9fl C.U. Meeting 36 (12 October 1921), Cab. 2U/im. 181 obligations. 31 Mond called the proposal for a development loan "the one fruitful suggestion" that the Unemployment Committee 32 had ever made; nevertheless, the proposal was rejected. Instead a much more limited proposal for 1x25 million in Government guarantees was adopted. This modification seriously limited the scope of the Gairloch Scheme eliminating a number of major projects that might have qualified under a direct loan. The City awaited the announcement of the Government's plans with a good deal of apprehension. Relief was expressed that Lloyd George had "not fallen victim to any of the showy preposterous schemes which rumor associated with his name." It was thought by seme that the Prime Minster might use unemployment distress as an opportunity for the construction of garden cities or other large construction programs. 33 Moreover there were also fears that Lloyd George might go ahead with his original proposal for massive inflation despite the cold water thrown at it by the financial experts during Hilton Young's investigation. As Josiah Stamp had pointed out, their chief concern centered around the fear that inflation would halt the fall of wages. Business leaders wanted to know whether or not this stretching of credit would enable

31 Lloyd George Papers F/28/8/7 Hilton Young to David Lloyd George, 5 October 1921. ^Ibid., F/37/18 "Notes on a Future Pblitical Programme" by Sir Alfred Mond, 7 September 1922.

33The Spectator CXXVII (8 October 1921), H54. 182 "the Trade unions to maintain at all costs the minimum wage, with minimum hours and the minimum amount of work and efficiency." One of the framers of the Gairloch scheme, W. L. Hitchens delivered a speech only a few days prior to the announcement of the Govern­ ment' s unemployment plans in which he made a strong plea for the reduction of wages. 34 This might have been a warning from the City interests that they had no use for an inflationary policy that might interfere with a business policy of wage cuts. Businessmen need not have worried given the emaciated form of the final Gairloch proposals, but having recently experi­ enced a wave of inflation, they were overly cautious. Even the left wing economist J. A. Hobson agreed that the scheme might cause a measure of inflation, or at least might act as a check on deflation, and in any case it might prove less expensive than other policies. Hobson believed that the most effective use of credits would be found in Eastern Europe where a demand still 35 existed for British manufactured goods. In Parliament the Gairloch Scheme now renamed the Trade Facilities Act, drew a mixed reception from Conservative members with business interests. Sir William Raeburn, a shipbuilder, was skeptical of the scheme's ability to generate work and favored instead a program of battleship construction in the Clyde yards.

3t*Ibid., 458, 454. qc J. A. Hobson, "Policies of Unemployment I-England," The Nation XXX (22 October 1921), 136. 183

He argued that it was a question of high prices, not the avail­ ability of credit that had stifled the economy. Colonel G. B.

Hurst, representing the Manchester cotton interests welcomed the Bill because it was economically sound and would increase the amount of exports and "strengthen the bonds which bind the different parts of the together." As might be expected, Sir Frederick Banbury held that the Bill would only make matters worse. If the Government really wished to improve trade he had two proposals: the first was to repeal the Trades 36 Disputes Act. The second was to abolish Trade Boards. On the left, Ormsby-Gore attacked the provision in the Bill which vested the power of making the guarantees in the hands of a committee of businessmen. He predicted that there would be an "ugly scramble" for the fcr25 million. To prevent local interests from making deals with the committee he wanted operation of the scheme handed over to the President of the Board of Trade and nobody else." After condemning the demands for drastic wage reductions Oswald Mosley placed the blame for the depression on the fall in exports since the end of the War. He argued that the legislation was totally inadequate and that more funds could have been available for unemployment palliatives if the Government had not "spent over fe300 million on military adventures in Iraq, Russia

36H of C Deb. CXLVII (25 October 1921), 679-682, 695-696, 732-735. 184

and all over the world." 37 Dealing with the immediate crisis the Cabinet Unemployment Committee continued to consider proposals along more traditional lines. Rioting had already broken out in Scotland and the possibil­ ity of trouble elsewhere seemed very likely as winter approached. While still at Gairloch the Prime Minister made one of his rare appearances before the Comnittee to emphasize the serious nature of the problem. He reminded his colleagues that "no Government could hope to face the opprobrium which would fall upon them if extreme measures had to be taken against the starving men who had fought for their country and were driven to violent courses by the desperation of their position." It was possible, of course, from a financial point of view to proceed with a few "temporary expedients" to meet the existing crisis but the risk was too great. "The Government might find themselves in a position of having alienated the whole of the working classes, who might sweep away all parties, put in their own people, and in the first flush of their success undertake experiments which would endanger the life of the comnunity." 33 Perhaps Lloyd George's analysis was overdrawn but it reflected a deep concern with social unrest among the unemployed. The real danger was not so much a revolution in the streets as a revolution at the polls. To protect its left flank it was

3^Ibid., (19 October 1921) 153 (25 October 1921) 769-774.

38C.U. Meeting 33 (6 October 1921), Cab. 24/114. 185 necessary for the Coalition to produce something substan­ tial in unemployment relief beyond the Gairloch proposals. Macnamara expressed this position clearly in a letter to Lloyd George at Gairloch: We have by the statements which have appeared in the Press for the last week, very naturally raised public interest and expectation— particularly on the part of the unemployed themselves. Now unless we actually accomplish the putting in hand at once of work which will ease the situation our last position is going to be worse than our first. 39 The situation in Scotland required immediate attention. As a result of the coal strike a large number of the pits had been flooded but the displaced men were unable to draw relief under the strict provisions of the Scottish Poor Law which did not permit able bodied men to draw benefits. Further complicating the situation was the outbreak of a riot among the unemployed in . Since (then Colonial Secretary) repre­ sented Dundee in the Commons, the possibilities of embarrassment to the Government were considerable. Despite a Report from the Chairman of the Scottish Board of Health, that the miners and their families were in a state of destitution and that disorder would spread unless poor relief was granted, Home maintained that the miners "must be allowed" to suffer for "their wickedness" in allowing the mines to be flooded during the strike. However, even H o m e had to admit that they could not be permitted to starve and the Committee instructed

39Lloyd George Papers F/36/1A5 Macnamara to Lloyd George 27 September 1921 "marked secret." 186 the Scottish Office to inform the local authorities to pay outdoor relief in contravention of Scottish law. Perhaps as the result of the riot in his constituency, Churchill briefly displayed a keen interest in the unemployment

problem during the fall of 1921. He thought the situation in Scotland had been mishandled and reported that the poor law

authorities there wanted sane reimbursement by the Government for their illegal payments. Considering the problem of unemploy­ ment relief fron the standpoint of the cost to the Exchequer he complained to Lloyd George that it would have been much cheaper to have continued payments to unemployment insurance instead of allowing an eight week gap leaving the unemployed to apply for poor relief. 41 Usually the poor law authorities granted higher rates than Unemployment Insurance benefit of 15s because they had to take into consideration dependent wives and children where the insurance did not. Sir Robert H o m e countered that the gap could not be filled by "giving something for nothing." The entire 42 cost would fall on the State. Scotland was only the worst of a very bad situation. As hundreds of thousands exhausted their unemployment benefit each

unC.U. Meeting 27 (13 September 1921); C.U. Meeting 28 (16 September 1921), Cab. 27/114. 41 Lloyd George Papers F/9/3/87 Churchill to Lloyd George 23 September 1921.

^C.U. Meeting 30 (27 September 1921), Cab. 27/114. 187 week and applied for poor relief there was a definite possibility that the poor law authorities would exhaust their funds. The Treasury position as represented by Hilton Young was that any aid to the poor law guardians would destroy economical administration at the local level. To Montague Barlow this was pure madness. He asked Young "what the Treasury would propose if people were on the verge of starvation and at the point of death." Mond,

Macnamara and Montague Barlew tired of Treasury excuses, pushed through a motion calling for Treasury aid to local authorities if they were unable to raise funds prior to the convening of Parlia- *+3 ment on 18 October. As might be expected Hilton Young dissented. To defend the Treasury position, Home produced a detailed memorandum outlining the financial crisis facing the country. In addition to using all the usual arguments about unemployment relief producing inflation Home maintained that the country was approaching bankruptcy. In such conditions, it was "imperative to limit assis­ tance for unemployment to something near the barest minimum to prevent starvation." Any extensive grants would merely retard recovery and would be "received with vehement hostility by the mass of those on whom the Exchequer depends for support of its present and imminent debt maturities." Self-help would "dry up at once" if the local authorities thought they could pass their burden on to the state, consequently

U3 C.U. Meeting 29 (20 September 1921), Cab. 27/114. 188 any assistance was to be hedged with all possible restrictions. Loans might be granted, Home conceded, but only in dire necessity and only when relief administration had been tightened through M-Li­ the use of some suitable destitution test. If Home’s position sounds parsimonious it was not unique. Most business leaders agreed that financial stability came first and that while the unemployed could not be allowed to starve, nothing should be done to encourage the working class to believe that they could be indefinitely maintained by the State. Benefits under Unemployment Insurance would hardly qualify as maintenance even with the fall in the cost of living after the onset of the depression. Aware that 15s a week was totally inad­ equate for a married man with a family, the Unemployment Committee recommended the establishment of a special compulsory distress 45 levy to supplement the unemployment benefits. A sub-committee was appointed to draw up the proposal although most of the planning was the work of Montague Barlow. He recomnended the establishment of a distress fund on a temporary basis for a six month period during the worst part of the winter with contributions of 2d from both the employer and employee and 3d from the State. Weekly allowances would be paid to each family at the rate of 5s for the wife and Is for each child.

44 C.U. 211 (26 September 1921) "State Assistance to Poor Law Authorities', Cab. 27/119. 44 C.U. Meeting 33 (6 October 1921) Appendix, Cab. 27/114. 189

Again the Treasury demanded that sane sort of destitution

test be imposed before the money was distributed by the poor law guardians. The Committee disagreed. Macnamara announced that he would not ask the Labour Exchanges to cooperate in a destitution test while Robert Munro argued that any unemployed man with a wife and children drawing only 15s a week benefit must be consid- 1+6 ered destitute. Although considerable temporary relief was provided by this scheme it was one of the worst examples of regressive taxation. It added a further burden to the already heavy contributions from the weekly pay envelope. Health and unemployment contributions together amounted to 25d per week for each worker, but the State's contribution to both schemes combined amounted only to 6d. In effect, the Government was asking the workingman to bear a major part of the burden of unemployment while contributing itself a relatively small portion of public funds. It was merely another example of the central government shifting the greater part of relief costs to local authorities to employers and to the workers themselves. Public works relief projects introduced the previous year as a contribution to the unemployment problem were also re-examined by the Cabinet Committee. Realizing that long periods without

Ufi R.D.C. (Relief of Distress Committee) 2 (10 October 1921) Note by Montague Barlow, Cab. 27/149; C.U. Meeting 36 (12 October 1921) Cab. 24/114. 47 CP 3391 (11 October 1921) "Report of the Relief of Distress Committee," Cab. 27/114. 190 work might have a demoralizing effect on the unemployed both Mond and Macnamara favored a large program of public works for its psychological impact. Even if the work had little economic value it was useful in a social sense to both the workers and the community. Churchill, as a novice in the problem of unemployment, rejected this position. In his view doles when supplemented with some sort of relief in kind such as public soup kitchens could meet the worst cases of destitution and prevent further disorder. It was doubtful, however, whether the situation called for the inauguration of any more work relief schemes which were expensive, led to extravagance and resulted "in endless friction and waste." The available money, Churchill maintained, would be better spent on doles where it could go five times as far. If it was necessary to stimulate unemployment this responsibility should be left in the hands 48 of private enterprise. Interestingly enough, this approach resem­ bled the unemployment policy of the second Baldwin Government (1924- 1929) in which Churchill served as Chancellor of the Exchequer. After 1925, work relief was almost halted and Unemployment Insurance 49 became the mainstay of Government policy for several years. Brushing aside Churchill's objections the Unemployment Cormdttee continued to plan for a large program of work relief

Lift C.U. meeting 31 (29 September 1921), Cab. 27/114; Lloyd George Papers F/9/3/88 "Memorandum by Secretary of State for the Colonies on the Unemployment Situation," 29 September 1921. 49 K. J. Hancock, "The Reduction of Unemployment as a Problem of Public Policy, 1920-29," Economic History Review XV (December 1962) 336. 191

projects for the winter of 1921-1922. Frightened that Home's prophecies of national bankruptcy were a signal for cutting back work relief projects, Mend and Macnamara were more than ready to concede any point that might make the entire scheme more palatable to the Treasury. One aspect of the relief schemes that particularly displeased Treasury officials was the payment by local authorities of full union wage rates. They were especially anxious to retain a fairly large gap between ordinary wages and

those for relief rates so that they would not draw employed workers onto the unemployment rolls. Macnamara was quick to oblige on this point lengthening the probationary period when 75 per cent of local wages rates were paid from three to six months. Reluctantly and only after grave warnings about the finan­ cial situation, Home authorized irlO million for unemployment schemes to be administered by the St. Davids Committee and an additional Ii3 million for loans to poor law authorities should they be needed. Macnamara was overjoyed having expected that his 51 pet project might fall under the economy axe In their rush to accept this offering from the Treasury Mond and Macnamara over­ looked just hew meager and inadequate it really was. Real costs

^C.U. Meeting 27 (13 September 1921); C.U. Meeting 43 (10 November 1921), Cab. 27/114; C.U. Meeting 31 (29 September 1921), Cab. 27/114. ^Middlemas (ed.), Whitehall Diary I, pp. 173-174. 192

to the Treasury were much smaller than the grant would indicate

amounting to about fe300,000 a year over a fifteen year period.

Results were also small. In the previous year's program only 52 80,000 men had been put to work at any one time. Placing most of the available funds in the hands of local authorities for their snail work relief programs made it impossible for the Government to undertake badly needed projects on a much larger scale. One such project was the Board of Education's request that school construction and maintenance projects which had been halted by economy considerations in December 1920, be adopted as a source of relief work projects through loans to local authorities. Although the Board reported that it had reviewed over 400 applications for school construction alone, the

Unemployment Committee rejected the proposal with Mond curtly remarking that there was no unemployment in the skilled construc­ tion trades. ^ The accuracy of Mond's remark may be questioned. Unemploy­ ment in the skilled trades had been rising rapidly since the 54 spring of 1921 reaching 10 per cent by March of 1922. After burning its hands on Addison's housing program the Government was

^C.U. 211, Memorandum by Horne, Cab. 27/119; C.U. Meeting 31 (29 September 1921), Cab. 27/114. ^C.U. 186 "Building and Maintenance of Schools," (15 September 1921), Cab. 27/118; C.U. Meeting 28 (16 September 1921), Cab. 27/114. 44 M. Bowley, Housing and the State, p. 275. 193 understandably shy about embarking on any new construction projects even if the Treasury had been willing to allocate the funds. Con­ servative critics, in particular, would be quick to denounce any- thing even slightly resembling the ill-fated housing scheme. 55 In any case the L-IO million proved inadequate even to deal with the demands of the local authorities. By the middle of December 1921, the St. Davids Committee, responding to the flood of over 600 applications, had almost exhausted its entire allocation. Again Home refused to authorize a further allocation for unemploy­ ment implying that he was considering a tax cut in the next budget 56 and that no further additions could be permitted for any purpose.

Only personal appeals to Lloyd George by Macnamara and

Lord St. Davids enabled the scheme to continue. Macnamara called the program of work relief "by far the best" method of dealing with unemployment. With the figures for the unemployed again approaching the two million mark no other plan could be put into effect so quickly. 57 Proposals for over L20 million in unemployment schemes had been received from the local authorities, and some L5 million of these schemes had already been rejected for lack of funds. Lord St. Davids warned of political repercussions if further funds were not made available: "After all the feeding of the people is

^ S ee for example The Spectator CXXVII (8 October 1921) 454. ^6C.U. Meeting 45 (13 December 1921), Cab. 27/114. 57 Lloyd George Papers F/36/1/48 Macnamara to Lloyd George 18 January 1921. 194 the first charge on a State. It must surely ccme before Elementary Education, or payment of Debt, or almost anything. It is a first necessity." Overriding the Treasury's objections an additional 58 hd million was approved for the use of the St. Davids Committee. As unemployment continued to plague the country these local authority relief schemes became an accepted part of Govern­ ment policy. At a policy planning session in late March 1922

Philip Lloyd Greame, who was soon to become Chairman of the Board of Trade under Bonar Law, praised the schemes, echoing Macnamara's argument that the psychological effect of these projects was very great, helping to ease conditions where unemployment was 59 very severe. The much heralded Gairloch schemes had been much less successful. Much of the difficulty stemmed from the size of the schemes to be considered and the overcautious attitude of the conmittee of financiers headed by Sir Robert Kindersley of the investment house of Lazard Frferes. By the summer of 1922 several large projects had been approved including L6 million for the electrification of the South Eastern and Chatham Railway and a 60 similar amount for extensions. Most of these

5®Ibid., F/44/7/5 Lord St. Davids to Lloyd George 15 January 1922; CP 3683, "Memorandum on Schemes for Relief of Unemployment," by Mond, Cab. 24/132. 59 C.U. Meeting 47 (30 March 1922), Cab. 27/114.

6C^C.U. 432 (4 July 1922) "Report of Inter-Departmental Corrmittee on Unemployment," Cab. 27/123; Saturday Review CXXXIII (18 February 1922), 36. 195 projects studied by the Kindersley Committee involved complicated engineering and planning before they could be started so that there was little immediate effect on unemployment. They were, however, the type of substantial capital expenditure that Mond had favored, and if pursued on a large scale might have had a consid­ erable impact on the economy. Although the Coalition's unemployment policy provided seme important blueprints for future Conservative policy makers, it provoked little enthusiasm among the Party faithful. For Die-Hards like historian J.A.R. Harriott who regarded the increasing reliance upon public assistance as a possible source of "the attenuation in moral fibre and racial degeneracy," anything that the Government 61 did beyond the prevention of starvation would be too much. This was an extreme view, no doubt, but most Conservatives were skeptical of any more palliatives and were concerned about the cost of the schemes. Even Lord Eustace Percy, who was one of the more progres­ sive young Tories showed deep concern for the additional expense that industry would have to bear because of the Distress levy scheme but he failed to register a similar protest over the additional burden that this same program placed on the workingman's pay envelope. Neville Chamberlain made a strong speech against the payment of only 75 per cent of the wages to relief workers, but

fil J.A.R. Marriott, "Public Assistance and National Decay," Fortnightly Review CXII (1922), 379.

62H of C Deb. CXLVII (24 October 1921), 521-523. 196 here again, the concern was with the local authorities rather 63 than the worker's wages. Realizing that unemployment insurance and relief could be quite costly with a million and a half unemployed, Conservatives revived interest in a system of industry wide unemployment insur­ ance. Both The Spectator and the Saturday Review favored a system of industrial insurance possibly administered in conjunction with the trade unions. 64 Much of this interest involved a hope that the burden of the unemployment insurance could be removed from the taxpayers. Most of those suggesting insurance by industries had given little thought to the difficulties involved in rates of unemployment and the transfer of individuals from one industry to another. Neville Chamberlain suggested that the problems were quite complicated but nevertheless that the plan had much merit and therefore should be thoroughly investigated because it would provide incentive for management to keep their workers employed. Furthermore Chamberlain recommended that it would provide an opportunity for both employers and employees to work together 65 through their mutual administration of the insurance program.

63H of C Deb. CXLVIII (7 November 1921), 106-107. fiU The Spectator CXXVII (24 September 1921), 387, Saturday Review CXXXII (22 October 1921), 365.

H of C Deb. CLII (29 Maroh 1922), 1410. 197 In unemployment, as in so much of the rest of its social policy, the Coalition was caught in its own trap of promising too much and delivering too little. This point was made by Robert

Cecil who denounced the Relief of Distress payments as totally inadequate: "Either they ought to have said 'We will not deal with it at all' or they ought to deal with it adequately and properly." 66 Unfortunately, on the Conservative side those who thought the Government were doing too little for the unemployed were a mere handful. On one exceptional occasion in November 1921, "the Group" supported a Labour Party motion to increase unemployment benefits, 67 but this sort of arrangement was very rare indeed. For the rest it was easier to respond to the continuing demands for economy and tax relief, allowing the Government to worry about the adequacy of its own unemployment policy.

The Geddes Axe and Social Programs Publication of the reports of the Committee on National Expenditure, better known as the Geddes Committee, in early 1922, brought about a new wave of economies and renewed debate on the Coalition's program of reform. Swinging their axe in every direc­ tion the Committee of businessmen found enough "waste" of public

66H of C Deb. CXLVII (9 November 1921), 1660 67 Ibid., 1670. The motion was introduced by (Labour) and seconded by Walter Elliott (Conservative). It failed 145 to 112. 198

expenditure to arouse almost everyone. Among its more sweeping

recommendations were the abolition of Labour Exchanges, the sale

of public authority houses built in the Addison scheme, reduction

of health services for war veterans, and the abolition of the 68 Ministry of Transport and the Department of Overseas Trade.

Imperialists like Churchill and Amery were angered at the

69 Committee’s call for massive cuts in the armed forces.

It was education, however, that was to bear the brunt of

the cuts. Of the Board of Education’s estimates for 1922/1923

of L50 million, the Committee demanded reductions of Erl8 million.

These economies were to be produced by raising the school entering

age to six, slashing state scholarships for secondary and higher

education, enlarging the size of individual classes to 50, reducing

teacher's salaries and making their pensions contributory. In a

further extension of the tendency to throw the cost of social

expenditure back on the local authorities it was also recommended

that the 50 per cent education grant be replaced by a system of

block grants. The implication here was plain: a block grant system would lead to smaller payments to the local authorities.

So savage and indiscriminate were these cuts that even

advocates of economy condemned them. Strachey's Spectator called

CO Parliamentary Papers, Cmd. 1581, 1922 First Interim Report of the Conmittee on National Expenditure, pp. 146, 131, 164-165; Cmd. 1582, 1922, Second Interim Report of the Conmittee on National Expenditure, p. 30. 69 See for example Lloyd George Papers F/18/4/32 Sir Eric Geddes to Lloyd George, 9 February 1922. 199 the recommendation for a reduction in teacher's salaries "the falsest of false economy." It protested that "the character and brains of children are the most precious raw material in creation. We cannot be too considerate or pay too much honour to those in whose hands has been placed moulding of that material."

Readers of The Spectator were reminded that teacher's pay, "inad­ equate for a great number of years," had only recently been raised on a sliding scale on the lines recommended by the Burnham Com­ mittee. There was a great chnger that if the cuts were permitted the teachers might become a discontented class who might "pass 71 on a spirit of discontent and unrest" to their students.

The Government too was worried. Economy was necessary but how was it to be carried out without alienating teachers, parents and good part of the working class? The President of the Board of Education, H.A.L. Fisher, found himself "totally unable to accept the sweeping and violent reductions recommended

72 by the Committee." If they were fully pressed Fisher would resign.

He was, however, prepared to allow a reduction of approximately

L5 million by reducing special services such as provisions for children's meals, the exclusion of those under five and by making

70 Cmd. 1581, 1922, First Interim Report, pp. 120-123.

^^The Spectator CXXVII (31 December 1921), 882.

72 Lloyd George Papers F/16/7/77 H.A.L. Fisher to Lloyd George 10 January 1922. 200 teacher's pensions contributory. Any further reduction would

"inevitably create the political trouble which the Government is anxious to avoid." This applied especially to cuts in teacher's salaries or in grants to the local educational authorities. It certainly was not worth the public outcry that such actions would provoke. In addition, "such a saving would not placate the 'anti-waste' Party or the thick and thin supporters of the Geddes Committee."7^

Signs of dangerous political repercussions were already evident. On 22 February 1922 the Conservatives lost a seat to

Labour at Camberwell North, a working class district in London.

It was suggested by Conservative supporters in the constituency that the chief reason for the loss was the hostility of the women to the Geddes Committee's recommendations barring children under

74 six from school.

This information had been communicated to the Prime Minister by Lord Burnham, the most loyal and consistent supporter of the

Coalition among the newspaper barons. Calling the Geddes recom­ mendations on education a "stupendous blunder" Lord Burnham warned that there would be "retribution" at the polls if the Government tried to carry them out. As chairman of the committee on teacher's salaries, Burnham had close contact with public sentiment about

7^Ibid., F/16/1/80 Fisher to Lloyd George, 21 February 1922. 74 Ibid., F/5/8/13 Henry French to Lord Burnham, 23 February, 1923. 201

education. He explained that working class mothers wanted their

children in school so that they would be kept off the streets.

Furthermore, the children would be deprived of the free meals

and medical services provided by the schools. There was also widespread objection to the 25 per cent limitation in scholar­

ships to secondary schools which would severely limit working

class access for further education. Lord Burnham concluded that

it was a "mad policy" adding that he had no sympathy with his

"brother capitalists of the Geddes Committee" who had devised

75 the reconmendations.

It was clear to the Government that the economy campaign had gone too far. A review conmittee of the Cabinet under the

chairmanship of Austen Chamberlain found "that it would not be either prudent or practical to insist on the proposed reduction."

Attendance of children up to six was made optional, but these parents who desired to send their children were permitted to do

so. The recommendation for increase of class size and the

immediate reduction of teacher's salaries were rejected. On the other hand, scholarships were cut down and the major reforms of the Fisher Act of 1918 such as the raising of the school leaving age to fifteen could not be implemented for another generation.

It was only after 1945 that these reforms were ultimately put

7^Ibid., F/5/8/11 Lord Burnham to Lloyd George 21 February 1922. into effect. 76

One result of the Geddes Report was to bring on a debate over the proposed cuts which revealed a deep seated hostility to education reform among Conservatives. Probably the most severe critic of the entire state education system was Henry Macquisten, a Scottish lawyer, who could best be called an educational funda­ mentalist. He called the Fisher Act of 1918 only a "teachers' stunt imposed upon a dying Parliament when the whole of the country was occupied with the War," and accused the teaching profession of spreading discontent among the working class by encouraging their pupils to enter middle class professions. He denounced the agitation against the Geddes Report cuts and as a way to produce economies called for an end to compulsory education. Historian,

J.A.R. Marriott demanded an end to the system of continuation schools which provided part time education for adolescents between fourteen and sixteen. Another Tory backbencher, Colonel G. B.

Hurst from Manchester, remarked that "it was better to have the country half educated and solvent than to have it well educated and bankrupt." Although he granted that there was some need for an educational ladder Hurst thought the provision for free places of 25 per cent in secondary schools "a very liberal allowance."

Moreover, there was "no great advantage in turning a large number

7®CP 3785 (28 February 1922), "Chamberlain Conmittee on the Geddes Report," Cab. 24/133; Gerald Bembaum, Social Change and the School 1918-1944 (London, 1967), pp. 29-33. 203 of boys and girls who are not particularly brilliant into occupa-

77 tions which are already over crowded..."

This was a veiled defense of the use of education as a check on working class mobility. Thus economy was often an excuse for the maintenance of the status quo, something the Conservatives usually tried to conceal. In all these instances there was no corresponding defense of educational policy by the Conservative left. This betrayed an obvious lack of interest, or an ignorance of State education policies, on the part of the progressive

Conservatives. These open attacks on education were upsetting to even some of the Die-Hard faction. One member, Sir Henry Craik, a former educational administrator, who was attempting to convince

Leo Maxse to publish his article on the need for educational economies expressed some doubt about the wisdom of these strong attacks: "I am not sure that some of those who are irritated at the extravagance have not made an error by too sweeping denuncia-

79 tions of Education which provides a reaction."

Publication of the Geddes Report also served to focus attention on the whole question of social reform and its goals.

A debate on the Government’s housing policy on 13 March 1922 provided an occasion for one of the rare public debates between

77H of C Deb. CL (7 February 1922), 120-121; CLII (H April 1922) 2098, CL <13 February 1922), 715; CLII (28 March 1922), 1181-1182.

79 Maxse Papers, Sir Henry Craik to Maxse, 29 June 1922. the extremes of the Conservative political spectrum on the subject

of social policy. Members from all parties, but especially

progressive Tories had been pressing the Government to review its

housing policy particularly in regard to enlarging efforts at

slum clearance. Lady Astor reminded Sir Alfred Mond of the pledges

that had been made: "you may not carry them all out, but at any

rate go forward instead of back." Describing herself as a

"Social Reformer not a Socialist" she asked for "hones rot for heroes

but for ordinary men and women". This drew a retort from Sir

Frederick Banbury who announced that the only difference between a

Socialist and a Social Reformer was "that a Socialist had the

courage to say straight out he was a Socialist, that is to say he believed...that the State should run the whole thing and the

Social Reformer had not the courage to say that-". The social reformers were merely trying to gamer votes with impossible promises in which the public could not put their faith. He added

that the only way the country "could be restored to anything like

its former prosperity was to get rid of all these socialistic

doctrines."

Banbury's comments provoked a rejoiner from Lord Robert

Cecil who denied that a social reformer was "a Socialist in disguise

A reformer was merely someone "who wishes to improve the social conditions of his fellow citizens." Reminding Banbury and his

Conservative colleagues of the Tory tradition, Cecil went on to make 205

a strong defense of social reform:

For good or ill there are many things in which the State shall assist the poorer citizen of the country. We have done it with regard to education and with regard to disease. We have done it with regard to housing in various ways. It may be wrong or right. I myself am quite confident it would be fantastic folly to go back on that course of legislation.

Cecil called Banbury's condemnation of all social improve­

ment "reaction gone mad," maintaining that the case for State

intervention was very strong because "the morality, health and

80 everything that constitutes the well-being require good housing."

From the Saturday Review came regrets that Cecil had not

studied the Geddes Report more closely to see how state enterprise

had "completely failed to promote 'social well-being"'. It had

hoped that Cecil would be identified "with the policy of intensive

economy and relentless retrenchment which alone can bring us back

81 to prosperity." With the exception of some modifications to meet public objections as in the case of education, economy was

in the saddle. No doubt the Geddes Axe was a blunder. It angered both the proponents of social reform and the defenders of the military services. So large were the cuts to the armed forces that the Conservative Party headquarters circulated a pamphlet rising to the defense of the fighting services against the budget

80H of C Deb. CLI (13 March 1922), 1852-1854, 1856, 1923-1924.

81The Saturday Review CXXXIII (18 March 1922), 275-276. 206 trimmers. 82

The Liberals also stressed the need for economy. Asquith presented a resolution calling for a definite promise of a reduc­

tion in taxation "so as to stimulate trade and decrease unemploy­ ment." It failed 241 to 92, but many Die-Hards joined with Tory 83 Democrats like the Cecils and Oswald Mosley in voting for it.

With an election in the near future the Coalition had no plans to

embark on new social programs or to revive old ones. Austen

Chamberlain in a speech before the Council of the National

Unionist Association on 21 February reminded his listeners that

"this was no time for great reform, which, however desirable always costs money." The war had left the country burdened with debt and taxation which might take some time to overccme. He

urged the Party faithful "to fight for economy, for the reduction

of expenditure, for the suspension or postponement of things we might desire until a better time comes." A renewal of reform,

Chamberlain warned, was some time in the future perhaps four or 84 five years away. Perhaps the Tory mood in the spring of 1922

can best be seen in the comments of Lord Bledisloe to Robert Cecil who had deplored the cuts in social services. Bledisloe maintained

that he was all for social reform "but Social Reform is in many—

82 Conservative and Unionist Pamphlet no. 2043, (1922).

83H of C Deb. CL (13 February 1922), 647, 742. 84 Gleanings and Memoranda LV (March 1922), p. 279. 207 in fact, in most spheres— a luxury which we cannot new afford." 85 The Geddes Report and the economy campaign in general implanted a belief in many Conservatives that new social programs were so costly and politically risky that they should be attempted only in cases of great public demand.

Fear of the Left The emergence of a strong, well organized Labour Party after the War, caused grave concern among the Conservative Party leadership. The Tories, long able to secure a considerable portion of the working class vote, now felt their hold on many working class constituencies threatened by the rapid growth of this new class-oriented Party. The Party's very name "Labour" grated on the ears of Conservatives. Chamberlain complained bitterly to Lord Robert Cecil that it was a misfortune "that a political party with political aims has taken the name of Labour

Party and it is difficult in the course of speeches always to keep clearly before others, hearers or readers the difference between opposition to the 'Labour Party and opposition to labour.1" The real difficulty was not a question of semantics but of Labour's fitness to govern and the sources of its support. Chamberlain expressed this view quite clearly in a letter to Cecil: I regard the growth of the Labour Party as a serious menace to the nation— not because it is mainly composed of working men— but in the first place because of its lack of experience and secondly and more seriously

®^Cecil of Chelwood Papers BM Add MSS 51163 Lord Bledisloe to Cecil (ca early March 1922). 208 because of its difference from every other party in the House of Commons in being directed and controlled from outside Parliament, so that we find that its leaders unable to take the action which they know to be right. 86

While it is true that Chamberlain, like many other Conser­ vatives, had an erroneous view of the Parliamentary Labour Party's relationship with the trade unions, this close connection was, nevertheless, upsetting to many Tories. The single feature of it most abhorrent to Conservatives was imposition of a political levy on trade unionists which was used to finance the Labour Party.

After the House of Lords in the Osborne judgement (1909) had ruled these levies illegal the Labour Party put pressure on the

Asquith Government to enact legislation reversing the judgement.

Eventually, after some delay a bill was passed in 1913 permitting the collection of a political levy. If a trade union member did not wish to contribute he could fill out forms "contracting out" of the scheme. Human inertia thus favored the Labour Party since the great majority of members would not exert themselves to sign the form unless they had strong political feelings for another

Party.

This system of "contracting out" proved to be a severe handicap to the Conservative Party's own efforts to organize the working class. In the spring of 1919 the Unionist Central Council

OC Ibid., BM Add MSS 51078 Chamberlain to Cecil, 26 April 1921. 209 passed a resolution calling upon the Party "to give every sympathetic consideration to the aims and aspirations of Labour and that opportunities shall be afforded them of making their

87 desires known." The culmination of the resolution was the organization of a Unionist Labour Organization by Sir George 88 Younger, the Party Manager. It was soon apparent that the new organization had met with trade union hostility in many areas. At a Unionist Labour Conference at Southport in March of 1920 many of the delegates complained of the use of trade union clubs and halls for Labour Party propaganda while they were subjected to harassment by union officials because of their political views. Participants also expressed a fear that the Labour Party would take over the Co-operative Societies 89 perhaps using their funds for political purposes.

Almost inevitably the feeling of isolation among many

Conservative trade unionists produced an almost paranoiac fear of large unions and the Labour Party. In one case the chief organizer of the Unionist Labour organization protested to Bonar

Law that the merger of several unions into the Transport and

87 Manuscript Minutes of the Unionist Central Council, 20 .

88H of C Deb. CLIV (19 May 1922), 711-712. This was admitted openly by Younger in debate.

88Gleanings and Memoranda LIV (April 1920), 262-263. 210

General Workers was nothing less than a conspiracy "to create a huge industrial fighting organization which will act, should the opportunity occur with the Triple Alliance." He asked that the 90 amalgamation be declared illegal, but the request was rejected.

It was ultimately concluded that the only way the Conservative

Party could counter balance Labour's strength in the trade unions would be a reversal of the system of collecting the political levy so that the members would have to "contract in" if they desired to participate. Of course this would have the effect of reducing the Labour Party's funds as it had after the Osborne Judgement, but the issue was disguised by making it a question of violation of personal liberty rather than political expediency. The issue was a popular one with the constituency organizations and a resolution was adopted at the 1921 Unionist Party Conference calling for an amendment to the Trade Union Act, 1913, "as to remove the necessity of making a declaration before a Trade Union member can become exempt from paying a political levy in support of policies with which he disagrees." To emphasize Party support for the Resolution it was given a strong endorsement by the Central

91 Council and submitted to Austen Chamberlain.

90 Bonar Law Papers 100/2/13 Robert M. Mathams to Bonar Law, 9 February 1921.

91 Minutes of the Unionist Party Annual Conference, Liverpool, 17-18 November 1921; Manuscript Minutes of the Unionist Central Council meeting of 21 February 1922. 211

A private members1 bill was introduced in the spring of

1922 with firm backing by Unionist headquarters and with consid-

92 erable support from various constituency organizations. The

Labour Party and the trade unions deeply resented this direct and spiteful attack on their political fund. One Labour M.P. protested that it was a direct "attempt by the Unionist organiza­ tions to destroy trade unions." However exaggerated this claim might have been, it was certain that many Conservatives saw this

Bill as a method of weakening the Labour Party as well as politi­ cal unionism. From the debate it was obvious that many Tories regarded Socialist politics as an illegitimate form of union activity but, of course, Conservative political unionism was another matter. The measure passed on the second reading by a vote of 171 to 83. Among the Conservative stalwarts voting for the Bill in this division were Stanley Baldwin, J.C.C. Davidson and W. C. Bridgeman (then Parliamentary Secretary to the Mines

Department). In addition, they all voted against an amendment by

Clynes (Parliamentary Labour Party Chairman) to postpone the

93 reading for six months.

As the Bill moved into Conmittee stage the Party stepped up its campaign for passage. A pamphlet was issued calling the bill a "trade union charter of freedom." It was quite frank about

92 See for example, Gleanings and Memoranda LV (February 1922) p. 113.

93H of C Deb. CLIV (19 May 1922) 711-749, 769-770. 212 the ultimate political objectives of the legislation. In a section entitled "Socialist objections and answers," it replied to asser­ tions that the Bill would destroy the political power of the trade unions by contending that "if their political power cannot

94 rest on a voluntary basis they have no right to it." The

Unionist Central Council exerted pressure on the Government to find time for the Bill before the end of the session, while auxiliary organizations like the Junior Imperial League actively supported it. ^

With an election approaching the Government had no inten­ tion of allowing such a controversial Bill to reach a third reading and it was permitted to die in Committee as the session ended. If a fall election was postponed, however, there was a definite possi­ bility that the Bill would come up again. J. P. Croal, editor of (Edinburgh) and close political associate of Bonar

Law, advised against pressing the Bill in a fall session, suggesting it would break up the Government and divide the Party. Although he agreed with the theory behind it, he told Bonar Law that "it would accomplish very little." He argued that "it was as impossible to give men character by legislation as to make them sober by pro­ hibition." He deprecated Younger's contention that hundreds of public meetings had voted in favor of it.

94 Conservative and Unionist pamphelt no. 2058 (1922) "The Trade Union Charter of Freedom." 95 Minutes of the Unionist Central Council, 27 June 1922; Gleanings and Memoranda LV (July 1922), pp. 3-9. 213

I remember Austen's father [Joseph Chamberlain] saying to me that a public meeting could be made to say anything. Besides our party are not united on the Bill. Our prin­ cipal party agent in Scotland told me confidentially some time ago that several strong Scottish Unionists— J. M. Macleod included— were against it.

If the Bill did come up it would then be wise to call for a speedy

96 dissolution and election.

All this was proved unnecessary because the Chanak crisis

had intervened and the Coalition had fallen before Parliament had

reconvened. The issue did not rest here, however. In fact it

grew in popularity among the Conservative rank and file. Repeat­

edly the Bill was reintroduced much to the embarrassment of the

Bonar Law and Baldwin Governments.

Repeated assaults on the trade union political levy exacer­

bated the distrust and ill feelings between much of the working

class and the Tory Party. Legislation of this sort when coupled with the economy campaign directed at social services and the

anti-union diatribes of the Die-Hard faction clearly did not

present an image of a progressive or even paternalistic political party. It would take more than a few well meaning speeches by

Tory politicians to dispel the impression of Conservative indifference or hostility to social reform.

96 Bonar Law Papers 107/2/58, J.P. Croal to Bonar Law, 25 . CHAPTER V

THE FALL OF LLOYD GEORGE AND THE 1922 ELECTION

PLANS AND PREPARATIONS

With the successful completion of the Irish negotiations on 6 December 1921, an earlyelection seemed imminent. As a striking accomplishment of the Coaltion Government it was hoped that the Irish settlement would overshadow the recent difficulties with economic and social questions. Moreover, continued dissension among the Conservative rank and file posed a grave threat to the continued existence of the Coalition. A sudden election in

January or February might solidify the bulk of the Conservatives behind the leadership of Lloyd George and Chamberlain leaving the Die-Hards too unprepared and disorganized to cause any serious trouble.

Such considerations prompted Lloyd George to hold discussions just before the Christmas holidays with his colleagues and some influential political figures. At a dinner given by Lord Birkenhead the prospect of a general election was discussed at seme length by the Prime Minister, Austen Chamberlain, Churchill, Macnamara,

Worthington-Evans, Charles McCurdy (Coalition Liberal Whip) and the

214 215 influential newspaper publisher, Lord Beaverbrook. McCurdy,

Macnamara and Beaverbrook supported a winter election while

Churchill and Birkenhead were more uncertain. Lloyd George did not disclose his position but it was obvious that he believed that a prompt election was a necessity. Later in private,

Chamberlain strongly dissented from this view, arguing that the

Irish settlement had not yet been completed; he predicted that an election would lead to the return of a large number of

Die-Hards unpledged to the Coalition who might disrupt the Irish agreement and even refuse to support a Coalition Government. ^

To support his position Chamberlain instructed Sir

George Younger to conduct a survey of Conservative and Coalition prospects in the event of a February election. Younger turned the work over to Sir Malcolm Fraser, the Party's Principal Agent, who solicited the opinion of influential Party figures throughout the country. The results of the survey were far from favorable.

Fraser reported that an election in February would probably return a Coalition majority but the Conservative Party would be split

"from top to toe". As Chamberlain had maintained, a large number of Independent Conservatives would be returned who could not be

"^Austen Chamberlain Papers, Library AC 32/2/3 Chamberlain to Neville Chamberlain 21 December 1921; Ibid., AC 32/2/2 Austen Chamberlain to Younger 22 December 1921; Beaverbrook, Decline and Fall of Lloyd George, pp. 121-125. 216 controlled and would undoubtedly oppose the Coalition on many important issues.

The Fraser memorandum revealed the full extent of Con­ servative restiveness. Many constitutency organizations were on the verge of revolt, others had already revolted, demanding that their candidate stand as an Independent Conservative in the next election. In addition, a large number of constituencies allocated to Liberals under the coupon in 1918 would be contested by Inde­ pendent Conservatives even at the cost of electing a Labour candidate in a three cornered contest. Party officials also expressed opposition to the timing of a February election. Cold and rainy nights would be an excuse for Party workers to stay at home rather than canvass while Labour, on the other hand, could approach the voters on the job or at the factory. The middle and upper class voters facing the prospect of paying their income taxes would greet the Geddes Report as a condemnation of the

Government’s financial policy. On the other end of the social scale, the two million unemployed would still have fresh memories 2 of an unhappy Christmas on the dole.

An even more important consideration was the absence of a real Coalition political program that could be presented to the

2 Austen Chamberlain Papers AC 32/H/la "Report of Sir Malcolm Fraser to Unionist Central Office to Austen Chamberlain on the Possibility of a General Election," 31 December 1921. 217

voters. Diplomatic triumphs such as the Irish treaty or the

Washington Naval Conference then in progress, would have little

effect on the voters whose interests had returned to domestic

questions and above all else to high taxes and unemployment.

In a separate memorandum forwarded to Lloyd George, Austen

Chamberlain's brother, Neville, advised that "it would be a

grave mistake to count upon the Irish settlement" as an election

"point of any magnitude." It was questionable whether the

country would "give a new lease of life to the most unpopular

Government of modem times" but in any case the question of unemployment could not be avoided. He suggested the working

class' answer to an appeal for a new mandate would be:

Prompt and devastating...You have tried everything you knew to solve it [unemployment] and have failed; you have got no new programme to put before us but you have cone with this thin excuse to try and get us to give you another five years in which to go on experimenting. We cannot be worse off than we are new and we will therefore give a chance to those who tell us that they will put bread and butter in our mouths and money in our pockets.

Interestingly, Neville Chamberlain did not propose any new unemployment scheme but suggested instead that the Government wait for the depression to ease and take some credit for curing it.

This would put the Coalition in a better position to introduce some new social policy such as reform of the poor laws, permanent provi­

sion for unemployment and some unspecified legislation to benefit 218 3 women and children.

A much stronger position was taken by Sir Malcolm Fraser who urged that, beyond economies and the adjustment of the inter­ national rates of exchange, some definite program for unemployment be adopted. Against this Labour could offer "L2 a week for all, good food and no workhouses." Labour could counter genuine achievements of the Coalition such as the Irish settlement and the Conference by asserting that they had advocated the same policy much earlier. Moreover, they could demand that the funds made available by disarmament should be used for social reform. 4

When news of the survey leaked to the Conservative consti­ tuency organizations fierce protests were registered at the

Central Office. Some of them threatened to endorse independent candidates, if the Coalition was going to continue beyond the next 5 general election. Any further discussions of an immediate election were ruled out by Younger's campaign in the press against any continuation of the Coalition. Angrily, Lloyd George protested to Chamberlain that Younger "had behaved disgracefully." The

3 Lloyd George Papers F/7/5/1 Austen Chamberlain to Lloyd George 4 January 1922 enclosing a memorandum by Neville Chamberlain.

^Austen Chamberlain Papers AC 32/4/la "Report of Sir Malcolm Fraser Unionist Central Office to Austen Chamberlain" 31 December 1921.

^Ibid., AC 32/4/4 Sir Malcolm Fraser to Austen Chamberlain 5 January 1921; Lloyd George Papers F/7/5/1 A. Chamberlain to Lloyd George 4 January 1921. 219

"serious damage" caused by Younger's activities would "be g difficult to repair." Even this was an over optimistic estimate considering the virtual mutiny of the Conservative organization against the Coalition. In a more accurate evalua­ tion J. L. Garvin's Observer suggested that the Coalition was commiting suicide. From a probable election victory with a reduced, but still comfortable margin, Younger's action had handed fifty seats to the opposition and an additional fifty would be lost as a result of the unpopular recommendations of 7 the Geddes Report.

With the plans for a winter election shattered, it seemed plausible that the Government would devote some time to the development of an electoral program with some special attention directed toward social issues. In fact virtually nothing was done for six months while the Coalition continued to decay. Legally the Government's mandate did not expire until the end of 1923, but the growing disaffection among the Conservative meant that an election could come at any time, probably under unexpected circumstances.

Much of the first part of 1922 was spent in behind the scenes operations in a final attempt to create a Centre or a

Fusion Party. These activities were interrupted by the resignation

0 Lloyd George Papers F/7/5/2 Lloyd George to A. Chamberlain 10 January 1922.

^The Observer 26 February 1922. 220 of , Liberal Secretary of State for India, over the publication of a memorandum sympathetic to in contra­ diction of the Government's policy. To appease the Tories,

Lloyd George and Chamberlain sought to recruit a prominent Con­ servative peer to fill the vacant post. Lord and the were both offered the post, in turn, but both g politely refused. The Coalition's prestige had fallen so badly that influential outsiders could no longer be lured into joining it. Lloyd George then suggested the post be given to

Baldwin or Mond. Both choices were vetoed by Chamberlain who considered Mond too valuable at the Ministry of Health while

Baldwin's lack of decisiveness made him unfit for the position.

An able but less prestigious peer, Viscount Peel, was selected

9 as a compromise candidate.

With the erosion of the Coalition, Lloyd George was pressed from many directions to move toward fusion as the only way of holding power. Both Lord Beaverbrook and Sir Philip

Sassoon (Parliamentary Private Secretary to the Prime Minister who had contact with all factions of the Party) urged Lloyd

George to make one last definite attempt to organize a new party

8 Randolph Churchill, Lord Derby, 'King of Lancashire' (London, 1959), p. 430; Lloyd George Papers F/7/5/12 Chamberlain to Lloyd George 16 March 1922.

9 Lloyd George Papers F/7/5/15 Chamberlain to Lloyd George 17 March 1922. 221 by appeasing the moderate Conservatives but excluding the

Die-Hards. An opposing opinion was set out in a series of memoranda by McCurdy and his assistant, Sir William Sutherland.

Presenting a cogent argument, McCurdy advised that the Conser­ vatives were only waiting for the break up of the Coalition; if it did break up "barely 25% of the constituencies would have any opportunity of voting for a supporter of the Prime Minister" in a general election. Even where Coalition Liberals could run they would be subject to four cornered contests from Asquith

Liberals, Labour and Conservatives.

McCurdy deprecated the idea of a Centre Party as a solution to the Coalition Liberals' dilemma. Unless the Con­ servatives leaders were willing to openly and completely favor it any new Party would fall. The Chief Whip analyzed the situation in depth:

A section of the Conservative Party is sick and tired of radical legislation. Owing to the solidarity of the Conservative Party, the revolt of a section involves sane thing like the revolt of the whole. The Conservatives find themselves faced with a choice between a break in the unity of the Conservative Party and a break-up of the Coalition. They will choose the latter without any hesitation. 11

Lloyd George Papers F/45/1/8 Sir to Lloyd George 13 February 1922; Ibid., F/4/6/6 Beaverbrook to Lloyd George 13 March 1922; Ibid., F/4/6/8 Beaverbrook to Lloyd George 15 March 1922.

^ Tbid., F/38/1/37 "Memorandum on the Political Situation" by C.A. McCurdy 16 March 1922. 222

Such being the case McCurdy suggested one possible alternative. Conservative hostility toward fusion of continuation of the Coalition could only be modified by electoral losses elim­

inating the large Tory majority. An immediate general election preceded by agreements between the Conservatives and the Coalition

Liberals to avoid fratricidal contests would quickly change the existing situation. McCurdy predicted the Conservatives would not obtain a clear majority over the other parties and would probably be forced into a new Coalition with perhaps a handful of Die-Hards declining to join. Available information indicated

that Labour would refuse a Coalition with anyone; therefore the

Lloyd George Liberals would be the logical choice for a recon­

stituted Coalition. 12

Support for McCurdy's political strategy could be found

in Sutherland's separate memorandum. With Ireland out of the way

Sutherland saw few basic differences between the attitudes of

Coalition Liberals and the bulk of Conservatives on most important questions: "they are alike opposed to nationalisation, capital levy, and the payment of such increased unemployment doles as would permanently handicap the revival of industry. Both are really anxious to encourage the merchant adventurers and the

2Ibid., F/38/1/37 "Memorandum on the Political Situation" by C. A. McCurdy 16 March 1922. 223 general revival of trade." This was a clear admission on

Sutherland's part that the Coalition Liberals had moved to the right along with the majority of Conservatives. Nevertheless,

they had not moved far enough to please the fifty regular Die-Hards who were able "to get a certain and increasing measure of assis­

tance from the Old Tory gang, the Pretymans, Pennefathers, Lane

Foxes and the other fox hunting Tories." From "this crowd" you

could expect "little sympathy with the social legislation of the

Government or the working classes". Instead they regarded them­

selves "as champions of economy" and longed "to hoist the old

Tory flag as a sort of Jolly Roger."

It was the Die-Hards who had prevented the more progressive

industrial Conservatives from asserting themselves and breaking with their own Party. Many center Conservatives found their

local constituency organizations were in the hands of Die-Hards who threatened to deprive them of funds and organization if they did not stand as Independent Conservatives. In Sutherland's view

this small but vigorous minority of Conservatives was the disruptive

force in the Coalition. Their motivation was "in part purely wrecking and in part a genuine desire to see the Conservative party re-established." On the more selfish side the Die-Hards

saw themselves as critics who could "saddle the Liberal Coalitionist with all the inevitable blame and unpopularity that a long tenure

of office brings to any Government." 224

No matter how loyal Chamberlain, Birkenhead and the rest of the Conservative leaders, "the aggressive element in the

Tory Party" was actively working "for the capture of the whole party and coming before the country as an alternative to the present government..." Furthermore, the Die-Hards claimed they could form a Tory Government immediately carrying on until "they thought the time favorable for an election, in the meantime giving the country a prompt settlement of the Turkish question, freedom from fresh legislation at home, further reduction of

13 expenditure and a greater sense of being left alone..."

Perhaps Sutherland's picture of the Die-Hards was over­ drawn. Certainly they were a disruptive force that had much to do with the movement of the Government's social policy farther to the right, but, lacking a strong alternate leader— that is, without the support of Bonar Law— they could not have toppled the

Coalition. Moreover, they were weak where it was most important— in the House of Commons. In a test of strength on 5 April the

Die-Hards challenged the Conservative leadership in a debate on the Coalition. Voted down 95 to 288 the Die-Hards were joined by the Cecils and Mosley who shared with them an unbending animosity

14 to the Coalition and its leader.

13Lloyd George Papers F/35/1/39 "The Present Position" by Sir William Sutherland, 18 March 1922.

1UH of C Deb. CLII (5 April 1922) 2380-2388. 225

With their control of a large number of constitutency

organizations the Die-Hards could intimidate the leadership but

they could not control, nor could they force the issue prior

to a Party Conference or a general election. The next Conser­

vative Party Conference was not scheduled until the following

November while one Die-Hard leader, Lord Salisbury, predicted

an election in October. Salisbury agreed with McCurdy’s

estimate that as the result of the next election no one group

could command a majority of the House of Commons. The emergence

of a new Coalition really did not concern him. Writing to Bonar

Law in early March, Salisbury noted his real interest: "what I

care for a great deal more than the Parliamentary situation is

the national interest and to speak frankly I am quite certain

that whatever he was a few years ago the Prime Minister now is

entirely unfitted for his task." In contrast to Sutherland’s

picture of the Die-Hards, or a portion of them, as Machiavelian

schemers, they viewed themselves as "a genuine movement of honest men who have risked their political reputation in order if possible

15 to rescue the Country."

In the eyes of the Conservative leadership the Die-Hards were merely an annoying faction "activated by a narrow party

spirit which distrusted Lloyd George and the measures of the

Bonar Law Papers 107/2/21 Salisbury to Bonar Law 4 March 1922 marked "confidential". Government." Obviously Austen Chamberlain had seriously underestimated the influence, if not the strength, of the Tory right wing. In a letter to a friend in India Chamberlain identified the opponents of the Coalition as being concentrated in "London and the Tory strongholds of the hone counties".

They were few in number but influential in the local associations where they "held prominent positions like retired colonels who are often chairman." Despite the activities and speeches of the

Die-Hards Chamberlain thought the majority of Unionist opinion favored continuation of the Coalition and he expected it to

16 obtain "a large but not abnormal majority" in the next election.

In comparison with the assessment of the political situation given

Lloyd George by the Liberal Whips, Chamberlain was curiously ill-informed about the depth of Conservative disenchantment. One possible explanation for this situation has been offered by

J.C.C. Davidson who suggested that Chamberlain had no close political advisors "except sycophants and yes-men," who told him

17 only what he wanted to hear.

While Lord Salisbury and his Die-Hard associates were busily organizing for an election which they realized could not be long delayed, Salisbury's brother, Robert Cecil, continued his

16 Austen Chamberlain Papers AC/8/1/28 Chamberlain to Lloyd George, 18 May 1922.

17 James, Memoirs of a Conservative, p. 10U. 227 efforts to draw together some sort of center left coalition or movement. In April 1922 he circulated a long political memorandum in the form of a letter to his constituency chairman emboding his views on the domestic arid international political situation. It is not quite clear if this was to be a manifesto to rally supporters or merely a trial balloon to elicit response from a number of his Conservative friends.

Cecil condemned both revolutionaries on the left and reactionaries on the right, as a threat to the nation's political stability. Although neither had much support beyond a few extremists, there were a number who were at least partially sympathetic to both positions. He was particularly critical of the reactionary faction who rejected any:

moderate alteration of the relations between Capital and Labour. Moreover, in their view all that is required is the resolute maintenance of what they conceive to the just rights of property, including the present wage system of employment. So too in order to secure public economy which they desire as much as others, they would take care not to weaken the military power of the State and would seek the needful retrenchment in such services as Education, which they hold to be either unnecessary or exaggerated.

In the Empire these same men replied to the growth of

National movements in Ireland, Egypt and India "with an appeal to firmness and the mailed fist." He found it odd that both reactionaries and Bolsheviks agreed on one factor— the use of force. Such policies were equally abhorrent to Cecil, but he 228

saw that the "irregularities and hardships of the present

organization of society" might provide potent ammunition for

revolutionary appeals. Reaction and revolution "were equally

idiotic", however; "no reasonable man ought to be satisfied"

with existing institutions for diplomacy, for the handling of

strikes or with "the Imperial institutions which have produced

the conditions existing in Ireland, Egypt and India."

Cecil then sketched out his own proposals for a middle

course which would "lead to real progress with stability."

Rejecting the use of force except for defense he advocated a

policy of international co-operation incorporating reliance on

the League of Nations overseas and the principles of industrial

Co-Partnership at home as its keystones. In the latter case

Labour must cease to be "treated as children" and be given a

responsible voice in the direction of industry. On the question

of unemployment Cecil was a little more vague. It was deplorable

"that the Industrial Council created in 1919 had been allowed to

disappear" but for the present unemployment doles would have to

continue however unsatisfactory "as the only palliative available."

One remedy for unemployment was a wise foreign policy, but oscil­

lations in trade would occur in any case. He proposed a solution,

something along the lines of the Labour Party's plan for a system

of contra-cyclical public works. Public authorities would reduce work and employment in bocm times so that in times of slump major

projects could be accelerated. 229

As for economy, the Army, Navy and Air-Force should be cut down "to the lowest possible point consistent with external and internal safety"; however, "any attempt to shift the necessary retrenchment on to such services as Education and Public Health" would be viewed "with grave suspicion." Cecil added that "each proposed reduction must be judged on its own merits and no one rule can be laid down, but apart from the elimination of actual waste any saving on Education and Public Health, including

18 housing, will be very bad policy."

If Robert Cecil expected any outpouring of moderate opinion to result from the circulation of this memorandum he was sadly disappointed. None of his correspondents offered any support for his movement and many expressed opinions that can only be described as reactionary. Perhaps the most typical response was that of the Marquis of Hartington who diplomatically and politely rejected all of Cecil's major points. Hartington found it impossible to agree with the "whole" of Cecil's statement and preferred instead "the statement of Conservative and Unionist

Principles," that had been issued by Lord Salisbury and the Die-

19 Hards. This manifesto had been "signed by some of the people who are ominously called reactionaries, but surely there is very little

^Cecil of Chelwood Papers BM Add MSS 51075 "Political Memoranda in the form of a letter to Colonel Heaton-Ellis" April 1922.

^ S e e p. 62-63 above. 230 in it which Lord Robert and his friends do not agree."

Reviewing the memorandum itself Hartington found its

implications were disturbing, particularly those dealing with the

industrial system:

For instance at the present moment the very foundations of the capitalist system in this country are shaken. I fully admit the necessity of reforms in the system but I consider its maintenance is far more important than any reform...that it is the capitalist system alone which makes it possible for this country to support its population and that Capital and Capitalists with all their faults and limitations are its very mainstay and that their security must be a first consideration. Schemes of industrial partnership were fine in theory but there was little support for them and it would take some time for public opinion to accept them.

On the subject of imperialism Hartington thought that something ought to have been included "about the necessity of obtaining law and order in the Empire." Perhaps it was true, he admitted, that

"force was no remedy" but it was "not our force but someone else’s which has prevailed in Ireland and Egypt." Even though Hartington disagreed with the political tenor of the memorandum he urged

Cecil and his friends to remain in the Conservative Party as a counterweight to rally reactionary forces who might rely "on force 20 as a solution for internal difficulties such as unemployment."

In his reply Cecil asserted that the policy of "co-operation must take the place of competition and the persuasion of force or the world as we know it will perish." You and my other Conservative

20 Cecil of Chelwood Papers BM Add MSS 51163 Lord Hartington to Lord Robert Cecil, 4 April 1922. 231 friends would not accept these views as I understand you, and attach primary importance to the maintenance of law and order and capitalism and the like." He granted that it might be better to work within the Conservative Party, but he seriously questioned the possibility of its becoming a reform party. He saw a lack of progressive leadership among the forces, "and I see no kind of sign that there is any sufficient feeling for them [Cecil's political and social views] in the Conservative

Party to make it probable that during my lifetime they will dispense with that type of leader." The really vital and active forces in the Party seemed to be on the reactionary side and 21 were "actually hostile" to Cecil's political ideas.

Even Cecil's young nephew (Lord Cranbome, the present

Marquis of Salisbury) rejected the basic thrust of the memorandum.

It was "so exactly between the reactionary and revolutionary point of view" that neither side would be attracted. From the reactionary point of view, Robert Cecil's remarks on imperialism were highly objectionable:

They will, and I must say I feel, that we govern the Indians, Egyptians, Irish, and indeed everyone we come across, far better than they do themselves, that it has been proved over several centuries and it is our only excuse for staying there at all, that this new policy of giving power to the natives is not progress, it is either retrogression or decadence that unless we are confident that we govern better than anyone else, we

^■'‘Cecil of Chelwood Papers BM Add MSS 51163 Cecil to Lord Hartington, 7 April 1922. 232

ought to clear out at once, and that training the natives to govern themselves will merely be exchanging the original for an inferior imitation. 22

Perhaps this view merely reflected the brashness of youth, but

it sharpens the picture of Robert Cecil's isolation from the

23 prevailing viewpoint of his own Party. Progressive ideas

such as Cecil’s were indeed so rare that in the prevailing

climate of reaction they could gain little acceptance among the

majority of influential Conservatives.

With the coming of Spring, a more optimistic spirit

prevailed in the Coalition. Stanley Baldwin issued a cautiously hopeful prediction of a trade revival, even though he saw little 24 prospect of a significant fall in unemployment. On an even more positive note, Churchill suggested to the Prime Minister that a trade revival had already begun, citing the authority of

Mond who was "a very good judge of these matters". Unemployment had dropped markedly, and according to Mond, there would be a real upsurge in the Fall. On this basis, Churchill advised Lloyd

George to instruct H o m e to "budget for hope and not despair."

^Ibid., BM Add MSS 51087 Lord Cranbome to R. Cecil (circa mid-April 1922).

^ F o r additional examples of this, see Ibid., BM MSS 51075 "Colonel Heaton-Ellis Memorandum II" (circa Ap r i l 1922); Ibid., BM MSS 51163 Lord Bledisloe to R. Cecil (circa early March 1922). 24 CP 3890 (25 March 1922), "Memorandum on Trade Prospects by S. Baldwin", Cab. 24/134. 233

The improved economic picture would permit a reduction of both direct and indirect taxes if another "20 or 30 million" could be scraped off the Estimates during the course of the

25 year. Talk of tax cutting was a sure sign of election fever in the Coalition ranks.

H o m e responded to this feeling by providing the only budget in the twenties that made no provision for debt retirement.

Debt payment was suspended to permit reduction in anticipation

26 of the general election. Thus political expediency had overcome financial orthodoxy. Had H o m e ’s policy been pursued to the point of a moderate deficit, it might have produced enough of a fillup to bring about at least a partial recovery from the slump. As it was, the reduction of Is in the pound on the income tax, and a snail cut in the tea duty, were hardly enough to stimulate a revival. Consequently, the reductions benefited only the upper and middle classes, while the working class was subjected to the full force of the economies in social expenditures.

Realizing that a fall election was a real possibility, the

Cabinet hurriedly began a study of social and economic proposals that could be used in the electoral program. Beginning in late

July, a Cabinet Committee on Trade Policy, began to produce a series of memoranda which promised to be the first real review of

25 Lloyd George Papers F/10/2/63 Churchill to Lloyd George 12 April 1922.

26 Hancock, "Reduction of Unemployment", Economic History Review XV 331; Grigg, Prejudice and Judgment, p. 83. 23H social programs since the Armistice. Unfortunatley, the

Chanak crisis intervened, and the study was far from completed when the Coalition left office.

Calling the attention of the Ccmnittee to a continuing problem of unemployment, Macnamara noted that the fall in joblessness, which began in the late winter, had ceased. In

January 1922, the rate stood at 1,823,000 but by the end of

August it had fallen to 1,331,000 with an additional 63,000 working short time. For this large number of unemployed and their dependents, the picture was even more dismal than a year earlier, because all individual resources such as savings deposits, and trade union unemployment benefits, had long since been exhausted.

Moreover, Macnamara disagreed with Baldwin's more optimistic predic­ tion of trade revival, and predictedtotal unemployment would reach a million and a half during the winter. All these dire warnings brought no corresponding suggestion for new initiatives to ward off the consequences. Beyond additional provision for those who could qualify for only twelve more weeks of benefit and increased funds for local authority public works projects, Macnamara had

27 no new proposals to make.

Most of the fresh proposals for social programs came from

Sir Alfred Mond, who was clearly aware that the Government would have to enact new positive legislation to meet the attacks of the

^T.P. 32 (Trade Policy Committee) (9 September 1922) "The Coming Winter". Memorandum by Macnamara, Cab. 27/179. 235 left. After denying the need for additional housing for over a year, Mond had come around to the position that there was a serious shortage, but its extent was difficult to gauge. He thought the figure of 500,000 given as a conservative estimate by most housing reformers, was greatly exaggerated, nevertheless, it was "notorious thatthere is at the present time a considerably unsatisfied demand for houses of every kind, and most of the large local authorities have long waiting lists of applicants for working class houses, whom they are unable to satisfy." Real estimates were difficult to make, but something in the neighborhood

28 of 100,000 houses would relieve the critical shortage.

There was also a question of increasing unemployment in the building trades which had reached 15% in June 1922 as compared to 3.5% in June of 1913. Furthermore, this percentage would increase as the Addison program neared completion by the end of the year. Proceeding very cautiously so that a gradual return to normal conditions would not be disrupted, Mond proposed a limited program of 80,000 houses to be constructed over a two year period.

When the 23,000 uncompleted houses of the Addison scheme were added the total number of about 100,000 houses would correspond to the appropriate number of working class dwellings constructed prior to the War. To provide incentive Mond proposed a flat subsidy of 1j3 per house with the locaL authorities picking up anything in excess

OO CP 4155 (10 September 1922) "Housing" memorandum by Mond, Cab. 24/138; Professor Marian Bowley calculates shortage of houses by March 1923 at 822,000. See Bowley, Housing and the State p. 24. 236 of this whether it was anticipated or not. If this was not acceptable to the local authorities he was prepared to adopt a "simple sliding scale" to make allowances for local

29 circumstances.

Expressing little enthusiasm for Mond's proposal, the

Trade Policy Conmittee studied the possibility of aiding private contractors directly and a Treasury scheme for a limited housing project to be financed as unemployment public works through the

St. Davids Committee. Mond rejected the first of these proposals as financially unsound and the second as politically unwise. In the winter months it would be possible to build about 7,000 houses as unemployment relief but according to Mond this small number would "do little or nothing to mitigate the pressure on us to state what the Government really means to do with the housing question." Agitation had already begun to promote further housing projects and the temporary program would be so unsatisfactory

30 that by the spring of 1923 "pressure will become irresistible."

He appealed for his own modest housing program on political grounds arguing it would "do us great harm in the constituencies" to enter the election without a housing program. Additional factors such as the duration of rent control would keep the Government from embarking on a large scheme for the present but a definite housing

9Q CP 4155 (10 September 1922), Cab. 24/138.

See The Nation XXXI (2 September 1922), 731-732 for an example of increasing demands for housing reform. 237 31 policy was "urgently required."

Not content with his proposals on housing Sir Alfred Mond submitted a memorandum to Lloyd George encompassing the entire range of social and economic problems in early September. On the continuing question of unemployment Mond favored a bold new approach. Clearly, he was fed up with doles and poor relief schemes "for which we have nothing to show". Speaking frankly he criticized the Treasury's policy of parsimony:

In fact I don't think we can be proud of the results of our policy on Unemployment. For nearly two years I have been battling with the Treasury for every few thousands of pounds. Last year I proposed an Empire and Home Development Loan for a 100 million pounds, which I still think could be raised and which judiciously expended would produce a large volume of work with beneficial results to our Trade afterwards...It is useless to think of Empire development unless a financial policy of much greater courage and larger vision is adopted then has been the case in the past, and if the execution of such plans were left in the same kind of hands with the same kind of ideas as has been the case for the last twelve months.

In addition, Mond proposed that the country's road networks be developed through the issuance of a Road Loan up to L50 million secured by revenue by the Road Board. This would enable the construction of much larger projects than the existing system "and give employment to large number of people."

On the question of fiscal policy Mond saw little possibility of further economies except at the expense of the Fighting Services.

31rp 39 (5 October 1922), "Housing" memorandum by Mond, Cab. 27/179. 238

The best approach would be to give the military a definite allocation and let them work within it. For civilian projects

Mond proposed that a greater part of capital expenditures such as buildings should be financed out of loans instead of current revenue. This would enable further reductions in taxation

"which in itself would be a powerful stimulant to trade." Mond added that he personally had:

never understood what disastrous results would be felt if the Budget failed to balance one year owing to an overestimate of Income or of some under-estimate of Expenditure. A permanent deficit is a serious thing, but a deficit of say 20 million pounds for one year would not be a matter of great financial consequence.

In Mond's view Poor Law Reform was impolitic because of difficulties that unemployment had placed on the local guardians.

It would alienate the "local government people, and I fear would create no enthusiasm among the electors generally." On the other hand, rating reform was badly needed and would please local authorities and people of all classes who realized the injustice in the present system. Rent control would be a burning issue in the election and Mond favored a limited continuance of the existing act. Moreover, he suggested the establishment of a system of fair rent courts as a possible permanent replacement for rent control laws. Some measure of rent protection was required for the average working man under the prevailing economic conditions.

^2Lloyd George Papers F/37/2/18 "Notes on a Future Political Progranme" by Sir Alfred Mond, 7 September 1922. 239

Many of Mond's proposals were taken up and developed by the succeeding Conservative Governments; others, including his suggestion for large development loans were rejected under the prevailing financial orthodoxy of the Treasury. In any case the abrupt fall of the Government halted any further development of these suggestions.

By late summer trouble was brewing inside of the Govern­ ment itself. Dissident Tory junior ministers led by Sir Robert

Sanders (Under Secretary at the ) forced a meeting with the Party leadership to express their desire for a more independent role for the Conservatives in the Coalition. After a sharp dressing dcwn from Chamberlain and Birkenhead who refused to consider their complaints, the junior ministers realized how completely isolated the leadership was from the rest of the Party in their determination to continue the Coalition despite heated opposition from all factions.

To check further dissension and to prevent a hostile vote at the

15 November meeting of the Conservative Party Conference, the

Coalition leaders agreed on 17 September to hold an election as

33 soon as the "Turkish crisis would allow."

Unexpectedly, however, events turned against the Coalition and a seemingly minor foreign crisis provoked its downfall. As a result of the massive defeat inflicted on British supported Greek

33 Winterton, Orders of the Day, p. 155; Petrie, Chamberlain II, pp. 196-198. 240 forces by the Turkish Army under the leadership of Mustafa

Kamal, only a small allied force could prevent the Turks from entering Istanbul. Pushed by Lloyd George the Cabinet reluc­ tantly decided to prevent this Turkish attempt to force revi­ sion of the World War I peace treaties. Alarmed by the bellicose attitude of Lloyd George and Churchill, Bonar Law decided to enter the political arena after much persuasion from Beaverbrook. ^ In a letter to The Times Bonar Law expressed the opinion that Britain could not "alone act as policeman of the world" and advised against any action except

35 in concert with France.

This was an immediate signal to all the Conservative dissidents that they had a potential new leader should the

Coalition collapse. Baldwin, Griffith-Boscawen and a number of junior ministers threatened to resign if Lloyd George persisted in going to war. To further complicate matters Chamberlain proposed an immediate "Khaki election" to solidify the Coalition

36 behind Lloyd George. Chamberlain was urged to postpone an election until the Party Conference in November. Instead, he proposed to hold a meeting of all Conservative M.P.s at the

Carlton Club on 19 October.

34 Beaverbrook, Decline and Fall of Lloyd George, p. 166.

357 October 1922.

36 Keith Middlemas and John Barnes, Baldwin,A Biography (London, 1969), pp. 115-116. 2m

Meanwhile the rebels were organizing for a final showdown. A reluctant and seriously ill Bonar Law would not assume the Party leadership unless he was assured of substantial support among the Conservative M.P.s. The Die-Hards could be counted on, of course, but they numbered only 60 to 70, at most, out of the approximately 300 Conservatives who were permitted to vote at the Party meeting. To secure additional aid for the

Anti-Coalition forces Sir Samuel Hoare, J.C.C. Davidson and

Baldwin asked eighty backbenchers to attend a special preliminary meeting to be held on October 18. Interestingly two of the strongest voices against the Coalition at this meeting were not

Die-Hards. William Ormsby-Gore and John Hills were both associ­ ated with the pre-war Unionist Social Reform Committee and its post-war counterpart, "the Group". They were able to sway the backbenchers into throwing their support behind a resolution

37 favoring independence at the next election.

Finally and after much pressure from all sides Bonar Law agreed to go to the meeting where his appearance demonstrated that an alternate leader was available for all the

Tories who could no longer stomach the Coalition. E. G. Pretyman's resolution calling for the Party to fight the next election inde­ pendently passed 185 to 88. An examination of the voting list reveals no split along the lines of left or right. Both Die-Hards

37 James, Memoirs of a Conservative, pp. 122-124. 242 and former members of "the Group" were very prominent on the anti-Coalition side. The more radical Conservatives like Cavendish Bentinck and Robert Cecil were either not invited or chose not to attend. Baldwin, Griffith-Bowcawen, Amery and Lloyd-Gneame were the most prominent members of the Government voting "aye" 38 to Pretyman's motion, but Sir Montague Barlow did not vote. The Coalition was finished. Lloyd George resigned and after being ratified by a majority of Conservatives as their leader,

Bonar Law took office. For the first time in seventeen years 39 the Conservatives were back in power on their own.

The Conservative Program Even the formation of a Cabinet proved difficult for Bonar Law. The most important Coalition Conservatives, including Austen Chamberlain, H o m e , Worthingtan-Evans and Birkenhead refused to join. Making the best use of the talent available, Bonar Law was able to construct a makeshift cabinet composed of the rebel junior ministers, the handful of Ministers who joined them, and no less than seven peers. The Prime Minister was appre­ hensive that his Government would be branded reactionary, therefore the only Die-Hard to enter the Cabinet was Lord Salisbury as

Lord President of the Council.

38Ibid., pp. 129-133. 39 For a complete discussion of the politics of the Chanak crisis and the see; Beaverbrook Decline and Fall of Lloyd George, pp. 149-203; James, Memoirs of a Conservative, pp. 113-133; Amery7 My Political Life II, pp. 233-240; Blake, Unknown Prime Minister, pp. 440-461; Middlemas and Barnes, Baldwin, pp. 95-124. 243

The ministries having the most responsibility for social policy were placed in the hands of moderately progressive, if not imaginative, men. Sir Arthur Griffith-Boscawen, Minister of Agriculture under Lloyd George was made Minister of Health,

Philip Lloyd-Greame was promoted from Director of Overseas Trade to President of the Board of Trade and Sir Montague Barlow was named Minister of Labour with Cabinet rank. This last appointment was especially important because it had been rumored that the

Ministry might be abolished or its Minister downgraded to sub-

40 . . . Cabinet level. Moreover, with wide experience in the field of unemployment and his recognized sympathy for the working class

Montague Barlow acted as a strong counterbalance to the reaction­ aries in the new Cabinet. In addition, Barlow was running unopposed and could devote his full time to the study of social programs that could be quickly implemented if the Tories should return successfully.

The election of 1922 was probably one of the most confused of the twentieth century. There were three different slates of

Liberal candidates, some running as Wee Frees, others as supporters of Lloyd George and still others without any label at all.

Liberals ran with Conservative support while Conservatives had

Liberal support in some areas. Labour, much better organized than in 1918, was expected to make a very impressive showing.

40 Manchester Guardian, 2 November 1922. 244

Furthermore, the incipient rebellion that had been brewing in the Conservative Party since 1920 had produced scores of Indepen­ dent Conservatives, Constitutionalist and Anti-Waste candidates.

Many of these were embarassing to the Party because it sometimes caused two loyal Conservatives to oppose one another. In one instance Bonar Law had to make a special appeal in favor of Sir

Leslie Wilson, the Conservative Chief Whip who had played a major role in bringing down the Coalition. Wilson’s opponent, an

Anti-Waster, argued that he was the rightful candidate and would

41 not withdraw.

The social policy of the Conservative electoral program of 1922 was lackluster and cautious. There was a general feeling that the error of the 1918 Coalition manifesto promised too much and should be avoided at all costs. As Party Leader, Bonar Law was able to commit the Tories to any electoral program, but in social policy as in other matters he first consulted those members of his Government who were most familiar with the problems.

Montague Barlow strongly advised Bonar Law against any statement that would commit the Party in advance to a definite unemployment

42 policy. The Government could also present the very reasonable argument that it had not had time enough to study the problems prior to the election. As part of an electoral strategy the

^Bonar Law Papers 110/3 Bonar Law to Sir Leslie Wilson 10 November 1922, Wilson was defeated in the general election. u? Ibid., 110/1/1 Msntague Barlow to Bonar Law, 25 October 1922. 245 approach was sound. Every attempt was made to avoid the alienation of Labour while a strong appeal for economy and a holiday from social experiments would please most Conservative voters and might draw a number of dissatisfied right-wing

L i b e r a l s .

Bonar Law's campaign for "peace and tranquility" was aimed at securing the confidence of the business community. He promised "as little interference as possible with the initiative of individuals leaving the recovery to come not so much by action from the Government, as by the free play and the energy of our

43 own people." Economy was the watchword in the Tory campaign although Baldwin, the new Chancellor of the Exchequer, made no promises for an immediate reduction in taxes. He did resolve to make economy the Government's "first and most important order of

44 business." Conservatives and others who had been expecting

45 a definite promise of a tax cut were deeply disappointed.

Lord Rothemere's attacked Law for pursuing the same policy as the Coalition and one Conservative candidate predicted that the lack of a stronger policy of retrenchment would "not only lose thousands of votes but the life of the Government if it

46 succeeds in getting a majority will be very short lived." In

43 The Times, 3 November 1922. 44 Birmingham Daily Post, 30 October 1922. 45 The Yorkshire Post, 24 . 46 The Daily Mail, 26 October, 6 November 1922; Bonar Law Papers 110/3 Major H. R. Cayzer to Sir M. Fraser, 31 October 1922. 246

later stages of the campaign the theme of economy was softened by Lord Novar, the Secretary for Scotland who stated that retrench­ ment "did not mean the curtailment of necessary services." In

contrast to the Labour Party position of large scale State expen­ diture to relieve unemployment, Novar warned that conditions did

47 not permit "schemes entailing fresh expenditure and fresh taxation.

With so much emphasis placed on economy it was almost

impossible to promise new social programs without risking opposi­

tion charges of inconsistency. On the question of housing Griffith-

Boscawen recommended the new Government take the position that the housing shortage had been alleviated by the Coalition's program.

He also suggested minimizing any state aided programs as costly,

temporary expedients which in the future would be replaced by private enterprise. There would, of course, still be a small amount of Government assistance available for the clearance of

48 slum areas. To support this position a special Ministry of

Health memorandum was produced which purported to show that the

suspension of the Coalition's housing program in July 1921 had produced a drastic fall in housing prices. Actually it showed that prices had already fallen before Mond had taken any action, but

49 this contrary evidence was ignored. Clearly most Conservative

47 The Scotsman, 11 November 1922.

48 Bonar Law Papers 110/1/1 "Memorandum frcm Griffith-Boscawen for the General Election" 25 October 1922.

49 Ibid., 113/11/1 Montague Barlcw to Bonar Law, 7 November 1922 enclosing a memorandum on housing. 2U7 thinking looked forward to the abandonment of all government schemes and a return to private enterprise.

There were serious difficulties if this course were to be followed. The Coalition had already established a precedent for the central government's responsibility in housing and unless there was only a small shortage this responsibility could not be shirked. Although there was little time for research and no real figures about housing were available, it was not politic for the new Government already tainted with a reactionary label to adopt an entirely negative attitude. Another memorandum presented to the Prime Minister pointed to entirely different conclusions than those of the Ministry of Health. Reporting that it would take half a century to alleviate the current shortage and prevailing slum conditions in working class housing, the memorandum proposed state aid to private enterprise and building societies to promote the construction of more cwner-occupier houses for the lcwer middle and upper working class. Vacant housing of a better quality would then be available for those who could least afford it. ^

The adoption of a scheme to aid private home ownership would at least provide a positive note in Tory housing policy.

Consequently, in on 5 November, Bonar Law in measured tones promised a program of assistance for home ownership "through

50 Bonar Law Papers 110/1/2 unsigned memorandum on housing and employment, 1 November 1922. 248 private agencies and individuals by sane method...which does not dry up private enterprise." On the question of direct State aided schemes the Prime Minister pledged little beyond the completion of the Coalition's program and a Government study of the housing situation. ^

As the principal domestic problem unemployment received considerable attention in the Conservative electoral program.

Again there was no attempt to adopt what Griffith-Boscawen called

52 a "flashy policy." To counter the Labour Party's proposals for work or maintenance for the unemployed the Tories could only offer retrenchment and Empire development. An unsigned election memorandum suggested that the former policy would have only

"gradual and invisible" effects on trade and unemployment. Thus the latter policy which it was hoped might produce "a sudden and visible change" would be the Tories alternative to the Labour

Party's manifesto. Bonar Law promised to call an Imperial Econanic

Conference which would lead to the development of the Dominions and colonies, stimulate trade in the Empire and create a demand

53 "for the surplus population of the Mother country." This

51The. Times, 6 November 1922; The Morning Post, 8 November 1922.

^ The Morning Post, 7 November 1922.

53 Bonar Law Papers 110/1/2 "The Economic Conference and the Election", unsigned memorandum, 3 November 1922; The Times 6 November 1922. 249 proposal was a hint that the Conservatives might return to

Joseph Chamberlain's policy of imperialism as a method of dealing with domestic social problems.

For the short range, the Conservatives promised to

"instantly examine and develop" the Coalition's unemployment plans. In a speech at Glasgow on 27 October, Bonar Law announced that his Government would try to improve and enlarge the late

(Government's plan "and we shall put them into operation without any delay." He reminded his listeners that these programs were only palliatives and that the "only real cure" was the restora-

54 tion of the country's trade and industry.

This was a theme that was constantly repeated throughout the campaign by all prominent Conservative speakers. Addressing an audience in Nottingham, Baldwin reassured the business leaders that Bonar Law's tranquility did not mean stagnation. On the other hand, he was not optimistic about a revival of trade because of the loss of foreign markets and the difficulty of overcoming protective barriers, but the development of new outlets in the Empire might counteract this trend. ^ A day earlier in Sheffield, Baldwin had premised some vague assistance to industry and urged large com­ panies, especially the railways, to initiate long delayed capital improvement schemes. ^

^ The Glasgow Herald, 27 October 1922.

55Birmingham Daily Post, 9 November 1922.

^Ibid., 8 November 1922. 250

A study of the Unemployment Insurance system with the object of improving its efficiency or reducing its cost was also promised. As a long term solution to the problem Bonar Law suggested the establishment of a system of unemployment insurance by industry, a proposal that was very popular among all Tory

57 factions. In an attempt to counteract the unfavorable image generated by the Tory campaign to modify the system of collecting the trade union political levy, Bonar Law denied that the Con­ servatives were out to destroy the trade unions. More importantly he promised not to take any "rash action" on the political levy until he had consulted with trade union leaders about a fair

58 solution to the question.

Repeatedly throughout the campaign Bonar Law denied he

59 was heading a "Government of reaction". From the viewpoint of social policy his statement was at least technically correct.

There were no proposals to repeal or seriously modify any of the reforms introduced by the Coalition. In reality the Tories were pushing a policy of maintaining the status quo. The Coalition itself, as we have seen, had already destroyed or emasculated a number of its major programs such as those concerning education and housing. By assuming what Lord Salisbury called a "creed of

^ Ibid., Glasgow Herald, 27 October, 14 November 1922.

58 The Times, 8 November 1922

59 See for example The Morning Post, 8 November 1922. 251 60 ordered progress" the Conservatives had rejected any commit­ ment to the immediate solution of the Nation's problems. With so much of the electoral program phrased in ambiguous terms that could mean as much or as little as the Government wished, the

Conservatives attempted to straddle the major issues and avoid even the merest hint of any commitment to new social expenditures.

Since the great majority of Conservative M.P.s had supported the Coalition or, like Bonar Law himself, shared in the responsibility for the formation of its programs, it was necessary to defend the former Government's policies. Preparations had already been made for this eventuality by the Conservative Central

Office prior to the breakup of the Coalition. A gigantic campaign guide had been issued defending the Coalition policy at almost every point. This might have limited Conservative flexibility in the campaign, but it demonstrated the essential continuity in social policy between the two regimes.

As in much of the other Conservative election literature, the Campaign Guide covered up embarassing Coalition policies such as the educational economies by launching an attack on the Labour

Party's policy; arguing in one case that "the Socialist clamour against any reduction of State burdens illustrates the extravagant conception which Socialist bureaucrats possess on the subject of education." It applauded the Coalition's enactment of educational

^Ibid., 14 November 1922. 252

reforms "conditioned by financial moderation" that would 61 "improve the highway from elementary school to the University."

There was, of course, no mention that the policy of "financial

moderation" had virtually suspended all educational reforms and

seriously impeded access to secondary and higher education to

all but the wealthy.

Such dishonesty is not unknown in election campaigns

but in 1922 Conservative propaganda went out of its way to

discredit the labour Party which was rightly regarded as the

most formidable opponent in the field. Conservatives made the

usual appeals to patriotism and national unity claiming to be

62 representative of all social classes. Beyond this rather

traditional appeal, Unionist headquarters demonstrated a zeal

for associating the Labour Party with Bolshevik revolution. One

Tory leaflet depicted a starving family in bed with a caption:

"this shows what Socialism means in Russia— Keep It Out of

63 Britain By Voting For the Conservative and Unionist Candidate."

Another merely showed a rider dressed in a cossack uniform on a red horse with a red flag on its tail— with the caption in red

64 reading "Don't Back this Horse or Socialism Vote Unionist."

61 National Union of Conservative and Liberal Unionist Associates, The Campaign Guide, 1922 (London, 1922), pp. 872, 914.

CO Conservative and Unionist Pamphlet, no. 2098 (1922 El-ction) "Why you should vote Unionist."

^ Ibid. , no. 2.125 (1922 Election) "Keep Socialism Out of Britain." RU Ibid., no. 2116 (1922 Election) "Don't Back this Horse." 253 Still another pamphlet accused the Labour Party of fomenting class warfare. The Parliamentary Labour Party was equated with industrial unionism and the policy of "direct action" which on four occasions since 1917 had "tried to start the class war."

The pamphlet added that "the next outbreak of the Class War is timed to take place after the General. Election if the 'Labour'

65 Party gets a majority."

Much of this "red-baiting" pointed to Conservative fears of heavy losses in working class constituencies. The greatest threat to the Tory position took place in Glasgow where a legal decision threatened to cause a Labour landslide. In a three to two decision, the Law Lords had ruled in the case of Kerr v Bryde that under the existing rent control law of 1920 the landlord had to serve a formal notice of the termination of tenancy before rent could be increased. Most landlords and their agents had failed to do this and collected illegal rent payment for nearly two years.

The Scottish Office voiced concern for the landlords who new owed their tenants over L5 million in Glasgow alone. It was obvious that if the landlord's position was to be protected, retrospective 66 legislation would be required to overrule the Lord's decision.

Taking advantage of this opportune decision Labour candidates pledged themselves to oppose any retrospective legislation

6^Ibid., no. 2066 (1922 Election) "The Danger of the Class War."

^ B o n a r Law Papers 113/11/9 Sir J. Lamb to R.P.M. Gcwer "Memo­ randum on Increase of Rent and Mortgage Interest (Restrictions) Act 1920— Kerr v Bryde 10 November 1922. 254 at the next meeting of Parliament which would, of course, deprive thousands of tenants of an unexpected windfall. In the resulting crisis situation Conservative officials appealed from Glasgow for assistance. Even Bonar Law's own constituency agent in the Central Glasgow Division asked that the Prime Minister put in an additional appearance prior to the polling day on 67 15 November. Robert Bruce, publisher of the Conservative Glasgow Herald, advised that the appointment of a board of enquiry to study the decision might be the only means "of saving some 6fi seats." This advice was taken but it failed to satisfy J. P. Croal's Scotsman which denounced the "superfluous enquiry" and called for retrospective legislation "to regularize all transactions between landlords and tenants." Unless this was done quickly, a 69 "great injustice" would result to the landlords. Bonar Law and the Conservatives did not cut a very impressive picture in the 1922 election. A displaced office holder, Sir Alfred

Mond, called Bonar Law's administration "ridiculous and its Policy hopeless." 70 Making allowance for Party bias Mond's evaluation was not totally inaccurate. Bonar Law's Cabinet with the exception

67 Ibid., 110/3 Robert S. Stewart to R.P.M. Gower 8 November 1922. ^8Ibid., 113/11/7 Robert Bruce to Bonar Law 10 November 1922.

69The Scotsman 15 November 1922. 70 Lloyd George Papers G/4/5/1 Sir A. Mond to Lloyd George 21 October 1922. 255 of Baldwin and Amery gave the impression of being less than brilliant. One member, Lord Novar, even made an apology for mediocrity arguing that statesmen who had "common-place minds would often be better able to understand the sentiments and the

71 point of view of other men and women." Nevertheless, the

Tories had a definite advantage as the largest single Party and the only one likely to be able to govern without a Coalition while its opponents including the untested Labour Party and the divided Liberals commanded less confidence.

Results and Trends

The results of the 15 November 1922 General Election might well be interpreted as a vindication of Bonar Law's "peace and tranquility" campaign. Contrary to McCurdy's predictions that the Conservatives could not secure enough votes to govern alone, the Tories held a reduced, but still substantial majority.

Mathematically the Conservative majority was about 70, but many of the Independent Conservatives and Anti-Wasters could not be relied upon consistently to support the Government. Still, even without the votes of the Lloyd George Liberals the Government could count on a majority of at least 20. With respect to the popular vote the Conservatives were a definite minority Party.

Because of the splinter conditions it is not possible to calculate

the exact percentage but, the Conservatives obtained only about

^^The Glasgow Herald 7 November 1922. 256

35 to 40 per cent of the total votes cast.

The Tories maintained their strength in Birmingham,

Liverpool and London but as Party officials predicted Labour swept Glasgow taking 10 of the 12 seats contested and even reduced

Bonar Law’s margin of victory. Glasgow was established as a

Labour stronghold which it was able to hold even in 1931. The defeat was so great that the Birmingham Daily Post suggested that 72 the local Conservative Party organization must have been at fault.

Among the Tory casualties in the elction were the Minister of Health, Griffith-Boscawen, Chief Whip Sir Leslie Wilson and

Die-Hard historian, J.A.R. Marriott, who lost Oxford to a Liberal.

The Conservative Government was faced with a much more formidable and higher caliber opposition than the handful of Wee Frees and

Labourites who opposed the Coalition. The election of 142 Labour

M.P.s was proof enough to the Liberal Nation that the election had been "no mandate for Toryism.” It maintained that only the large number of three cornered contests had kept a Labour— Liberal

73 Government from coming to power. In the view of the Tory

Scotsman, the Labour showing would be "weaker rather than stronger—

74 four or five years hence." Overjoyed by the results Lord

72 Kinnear, The British Voter, pp. 40-42; Birmingham Daily Post 17 November 1922.

7^The Nation XXXII (18 November 1922), 274.

7l+The Scotsman 17 November 1922. 257

Rothermere1s Daily Mail announced that Bonar Law's election would produce such great confidence within the business corrmunity that capital would be released and a trade revival would follow

•4*. . 7 5 in the spring.

Many explanations were offered for Labour's great advance but most observers would agree with the Birmingham Daily Post that

76 the'prevalence of serious unemployment" had much to do with it.

From the opposite point of view Bonar Law's appeal for economy and tranquility met with considerable success among the middle class.

The 1921 census reported only two constituencies in which majority of the voters could be called middle class, but there were 200 with at least 20 per cent middle class and in 1922 the Conservatives captured 158 of these. While there was some defection from the

Tory ranks in agricultural areas, the strong showing of the Party in the suburban seats when added to the traditional Conservative strength in London and the West Midlands provided a substantial margin for victory.

All of this had considerable ramifications for the develop­ ment of Conservative social policy. With a capable well organized opposition the Conservatives would be forced to make concessions to social reform. Moreover, Labour's large gains were, in part, a manifestation of social discontent among the working class. Even

^ The Daily Mail 16 November 1922.

^ Birmingham Daily Post 17 November 1922. 258

safe cities such as Liverpool and Birmingham might not remain

in the Conservative ranks if the Party failed to deal with the great social issues, especially housing and unemployment. On

the other hand, the heart of Tory strength was South of the

Thames where the rapidly expanding middle class population looked upon retrenchment and lower taxes as the only sane Government

77 policy. Living under relatively prosperous conditions these

suburbanites were unconcerned or unaware of the effect of unemploy­ ment and slum conditions on the inudstrial cities of the North.

Only when the interests of the two classes happened to coincide as in the case of rent control were there strong middle class pressures for positive social legislation.

Tory dependence on the South and West of England meant that the demands of the Die-Hards, Anti-Wasters, and economizers could not be overlooked. This was a major limiting factor in the initiation of a substantial program of social legislation by any Conservative Government.

77Kinnear, The British Voter, pp. 106-107, 122-124. CHAPTER VI CONSERVATIVES RETURN TO POWER NOVEMBER 1922-MAY 1923

Returned to power on their own for the first time in almost two decades, the Conservatives were forced to deal immediately with pressing social issues, especially unem­ ployment and housing. Although Churchill had called it a Government of "the second eleven", Bonar Law's Ministry proved capable, if not brilliant, Junior Ministers, such as Montague Barlow and Lloyd-Greame ably filled the shoes of their former chiefs, while two newcomers, Douglas Hogg (Attorney General) and Neville Chamberlain (Postmaster General) offered considerable promise for rapid promotion. Only a few of the peers, Cave (Lord Chancellor), and to a lesser extent, Novar and Salisbury, acted as a check to more progressive social policies. As the result of Bonar Law's campaign defending the status quo and making few positive commitments, the Govern­ ment had considerable freedom in formulating new policy. Much of this flexibility was in reality, illusory. Faced with a powerful array of social critics, ranging all the way from the patronizing tones of Sir Alfred Mond to the brilliant

259 260 invective of Clydesider , the Government was usually outclassed in debate. A purely passive policy was out of the question — something positive had to be offered. Moreover, the Conservatives were subject to the same obstacles that had blocked so much of the Coalition's reform proposals — the fiscal policy of the Treasury, pressure for economy in State expenditures and demands from the wealthy and middle class for tax relief. In addition, the recent history of the Coalition's failure served to produce an ultra-cautious attitude toward any bold, new or unorthodox proposals. It was safer for a minister to follow the well worn path of the previous Government, deviating only in those cases where the Coalition had been too brash or adventuresome.

Unemployment

With the Irish question seemingly settled, and foreign affairs tending to fade into the background, unem­ ployment emerged as the most important political question.

At the end of October 1922, over a million and one third men and women were unemployed, some 11.8 percent of the total work force. Even though this was a considerable de­ crease from the 15.9 percent of December 1921, unemployment was no longer falling, and all indications pointed to an upswing during the winter months. ^ Facing the third winter of persistent unemployment, the new Government had to develop an immediate program to alleviate some of the hardships.

With an election campaign in progress, the Cabinet had no time to begin a detailed investigation of possible remedies. The Coalition had already drawn up a complete plan for the coming winter, and it was only necessary for the Conservative Government to confirm these previous decisions. Bonar Law’s Government fell easily into the Coalition’s pattern of operation. At the very first meeting of the new Cabinet, an Unemployment Committee was reappointed 2 with Sir Arthur Griffith-Boscowen as its chairman. Since Bonar Law had already promised to implement the Coalition's plans, the Unemployment Committee merely concluded a review and submitted the late Government's proposals to the entire

Cabinet. The Committee recommended a renewal of the Gairloch

Scheme or the Trade Facilities Act permitting Treasury guarantees to be increased from L25 million to L50 million, an additional Lrl2 million in credit and insurance for the promotion of overseas trade, and an increase of fc8 million

^CP 4301 (13 November 1922) "Special Report on Unem­ ployment" , memorandum by Montague Barlow, Cab. 24/140. 2Cab. 68 (22) (1 November 1922), Cab. 23/32. 262 to the St. David's Committee for public works. An allocation of L300,000 was provided for land drainage projects to assist the rural unemployed, and L375,000 was to be used for a long 3 term project for Post Office cable construction. All of these projects, with the exception of land drainage, had already been in effect for over a year, and according to figures supplied by Montague Barlow, produced employment for if 102,000 men, mostly for short periods. To supply the Tory Government with a fresh approach of its own, Montague Barlow proposed the establishment of a system of juvenile unemployment centers to provide training, and to prevent demoralization of jobless adolescents between the ages of 14 and 18. ^ Even this idea was not entirely new. In the period immediately following the Armistice, the Coalition had established a series of 157 unemployment centers under the supervision of the Board of Education. All of these had been phased out by February 1920, but they had "proved reasonably 0 successful as social, rather than educational agencies". Montague Barlow's proposal involved a mixture of conventional

^CP 4319 (27 November 1922) "Revised Report of Cabinet Unemployment Committee", Cab. 24/140. 4CP 4301 (13 November 1922) Cab. 24/140. ^C.U. 487 (21 November 1922). "Juvenile Unemployment Centres", Cab. 27/124.

^C.U. 486 (20 November 1922) "Notes by the Board of Education on the Memorandum C.U. 476 by Minister of Labour", Cab. 27/124. 263 schooling and vocational training which would make the young people more acceptable to an employer. It was to be experimental at first, with only {>25,000 to be provided by the Exchequer, the central government contributing 75 percent of cost and local 7 authorities the remainder. No one was more aware of the limited scope of all these proposals than Montague Barlow. This meagre list would produce work for "not much more than 100,000" at best. He observed that only large new items had been allocated to rural relief, a factor that was bound to bring criticism in the House.

Moreover, it was advisable that publicity about the Government's programs should include some mention of contacts with the industrial interests, railways, and shipping concerns, pointing out new commitments for capital expenditure to provide employ­ ment. If possible, a meeting should be arranged between executives of the railway companies and the Prime Minister to impress upon them the importance of embarking on improvement projects.• * 8 Montague Barlow's suggestion was adopted, and the meeting was held on 28 November. Approaching the executives with a warning that the "whole system of private enterprise was being challenged" by the appearance of a large Labour contingent in the House, Bonar Law urged them to begin

7 CP 4367 (18 December 1922) "Juvenile Unemployment Centres", memorandum by Montague Barlow, Cab. 24/140. 8CP 4322 (23 November 1922) "Unemployment Proposals", memorandum by Montague Barlow, Cab. 24/140. 264 delayed works to relieve unemployment. He recognized that the interests of the shareholders came first, of course, but if work was being planned, such as electrification or recon­ ditioning of railway rolling stock and right of way could be advanced, a general stimulation of business might follow. For their part, the railway executives were receptive, but they did not offer to provide the really large schemes that would make for a real economic stimulus. At this point the railways were working at a disadvantage because of the con­ solidation of over 100 separate companies into four large groups, to become effective on 1 January, 1923. Disorgan­ ization in management had prevented the initiation of a number of capital improvements, the most important of which was the electrification of the Southern Railway. In addition, bureaucratic delays had kept some smaller programs from being started, but the railway presidents assured Bonar Law that if these difficulties could be overcome, a large amount g of work could be provided. The obvious advantage of promoting railway development as an unemployment palliative was that it cost the Exchequer nothing, and if it proved successful the government would receive the credit. Lake much of the rest of the Government's unemployment policy, there was often more shadow than substance. The most glaring example of this tendency could be found in

Q Bonar Law Papers, 116/3 "Deputation of Railway Executives Received by the Prime Minister an 28 November 1922." 265 Unemployment Insurance. Up to the fall of 1922, t-78 million had been paid into the fund by employers and workers. As Montague Bar lew candidly remarked: "from the point of view of the ordinary taxpayer" this system "cannot be considered other than a very economical arrangement". ^ The labor correspondent of the Economist pointed out that with the decline in wages, the donations to the insurance fund had become much heavier for the working nan. Moreover, the Unemployment Insurance system did not provide continuous coverage. During gaps of upwards to five weeks, the unemployed would be farced on poor relief, adding enormously to the local taxes. These local taxes or rates fell more heavily on the workers than the middle or upper class, adding to the repressive character of the system. While the local guardians poured out fa60 million in relief funds, the central government had contributed only 4r28 million in unemployment funds. ^ As Mond had pointed out in his electoral memorandum, a vast development loan or system of grants was needed in any serious attempt to diminish unemployment. The Nation suggested it would take an investment of W O million a year to provide employment for 400,000. 12 Proposals for public

^C.U. 477 (8 November 1922) memorandum by Montague Barlow, Cab. 27/124 (original emphasis). 13The Economist. XCV (2 December 1922), 1022. 12The Nation. XXXII (2 December 1922), 313. 266 works projects were not lacking. J. St. Loe Strachey, endorsed in his Spectator Lord Montague of Beaulieu's proposal for the construction of a L50 million project of road development. Difficulties of finance could be met by imposing a tax of 3d a gallon on fuel. Strachey, long an advocate of an improved road system, saw another advantage

in the ability of highway construction to absorb large quantities of unemployed. If prosperity returned and the demand for labor rose, recovery would not be held up by having large numbers of men engaged in public works projects.

Road construction could easily be halted, and the incomplete section could await further funds or another dip in the trade 13 cycle. Much publicity was given this proposal, but the Unemployment Ccranittee turned it down, perhaps because it 14 involved an unpopular tax increase for the upper* middle class. As final preparations were made for the presentation of the Unemployment program to the fall session of Parliament on 20 November 1922, an incident occurred which seriously damaged

the Government's image of good will toward the unemployed. A National Unemployment Workers' Connittee had been organized with the idea of bringing direct pressure upon the Government

^ The Spectator. CXXIX (2 December 1922), 826-827.

14CP 4364 (18 December 1922) "Report of Cabinet Connittee on Unemployment", Cab. 24/140. 267 to carry out reforms in the Unemployment Insurance and Poor Law relief systems. While there was an undoubted Communist influence in the movement, the leaders focused their agitation on specific defects of the country’s Unemployment relief system. 15 Marchers came from every part of the country to appear at a rally in Hyde Park, and to petition the Prime Minister far redress.

Unlike LLoyd George who made an effort to meet with all such delegations, Bonar Law thought any discussion with the group would be a waste of his time. The Minister of Labour or one of the other ministers dealing with unemployment problems would 16 be able to deal with any questions that the group might bring up. Had the question rested here, the Government would have received little adverse criticism. However, Bonar Law decided to examine the police report of the marchers’ speeches, and finding several of them violent and abusive, decided that they represented a subversive threat and would probably cause serious rioting. At a meeting on 20 November the Cabinet supported Bonar Law's decision and authorized J.C.C. Davidson, the Prime Minister's Parliamentary Private Secretary, to publish "the Communist character and record of the leaders of the unemployed marchers". It was also decided that no charges would be brought against seme of the leaders who supposedly had made seditious speeches "as this would unite the Labour Party

"^Wal Hannington, Never on Our Knees. (London, 1967) pp. 138-147. 16H of C Deb. CLIX (27 Nov. 1922), 402; Blake, The Unknown Prime Minister, p. 477. 268 against the Government and give a wide advertisement to the Communists". To further complicate matters, Davidson and the other secretaries omitted calling in the representatives of the Daily Herald, the only large Labour daily, while the other papers made much of a subversive march of a "Red Army" on 17 Whitehall. Labour moved a vote of censure, and despite Bonar Law's appealing candour in defense, the Government's handling of the incident appeared unsympathetic to the unemployed Montague Barlow anticipated the defense of the Government unemployment policy with a good deal of trepidation. He expected a stormy debate with the back benchers in a "somewhat truculent mood". In reply to the expected position of Labour that the Government had done "little or nothing" the Minister of Labour was clearly aware that the Government's "new proposals 18 would not bulk very large". Surprisingly, some of the most cutting criticism of the Government's program came from the former chairman of the Cabinet Unemployment Committee, Sir Alfred Mond. He wanted specifically to know what consideration had been given to the large scale unemployment plans of the Coalition. Particularly he advocated the use of national credit to finance a LdOO million fund for

17 CP 4326 (23 November 1922) Report on Revolutionary Organizations in the " Cab. 24/140; Conference of Ministers 158 (20 November 1922), Cab. 23/39. For Newspapers see for example: Daily Express, 21 November 1922. 18 Bonar Law Papers 111/4/14, Montague Barlow to Bonar Law, 21 November 1922. 269 Empire development as he had in his September memorandum. In addition, Mond suggested that the Unemployment Act benefits might be voluntarily surrendered to an employer in return for "full time employment for a fixed period, all at prevailing wages". Admitting this was subsidization of industry, Mond proposed that the economic situation was "so extraordinary, unparalleled, and unexampled that you are entitled to Bke 19 some economic steps in order to achieve results". Bonar Law replied that he did not think it was necessary to have a L100 million development loan, but he maintained that "he was not afraid of a little inflation". 20 So much criticism was directed at the Government's meager unemployment efforts, that Montague Barlow proposed to write an article setting forth the programs and plans in detail. Bonar Law curtly rejected the proposed article by asserting that "there is nothing that the public so much dislikes as articles by Ministers in the newspapers, and I 21 think it would be unwise therefore, to publish this one". The draft itself merely reiterated the Tory program that he had been set before Parliament in November. In one paragraph,

18Bonar Law Papers 111/4/14, Montague Barlew to Bonar Law, 21 November 1922. 19H of C Deb. CLIX (30 November 1922), 989. 20Ibid. (1 December 1922), 1143. 21Bonar Law Papers, 111/4/15. Bonar Law to Montague Barlow, 21 December 1922. 270 however, Montague Barlow made reference to "plans for dealing with the problem in a more radical and permanent manner". 22 This must have been a mere rhetorical phrase, for there is no evidence that the Government was seriously studying any bold new approach to unemployment during the winter recess or afterwards. Sir Alfred Mond’s proposal for using unemployment benefits as a method of subsidizing industrial production was rejected for several reasons, including its destructive effect on the

still sacred contributory principle and anticipated hostility of trade unions to the subsidization of business from unemploy- ment funds. 23 Consideration of a development loan as suggested by Mand was postponed until the meeting of the Imperial Economic Conference in . There was no question about the hostility of the Bonar Law Government towards borrowing for unemployment works. In a meeting with a deputation from the General Council of the Trades Union Congress on 17 January 1923, Bonar Law admitted that the system of paying all expenses out of current revenue was deflationary and had probably exacerbated unemployment, but borrowing would only lead to greater suffering later on, and would "permanently destroy the 24 chance of getting back to normal conditions".

23C.U. 509 (16 January 1923), memorandum by Montague Barlow, Cab. 27/193.

O il Gleanings and Memoranda, LVII (February, 1923) pp. 1H9-150. 271 Even as late as , opinion within the

Government had not accepted large scale unemployment as a permanent phenomenon. Lloyd-Greame published an optimistic memorandum predicting that unemployment would fall in 1923 as it had the previous year. Expansion of both exports and the hone trade would call for the employment of 900,000 persons, but making allowance for increased productivity, the actual numbers of unemployed would be reduced by

700,000 to 750,000. 25 These figures were challenged by

Montague Barlow who doubted whether sufficient attention had been given the tremendous increase of production through the extended use of machinery since the beginning of the War. Furthermore, industry was not absorbing enough of the 700,000

adolescents who entered the labor market annually. He pre­ dicted that all unemployment plans for the coining winter should be based on an estimate of not less than a million 26 * unemployed. Despite this pessimistic prediction, it was not until the summer of 1923 that the Government became fully aware that unemployment was chronic, and not a passing phase of the business cycle. Early 1923 brought about the first general re-examination of Unemployment Insurance since it had been enacted in 1920.

25 Unemployment Insurance Conriittee *4 (Feb. 7, 1922) "Trade and Employment" memorandum by Lloyd Greame, Cab. 27/210. Hereafter cited as U.I. ^C.U. 535 (ca. 23-27 March 1923), "Prospects for Trade and Employment", memorandum by Montague Barlow, Cab. 27/193. 272 Bonar Law appointed a special Cabinet Unemployment Committee, chaired by Lord Cave, the Lord Chancellor, to look into the system and make any necessary recommendations. 27 The chief problem in the administration of Unemployment Insurance centered on the question of gaps in the payment of the benefits. Under the emergency legislation begun in 1920, all those who had not contributed a sufficient amount to qualify for ordinary benefits could collect an uncovenanted benefit, but not continuously. In the spring and simmer of

1922, thirteen weeks’ benefit had been spread over thirty weeks with gaps of five weeks in between. The result had been disorders in London and Birmingham and strong criticism 28 of the Government’s "cat and mouse" procedure. As a partial remedy, Parliament had passed a short amending Act at the end of the 1922 summer session, limiting the gaps to one week each. Convinced that the procedure of allowing gaps had been discredited, Montague Barlow proposed the payment of a contin­ uous uncovenanted benefit to unemployed workers. He repeated his earlier observation that the Unemployment Insurance Scheme was extremely economical to the taxpayer, and that it had

22CP 51 (23) (29 January 1923) "Unemployment Insurance", Cab. 2H/138.

28C.U. Meeting 50 (30 May 1922), Cab. 27/im. 273 "provided the back-bone of our whole system of assistance for the unemployed". 29 Administrative rules had been so tightened that many of those who might claim benefits were being denied them. So severe were these regulations that The Economist’s labor correspondent reported that they had created "widespread dissatisfaction and a sense of injustice". Single persons living with their relatives, and all aliens, for example, 30 had been excluded from the uncovenanted benefit. The prolonged high rates of unemployment made the continuance of the uncovenanted benefit "unavoidable". Montague Barlew proposed payments of benefits over an entire year, with pcwer to allow the Minister of Labour to extend them in the advent of an emergency situation. After the fall of 1924, and in the following years, he expressed the hope that it would be possible to limit all benefits to the twenty-six weeks of covenanted 31 benefit, with no uncovenanted payments. In reply to Montague Barlow's memorandum, John Hills, the Financial Secretary of the Treasury, attempted to discourage any expansion of unemployment benefits. He argued that the Minister of Labour's proposal would bring about increased demands on the budget, requiring an increase in the income tax of

^U.1.2 (30 Jan. 1923), "Extended Grants of Unemployment Benefits", memorandum by Montague Barlow, Cab. 27/210. 30The Economist XCVI (17 March 1923), 586.

31U.I.2 (30 January 1923, Cab. 27/210. 274 6d in the pound. Rather than increase benefits, Hills proposed a drastic cutback, including the elimination of the uncovenanted benefit after October 1923. This could be accomplished by a gradual lengthening of the gaps to four weeks by the fall. "A reduction of the benefit period in this way," Hills added, "is essential to a gradual return to normal conditions". He "viewed with alarm" his colleague's proposal "to make no dis­ tinction between the man with contributions and a legal right to benefits, and the man with none. Such a proposal reduces 32 contributory insurance to a farce". At the first meeting of the Unemployment Committee,

Bar lew defended his position, holding that in an abnormal situation continuous payment of benefits was necessary, but with the return to normal conditions the liability would become manageable. He was supported by Griffith-Bosccwen who pointed to the difficulties caused for the Board of Guardians when the gaps forced hundreds of thousands to seek Poor Law relief. Hills insisted that the gap be increased despite the strain on the Guardians, but Barlow warned that any proposal for lengthening the intervals without benefit would be 33 "strongly opposed". The Treasury position was supported by Lord Cave who commented "that the feeling in the country was very strong that the cost of the scheme should be reduced".

3^U.I. 6 (10 February 1923, memorandum by J. W. Hills, Cab. 27/210.

33U.I. meeting 1 (31 January 1923), Cab. 27/210. 275 He also expressed concern at "so long an extension of the emergency provisions" as suggested by Barlow. He proposed to approve the scheme up to October 1923, and then to go to Parliament at the end of the sunnier session for an extension. Montague Barlow replied that this was precisely what the Committee was trying to avoid. Too many of the earlier Insurance Acts had been legislated in a hurry and without careful consideration of the consequences. Hills modified his position, but insisted that a three week gap be maintained in order to squeeze out a certain number 34. of undesirable people from the scheme. Over strong dissents from Grif f ith-Boscowen and Bar lew, the Treasury prevailed.

In the period up to 17 October 1923 the gap would only be a fortnight, but after that point, individuals would have to wait three weeks before they could again receive any benefit. Further benefits of twenty-six weeks were available over the following year, with gaps arranged so that they would not fall during the Christmas holidays. The emergency benefits first provided in the fall of 1921 as a six month program for the relief of the dependents of the unemployed, and extended over since was 35 made a permanent part of Unemployment Insurance.

34U.I. meeting 2 (1 February 1923), Cab. 27/210. 35CP 97 (23) (13 Feb. 1923), "Unemployment Insurance Report of Committee", Cab. 27/210. 276 What had been promised in the election as a thorough review of the Unemployment Insurance scheme, was actually merely another temporary expedient. The fiction of a contributory system, although badly shaken, was still maintained. Despite the best efforts of Barlow, the system of gaps was not abolished until Labour came to power in 192*4. Little consider­ ation was given to comprehensive changes in the scheme as long as it was thought that a return to normal conditions was only a year or two away. By the winter of 1923, unemployment had reached catastrophic proportions in some industrial towns. Perhaps the worst of these was Barrow-in-Furness where the average percentage of unemployment in March, 1923 was 33.6 per cent compared with 11.8 per cent for the country as a whole. In response to a delegation from the town authorities, the Minister of Labour sent an official to make a complete investi­ gation of the problem. Dependent largely on only one industry, the Vickers shipyard, the town had suffered heavily from the sharp cuts in naval construction and the depression in shipbuilding generally. Most of the unemployed men were skilled workers who had been out of work upwards to two years. Local docks were unable to accommodate the larger liners, so it was inpossible for the company to secure much reconditioning work. 277 It was obvious that the town was so industrially depressed that even if trade revived in the rest of the country, Barrow would still have a very large amount of unemployment. Without setting a precedent for other depressed towns, Barlow proposed that special assistance was warranted. Aid might take the form of Admiralty contracts, or subsidy to the Cunard Company to resume work on liners awaiting completion in the Vickers Yards. Since many of the unemployed at Barrow had migrated during the War to seek employment, he suggested a 36 subsidy to return them to their homes. From the experience at Barrow, Montague Barlow drew the conclusion that it would be preferable "to take districts where existing and prospective unemployment is most serious and examine the practibility of attaching big schemes to such districts" rather than try to make doubtful progress in 37 fighting unemployment in the country as a whole. This study of Barrow-In-Fumess anticipated the schemes for assistance to depressed industrial areas in the late twenties and thirties. Structural unemployment arising out of obsolete plants or nan-coiipetitive British industries such as cotton, coal and shipbuilding, was eventually recognized as a major drag on the national economy. While this sort of

36C.U. 532 (21 March 1923) "Position at Barrcw-In- Fumess" memorandum by Montague Barlow, Cab. 27/193.

37C.U. 535 (ca. 23-27 March 1923), Cab. 27/193. 278 remedy seemed plausible, ultimately it proved to be a failure. Moving individuals out of depressed areas or producing local public works contracts, had little effect as long as aggregate 38 demand for labor was limited. It only served to divert attention from the national problem, making unemployment seem like a local one.

Housing The Conservatives had nade no commitment to a publicly

financed housing program in the 1922 election campaign. Indeed they took great pains to emphasize that the real solution was a return to private enterprise as quickly as possible. Only a

statement favoring greater home ownership indicated any Government action in the housing field at all. After the election, while preparations were being nade for presentation of the unemployment program, the Government remained undecided on any course of action. Griffith-Bosccwen informed Bonar Law that argements for and against a new housing program were so evenly balanced that no early decision could be made. He recorrmened "that the best policy was to play out time during the present Session by saying that the whole question is being re-examined, while in the meantime, the old scheme is still going on". A policy of delay also reflected a basic indecisiveness 39 and division in the Cabinet.

38 Hancock, "Reduction of Unemployment as a Problem of Public Policy, 1920-29", Economic History Review XV, 337-343. 39 Bonar Law Papers 113/11/3 Griffith-Boscowen to Bonar Law, 23 November 1922. 279 To provide a study of the entire housing situation, a Cabinet Cornnittee was appointed under the chairmanship of the Minister of Health. Other members proposed by Bosccwen included Lord Novar, Neville Chamberlain, Montague Barlow, Lard Salisbury, John Hills and Lord Onslow, the Parliamentary Secretary of the Minister of Health. Salisbury and Montague Barlow were not named by Bonar Law but Sir Douglas Hogg, the Attorney General, 40 was added to the list. At its first meeting, the Cornnittee took a negative view of any new State aided housing scheme. Griffith-Bosccwen pointed out that private enterprise was reviving, and some local author­

ities had begun their own building programs without State assistance. He maintained the Cornnittee1s general line of policy should be "the encouragement of private enterprise, short of subsidy" and the reliance on local authorities without any additional financial aid. There was sane interest in aiding private enterprise indirectly, possibly through exemption from local rates. 41 Between the first meeting on 8 December and the second on 19 December, Boscowen underwent a complete reversal of opinion. In the interim, advanced information from Lord Onslow's Committee

un Ibid. 113/11/13 Griffith Boscowen to Bonar Law, 1 December 1922. ^^Housing Committee Meeting 1 (8 Dec. 1922), Cab. 27/208. Hereafter cited as H. 280 studying rent control, suggested that it would probably reconmend a renewal of the Rent Restriction Act for two more years. The Government could not extend rent control on the grounds of a housing shortage and then take no action to cure it. The Minister of Health had also examined the housing proposal of his predecessor and found it to be a sound approach. It would provide a very limited liability for the Exchequer, thereby avoiding the pitfalls of the Addison scheme. Furthermore, Boscowen was convinced that pressure for a State-sided scheme "would come frcm political friends and opponents alike". If there was going to be a project, it should be based upon Mond's proposal.

Arguing that the Mond scheme was little better than Addison's, Lord Novar saw no need for any direct subsidy. Instead, he preferred some indirect method through relief of the rates to provide sufficient incentive for private builders.

Supporting Novar, Hills suggested that it might be possible to get more houses without a State subsidy than with one. If a scheme were adopted, there might still be a housing shortage in 1925, and the Government would again be under severe pressure to extend rent control. Hogg liked the Mond proposal if it could provide 80,000 houses at U a house, but he opposed a subsidy of L5 or L6 a house if that were necessary to secure local authority cooperation. Although Neville Chamberlain was 281 not present, Bowccwen indicated that he thought Chamberlain would support his position. At the third meeting of the Committee on New Years Day,

1923, Boscowen, completely in control of the situation, presented 143 an outline of the suggested subsidy plan. He also managed to convince Novar, despite his previous reluctance, to go along with the plan. Hills was not isolated, but he had marshalled sophisticated arguments for opposing the program. If the Government revived a subsidy plan, he contended, they would have to pay it to all those local authorities who had begun construction without looking for State aid. His second objection was based on the rates of construction wages which were to be renegotiated at the end of March. If the unions became aware of a subsidy, the wages which were too high would not cane down, and the "Government would be saddling the whole country with an enormously increased charge", both in the building industry, and indirectly in other trades. Moreover, Hills maintained that such a scheme would cause political difficulties, particularly from "representatives of important interests which were opposed to any form of Government inter­ ference in industry". For Chamberlain, the key to the question was the "almost certainty" that the Government was going to renew the Rent Restrictions Act. He favored limiting any

U2H. Meeting 2 (19 December 1922), Cab. 27/208. HO See H .8 "Outline of Proposed Policy, Cab. 27/208 (29 December 1922). proposal to the period of extended rent control. Shrewdly,

Chamberlain contended that a small subsidy could strengthen the employers in the building negotiations. They could argue that excessive wages were preventing the Government from providing a large program. Hogg agreed with Chamberlain that it was impossible for the Government to do nothing, and since a subsidy was the only alternative, he favored it. On 8 January 1923, a preliminary report was submitted to the Cabinet, indicating the Committee's belief that a subsidy was necessary. Recarmnending the Mond plan, the Committee emphasized that only the smallest type house would be eligible for assistance. If costs proved to be more than L3 a house, it was suggested that the total number of houses 45 be reduced to compensate for the increased costs. Strong support for the Housing Committee's Report came from the London

County Council. A delegation representing all three parties emphasized the extreme shortage of housing on the lowest economic levels. One member of the group, a Conservative, pronounced the present state of slum and housing conditions, "a menance to civilization". Private enterprise could not be expected to provide working class housing for the present;

uu H. meeting 3 (1 January 1923), Cab. 27/208. U5CP 8 (23) (10 January 1923), "Interim Report of the Committee on Housing Policy", Cab. 27/208. 283 thus the delegation emphasized to the Minister of Health that it was a duty of the Government and the local authorities to 40 take the responsibility. At the following meeting of the Housing Policy Conmittee on 22 January, the remaining problems were thrashed out. It was proposed by Boscowen that any scheme should be timed to coincide with the end of rent control in . As

for the subsidy to private enterprise, he preferred to allow the local authorities to handle this directly through grants or rebates on the rates. Both these suggestions were adopted by the Cornnittee at Hills' insistence. There was to be no publication of the Government's program until wage negotiations in the construction industry had been completed. Slum clearance was confined to k200,000 a year, this same amount 4 9 that has been provided by the Coalition. In its completed report, the Cornnittee asked the Cabinet for permission to begin negotiations with local authorities up to a maximum of L4 a year for twenty years. ^ The general lines of the policy laid down by the Committee were approved by the Cabinet on 26 January, although the

us HLG 48/29 "Deputation frcm the LCC meeting with the Minister of Health, 3 January 1923". 49 H. meeting 4 (22 January 1922), Cab. 27/208. ^C.P. 36 (23 January 1923), "Report of the Coranittee on Housing Policy," Cab. 27/208. 284 exact financial details and some of the arrangements for slum 51 clearance had not been c o m p l e t e d . Not all the members of the Cabinet agreed with this decision. Lord Salisbury, like Hills, argued that a subsidy would be used by the trade unions as a lever to keep their wages high. With a new State-aided scheme in progress, the trade unions "will be confirmed in their obstructive convictions and their conversion will be retarded for another period of years". His private and official information indicated that there were many economies available in housing to make it a viable proposition for private enter- 52 prise, so that there was no need for subsidies. Negotiations with the local authorities remained the only major stumbling block prior to presentation of the scheme to Parliament. Of the large cities, only Birmingham had already embarked on a program of housing in anticipation of a future Government subsidy. 53 Most of the other cities under the leadership of the Lord Mayor of Manchester (Councillor Cundiff) insisted that they could not build homes for less than L6 per house on an annual basis, or less than 50 per cent of the total cost if the loss on each house was more than M 2 a year. 54 The local authorities insisted at the beginning of negotiations on 23 January that the L6 represented half their

^Cabinet 3(23) (26 January 1923) Cab. 23/45. 52 Bonar Law Papers 111/29/144, Lord Salisbury to Bonar Law 12 February 1923.

^ Birmingham Daily Post, 12 October 1922. 285 estimated annual loss, but Bosccwen maintained that information from private builders suggested was the actual figure. 55 The

Lord Mayor of Manchester maintained that the Ministry of Health's figures were based on the smallest, lowest priced house available, while his own city and others like it had much higher land prices, 56 and a higher standard of construction. The deadlock continued throughout February, but Boscowen was abruptly removed from the negotiations. Still without a seat in the Caimans since the General Election in November,

the Minister of Health was defeated by a Labour candidate at a by-election in Mitcham on 3 March. Although the Conservative Housing Bill of 1923 is usually called the Chamberlain scheme,

almost all the planning with the exception of the completion of negotiations with the local authorities, had been prepared 57 and directed by Griffith-Bosccwen. Moreover, the general outlines of the 1923 housing bill were merely an expansion of the proposals set out by Sir Alfred Mond during the previous summer. Bonar Law named Neville Chamberlain as Bosccwen's replacement on the 7 March. From his own experience in

Birmingham, Chamberlain realized that without the cooperation

^HLG/48/10, "Housing Subsidy, 25 January 1923". ^The Manchester Guardian, 7 February 1923. 57Iain Macloed, in Chamberlain credits Neville Chamberlain for convincing Bonar Law that a housing subsidy was necessary. The Cabinet had already approved a program for State aid on 26 January. 286 of the largest local authorities it would be impossible to implement a successful housing program. He asked for and received Cabinet permission to offer the municipal represen­ tatives a subsidy of t6 per house, over a period of twenty 58 years. At the following day's negotiations, Chamberlain in a gesture of goodwill agreed to accept the local 59 authorities' terms. A heavy schedule of legislation delayed the second reading of the Government's housing bill until 24 April. In his introductory speech, Neville Chamberlain admitted that the bill could "not be a solution to the housing problem but a beginning of a solution". Much criticism was directed against the absence of the parlor in the proposed houses. It was a place where the family could entertain, or the children might have a quiet place to study. To meet these critics

Chamberlain demonstrated that it would be possible to rearrange the space so that a 10 by 6 parlor was available without increasing the size of the house. In Chamberlain's 60 words, the room was "big enough to court in".

Even the normally conservative Saturday Review thought Chamberlain had gone too far. It agreed with other critics that a house of less than 1000 cubic feet should not

58Cabinet 13 (23) (14 March 1923), Cab. 23/45. 59 HLG/48/10 "Housing Subsidy Negotiations meeting on 15 March 1923".

60H of C Deb. CLXIII (24 ), 304, 306. 287 be subdivided into tiny cells. The best solution was to allcw the local authority of each district to decide what type of house was needed and suitable for the local climate and 61 traditions. John Wheatley, who was soon to be the first Labour Minister of Health, denounced the houses as "boxes" that would be the standard of housing "in the country, not 62 merely for today but for 30 years to come". Chamberlain answered that he still intended to return to private enter­ prise as soon as possible, making it necessary to "be careful not to give a subsidy to any class of house which can be 63 provided by private enterprise unsided". Another feature of the bill to cone under fire, was its short duration. Sir Alfred Mond observed that it would be at least the middle of June before the bill would get the Royal Assent. A good part of the building season would be lost and Chamberlain's "limit of about two years will be reduced practically to 18 months. That is too short a time to get the Scheme going on any scale". The former Minister of Health predicted, oorrectly as it turned out, that it would take a considerable number of years before the program

could show any results. Wheatley supported Mond in calling the two years limit ridiculously inadequate. Mond, a

^~*The Saturday Review CXXXV (28 April 1923), 560.

62H of C Deb. CLXIII (24 April 1923), 335. 63Ibid., 311.

64Ibid., 345-346, 332. 288 wealthy industrialist, thought the Government's proposal for giving out subsidies to private builders was an "unsatisfactory and inefficient system". It was preferable to give the money to local authorities to build and operate the houses. In Mond's view, , at least in housing, would 65 be more efficient and would produce much happier results. Another housing expert, Sir , a Conser­ vative who had served under Mond at the Ministry of Health, spoke out for the middle class. He charged the middle and lower middle class were "living in circumstances as dreadful as any other class of the community". He reported that 75 per cent of the new occupants of a London County Council estate were not the working class "but the hard-pressed middle class today who are going into that type of house, of very necessity". 66 Sir Kingsley Wood's judgement was correct. Despite a maximum limitation of 950 square feet, most of the "Chamberlain" houses became the dwelling places of the new middle class rather than the workers and their families.

As an electoral issue the Tory housing scheme probably 67 lost more working class votes than it gained. The Conservatives could boast that housing was solid evidence

65Ibid., 349. 66Ibid., 355. 67Taylor, English History 1914-1945, p. 206. 289 of reform legislation which, of course, was true. But considering the precedent of the Coalition's Experiment, and the immense housing shortage that existed in 1923, it was not a very impressive performance.

Rent Control Closely related to housing, the question of rent control proved to be a troublesome and devisive issue for the Bonar Law Government. As the last remaining wartime control, the Rent Restriction Act was due to expire in . The Coalition had appointed a Departmental Committee to study the problem, but the final report was delayed until long after the General Election. For many Conservatives, rent control was the source of all the existing troubles connected with the housing situation. Confidence had been destroyed in the housing market by the maintenance of rent restriction legislation since 1914. Not only were the rents uneconomical in terms of a fair profit to the owner, but the landlord had been pictured as a contemptible person, squeezing his livelihood from his helpless tenants. Unless there were a revival of confidence and respect for the landlord, it would be impossible to return to normal conditions. Restoration of trust in the view of the advocates of private enterprise, could only come when a definite date had been established for an end 290 to rent control legislation. 68 For the Conservatives, the question was an extremely sensitive one because it brought two major factions of Party supporters into conflict. As a Government pledged to bring about a return to private enterprise, an end to rent control was desirable as soon as possible. However, immediate decontrol would cause panic among millions of tenants and would lead to disaster for the Party at the polls. The Tory situation was complicated by the demands from landlords and business interest to end control, as opposed to cries for con­ tinued protection from thousands of middle class tenants. The Government tried to delay making any decision, but by late January a preliminary report of Lord Onslow's Departmental

Committee was made available. The Cornnittee reccnmended an end to rent control to be accomplished in stages, as soon as possible. The highest priced houses would not be protected after June 1923, those in the lower category, not after , and the remainder a year later. Rent increases beyond the 40 per cent allowed in the 1920 Act were not permitted. New houses and those becoming vacant after February 1923 would automatically be decontrolled.

CQ See Birmingham Daily Post, 11 Oct. 1922 for an extended discussion of the issue from the Conservative viewpoint. 291 Owners who needed a house for their own occupation or for one of their children, would be permitted to evict the tenants after giving them three months notice. To mitigate the effect of this provision, the courts were instructed not to supply an eviction coxier unless it was satisfied that it was "reasonable to do so". The Conservative press was divided over these proposals for extending control for another two years. The Scotsman compalined that the recommendations favored the tenant over the

landlord and was a "victory for the wrong people"; meaning, of 70 course, the Socialists. The Liverpool Daily Courier admitted

that the abolition of control could add "to the immediate difficuL ties of the already heavily-burdened middle class, but it was the 71 only remedy available to revive private house construction". Agreeing with the Committee's conclusions, the Economist thought it was wise to postpone decontrol of the working class property while unemployment was so high, and cuts in wages were being made. However, it concluded that the "supply of houses would only increase if the price of housing accommodation is allowed to rise".. ,, 72 Sir Kingsley Wood, as a spokesman for the middle class tenants, predicted that the Onslow Report would meet with

^ The Scotsman, 1*+ February 1923.

^Liverpool Daily Courier, 16 February 1923.

72The Economist, XCVI (24 February 1923), 422. 292 opposition. To end control in 1924 would be "most unfair to the middle class man and woman". The dispossessed families would have to enter into competition with the working class for the smaller type house because they "could not afford to go to hotels or boarding houses." In Wood's view, the wisest course was the extension of all controls for two years allowing time for enough new houses to justify decontrol. 73 Realizing that the Report was unpopular with a large number of their own supporters, the Government tried to procrastinate until the divided Cabinet could come to a decision. 74 In the meantime Bonar Law appointed a new Cabinet Committee under the chairmanship of Lord Salisbury to attempt to hammer out an agreeable compromise. ^

While the Government was delaying action, the Minister of Health had to face an agitated electorate in a by-election at Mitcham in suburban London. As the responsible Minister, Boscowen could not avoid taking a position on the controversial issue. In his electoral address on 13 February, Bosccwen disclosed the general outlines of the Government's new housing policy. He coupled this with a vague pronouncement on rent control, maintaining that it had to be rumored at the earliest

7^The Manchester Guardian, 12 February 1923. 74 Cabinet 8 (23) 9 February 1923, Cab. 23/45. 75CP101 (23) (16 February 1923), Cab. 24/159. 293 date possible, but "it should be removed gradually". However, he added that care should be taken that no undue hardships were inflicted on the tenants of working class and middle class houses. Three days later, Bowccwen announced that the Government had decided to extend the Rent Restrictions Act beyond its expiration date of June 30. Furthermore, there was to be "no sacrifice of the middle classes, and the Government would not therefore accept the proposal for gradual decontrol, which would entail the higher rated houses coming out of the Act next June". 77 The Minister of Health's second statement reflected a decision by the Cabinet to delay any decontrol of the highest priced houses 78 until the summer of 1924. A mere postponement of the question for another year was not enough to appease the public outcry for sane definite policy.

Boscowen found himself faced with an additional opponent, an Independent Conservative who threatened to split the Tory vote and hand this supposedly "safe" seat over to Labour. Sponsored by the disgruntled Coalition Conservatives, the Independent candidate pledged himself to the postponement of any decontrol 79 until the housing shortage was over. With rent control the

^^Westminister Gazette, 13 February 1923. 77 The Manchester Guardian, 17 February 1923. 78Cabinet 10 (23) (15 February 1923), Cab. 23/45. 79 The Manchester Guardian, 24 . 294 only issue, Boscowen was forced to take a much bolder position to counteract his new opponent. He had to premise that there would have to be a sufficient number of the houses built before decontrol took place. 80 This went beyond the authorization given Bcwcowen by an emergency meeting of the Cabinet on 24 February. According to the agreed policy, the Government would decontrol all houses in , with the higher valued houses coming out of rent control in 1924 unless Parliament should pass a resolution to the contrary. Lord Salisbury was enraged at Boscowen*s speech. Only in one case of an "unimaginable shortage" or "widespread disasters" should the Government delay the beginning of decontrol beyond 1924. Moreover, Boscowen*s pledge would make it difficult to end rent control in 1925, if at all. Salisbury was insistent that the hardship of "a few tenants" should not be used as an excuse to 82 postpone further action. Most of the voters did not agree with Salisbury's opinion, and in a wave of discontent, Griffith-Bowcowen and two other members of the Government, John Hills and Colonel G. Stanley, Under-Secretary at the Home Office, were defeated at by-elections between 3 and 6 March. The defeat of three members of a Government after only four months in power, was termed by the Economist

88Ibid., 26 February 1924. 81Cabinet 12 (23) (24 February 1923), Cab. 23/45. 82 Bonar Law Papers 108/5/16 Salisbury to Bonar Law 27 February 1923. 295

"without precedent in the history of British Government". 83 At

Liverpool, where Hills was defeated, the Tory machine suffered its first loss in forty years to an outside candidate. In Willesden, a North London suburban district, a Conservative majority of over 1,300 was turned into a Liberal majority of over 5000. Bowcowen1s Independent Conservative opponent at Micham, had split enough of the Tory votes to elect the Labour 84 Candidate by almost 900 votes. In all three by-elections, the single issue had been the Government's rent and housing policy. By refusing to give Bosccwen a clear mandate for an indefinite extension of rent restriction, the Cabinet had demonstrated indecisiveness, and even incompetence. The Spectator commented that each of the constituencies were inhibited by people "who know that if they are turned out they may not find another place to shelter themselves and their families". Although it agreed that a return to private enterprise was the real solution, "a sudden de-control of rents would cause something like pandemonium". Any decontrol measures, it advised, should coincide with a

Government sided program of housing construction on a large scale. 85

88The Economist, XCVI (10 Ifarch 1923), 535. 84 Manchester Guardian, 5-7 March, 1923.

85The Spectator, CXXXV (10 March 1923), 316. 296 A different reading of the political signs was taken by the Saturday Review. In spite of the by-election results it saw no diminishing "of the general mandate of the country given to

Mr. Bonar Law at the polls last November". The real difficulty was not a fear of a private enterprise, butthe Government's failure to make a definite statement of a date for deoontrol. It was the tendency to put "mere opportunism" before "true Conservative principles" that had caused this temporary setback. 86 If the Cabinet had accepted the Saturday Review's position, the Government would have faced increasing unpopularity and eventual defeat at the polls.

Fortunately, Bonar Law's selection of Neville Chamberlain as Minister of Health checked the drift to the right. Not only an able administrator but also an astute political observer, Chamberlain fully realized that any date set in the near future for the termination of rent control would probably be unacceptable to the great majority to tenants. At the same time, a fixed date was necessary to bring rent control to an end. He also advised against a gradual decontrol that allowed rents to rise gradually because they were already "really higher than is at present necessary". As a compromise solution, Chamberlain proposed to the Rent Restriction Committee that decontrol should end officially in June 1925, but a series of Arbitration Tribunals

86 The Saturday Review CXXXV (10 March 1923), 316. 297 would be established to protect the tenants "from extortion on the part of the landlords". These tribunals' sole duty would be to arbitrate between the landlord and the tenant in case of disputes between the parties after 1925. No appeals were to be allowed. The tribunal's decisions were limited to fixing 87 the rent to be collected. Most of Chamberlain's colleagues on the Committee disagreed with his position, but he insisted that it was the only way of achieving decontrol without alarming the tenants who had "an increasing terror of eviction". 88 Lord Novar agreed that the Minister of Health's proposal was attractive politically, but it would tend to set up rent courts which would became permanent, making resumption of private enterprise in the house building i i 89 unlikely. A serious counter proposal was presented by Sir William

Joynson-Hicks, who had taken Chamberlain's place as Postmaster-

General. He suggested the continuation of rent control for five years, up to , which would allow sufficient time to relieve most of the housing shortage. Meanwhile, if the property changed hands, or in cases where the tenants died or moved away,

0 7 Rent Restrictions Committee 4. (27 March 1923), memorandum by N. Chamberlain, Cab. 27/220. Hereafter cited as R.R.C. 88R.R.C. meeting 4 (24 March 1922), Cab. 27/220.

89R.R.C. 5 (10 April 1923), memorandum by Novar, Cab. 27/220. it would automatically be decontrolled. By means of attrition, decontrol could then be spread over a five year period and take place almost imperceptibly. 90 For political reasons, Chamberlain considered Joynson-Hicks' proposal to be impractical. A five year extension would bring the issue of rent control too close to the next General Election which could be held no later than the fall of 1927. 91 Douglas Hogg, the Attorney General, strongly opposed Chamberlain's plan. He correctly predicted that if the Minister of Health's proposals were adopted, "control would never come to an end". A choice had to be made between the Onslow Committee's recommendations to bring an end to control in 1925, or "allowing it to become a permanent feature of our social system". Even if it did make the Government unpopular, Hogg argued that it was better to end control in 1925 than to continue it indefinitely. As a protection for the tenant, he advised a provision in a new bill allowing the County Court judge to prevent harsh action by the landlord. 92 Replying to Hogg's criticism, Chamberlain agreed with him that control should end in 1925, but some other provision had to be made for a further transition period. The Government could, of course, merely carry on the present Act with minor amendments

QQ R.R.C. (10 April 1923), memorandum by N. Chamberlain, Cab. 27/220. 299 until 1925, but "this would expose us to charges of 'tranquility,1 evasion and an inability to decide on a policy which would probably prove to be extremely damaging". Ignoring any further objections, Chamberlain proposed the continuance of rent control for seven years. In the first two years the Act of 1920 would remain in effect with some minor amendments. After the summer of 1925 the owner could raise the rent; if the tenant refused, the case would be arbitrated by the Tribunal. This procedure would continue until 1930 unless Parliament passed a resolution ending it sooner. 93 Chamberlain's forceful presentation and cogent arguments silenced any serious opposition in the Cabinet. In the final draft the term tribunal was replaced by tne reference committee to avoid the connotation of a rent court. While some objections were expressed that the work of the committees could be better handled by the County Courts, Chamberlain pointed out that the 94 Courts did not have the power to decrease rents. In the Commons, a group of right wing Tories led by Sir

Kingsley Wood directed a sustained attack on Chamberlain's provision for reference conmittees. Wood argued that these bodies would continue the uncertainty that already existed in house building. "People who lend or borrow money on house

9V r .C. meeting 5 (13 April 1923), Cab. 27/220. 300 property will begin to think there is going to be some authority interposed between them and their rights as borrowers, lenders, or as purchasers of property". He reported that not a single Conservative backbencher had supported the proposal which was 95 looked upon "as a new and dangerous principle in this country". Most of the Conservative objections were designed to protect the interests of the landlords. Fear was expressed that the reference conmittees would develop into rent courts which would tend to give the tenants an upper hand as opposed to the County Courts where the landlord with his counsel and right of appeal had the upper hand. 96 E. G. Pretyman wanted to know more about the composition of the reference committee: -"are they to be composed of tenants and representatives of landlords, or are they to be composed of independent people .... who would have no particular leaning towards landlords or tenant; what class of 97 person is to compose these reference committees?" Insistence by Conservative opponents forced Chamberlain to agree to an amendment allowing Parliament to reconsider the question of reference committees in two years before they were 98 to go into effect. This was not a substantial concession since

95H of C Deb. CLXVI (10 ), 1275, 1273. 96Ibid., CLXIV, (6 June 1923), 2U33. Q7 a Ibid., CU(VI, (10 July 1923), 1278.

"ibid., 1291. 301 the general principles of the bill were maintained intact. With this opposition satisfied, the Bill was passed with little further difficulty. As a solution to a vexing problem, Chamberlain’s rent control legislation made the best of a bad situation. It saved the Government from political disaster and postponed a decision on the question until 1930. As in the case of housing, the Conser­ vative Rent Restriction Act embodied as implicit admission of the total failure of the free mrket to provide housing. Under intense pressure from their own supporters, the Tories produced a creditable piece of social legislation, but as with its housing and unemployment programs, the Bonar Law Government attempted no more than temporary expedients. CHAPTER VII PROTECTION, THE NEW PANACEA: MAY 1923-JANUARY 1924

Unemployment Remedies Bonar Law never planned to continue as Premier indefinitely.

In fact, he told Balfour late in 1922 that he intended to keep his position only one year. Balfour replied that this was impossible, but slowly, almost imperceptibly, the Prime Minister's health was

failing. ^ When a sea voyage in early May 1923 did not bring an improvement, a specialist was called. His verdict was that Bonar Law was suffering from cancer of the throat. If seniority were the only criterion, Curzon was the logical successor, but Bonar Law refused to reccjimend anyone to the King, leaving open the possibility of another candidate. Meanwhile, Law's Parliamentary Private Secretary, J. C. C. Davidson, hurriedly drafted a memorandum to the King's private secretary, Lord Stamfordham, supposedly giving the view of the average Tory backbencher of the two leading contenders. In Davidson's view, Baldwin's only drawback was his relative inexperience.

"'"Balfour Papers, BM Add. MSS 49693, Memorandum by Balfour of a Conversation with Bonar Law, 22 December 1922, 304.

302 303 Curzon on the other hand, had many liabilities, including an inability to "inspire complete confidence in his colleagues". As for the Foreign Minister's well known arrogance, the prospect of Curzon meeting delegations from the "Miners' Federation or the Triple Alliance, for example, is capable of causing alarm for the future relations between Government and Labour. ..." Finally, Davidson pointed to the resentment in the Commons and in the Party that would be caused by having a peer as Prime

Minister. 2

The King summoned Salisbury, who strongly recommended Curzon, while Balfour who was also called for advice, counseled 3 that Curzon had better be passed over for Baldwin. Agreeing with Balfour and Davidson, the King selected Baldwin as the most suitable candidate. With only two years as Cabinet Minister, and virtually unknown to the public just eight months previously, he was named Prime Minister on 22 May 1923. The choice of a new Leader was especially significant because Baldwin was to control the development of Tory social and economic policy for over a decade. Curzon, although not closely associated with domestic policy, might have served as a transitioned figure until a more innovative and imaginative leader could emerge. The new Cabinet was almost a duplicate of Bonar Law's. Robert Cecil had made his peace with the Tory Party in November 1922 and was selected

2 James, Memories of a Conservative, pp. 153-155. 3 _ . 304 as . For Chancellor of the Exchequer, Baldwin approached Home, but he refused to take office unless the other Coalition Conservatives were also included. A former Liberal, Reginal McKenna, who had been Chancellor of the Exchequer under Asquith, and was now President of the , was offered the position Home had rejected. McKenna also was ill and could not take office for several months; until then Baldwin would continue at the Exchequer. Eventually, McKenna reversed his decision to re-enter politics, and Neville Chamberlain was given the post on 27 August. With the French occupation of the in January, 1923, hopes of a quiet settlement of the European economic problem vanished as did expectations of an end to the British slump. Coal mining benefited to seme degree from the shutdown of the German mines, but despite the temporary collapse of Britain's most important European trade rival, prosperity did not return and unemployment continued to hold at well above the million mark. It was no longer possible to argue that unemployment was a world­ wide phenomenon. Prosperity had returned to the United States and to most of industrial Europe, with the exception of Germany. Long range British prospects looked bad, especially when it was recognized that the coal industry was experiencing only a temporary bubble of prosperity that could burst at any time, 4 sending the unemployment figures sharply upward again.

4 Middlemas and Barnes, Baldwin, p. 214. 305 June brought more gloomy news to the new Government.

Llqyd-Greame circulated a memorandum, from his Advisory Council of Business, warning that a temporary advance in trade conditions as a result of the Ruhr crisis, would probably be followed by a general downturn in the economy. Unless a general settlement in Europe took place within a month or two, "seasonal unemploy­ ment of the winter months would be aggravated by a serious trade depression." ^

Lured back into the Government by Baldwin, Worthington-

Evans who had been the first chairman of the Cabinet Unemployment Committee, was given the task of providing the now almost ritual­ istic palliatives to meet the unemployment emergency of the caning winter. As in previous years, emphasis was placed on unemployment relief works. After three years of chronic joblessness, it was recognized that these programs were having a diminishing impact.

In areas of heavy unemployment such as Glasgow, Newcastle, Sheffield, and Barrow-In-Fumess, the local authorities had virtually exhausted their funds for these projects. Even the large program for a new Liverpool-Manchester road was held up because g the local authorities could not supply the needed matching funds.

5CP 278 (23) (14 June 1923), Memorandum by Lloyd-Greame, Cab. 24/160. 6C.U. 545 (24 June 1923), "Draft Interim Report of Sub­ committee on Future Arrangement", Cab. 27/193; H of C Deb. CLXVII (1 August 1923), 1563. 306 Moreover, the total effect of these schemes on the relief of unemployment, was severely limited. K. J. Hancock estimates that between 1920 and 1928, relief works employed only one per cent of the total work force. This does not take into account secondary effects on aggregate demand, but he suggests that it 7 could not have been very large. Having made no detailed studies of possible alternatives, the Unemployment Committee could merely modify the existing programs and make them a little more suitable to the conditions of long term unemployment. To assist in the revival of the steel industry, it was proposed to make grants to local authorities for works that might produce orders for products. In addition, the usual grants and loans were available through the St. Davids Committee up to a total of t30 million. Real costs to the Exchequer for this program were much less. In the case of most of these loans, the State only paid half the interest and charges were spread out over a number of years; consequently, for the tr30 million allocated in 1923, the expense to the Exchequer was only fe950,000. 8 The Baldwin Government also sought to rekindle interest in the rather unsuccessful Export Credits Scheme. This system of guarantees to facilitate British exports cost the taxpayers only

7 Hancock, "Reduction of Unemployment", Economic History Review XV, 335. 8C.U. 550 (217 June 1923) "Draft Interim Report of Cabinet Committee on Unemployment", Cab. 27/193. H of C Deb. CDCVII (1 August 1923), 1566. 307 a pittance. Of U 7 , 651,000 sanctioned under the program, it was estimated that total losses would amount to only 1x75,000. The Board of Trade claimed that it saved the country some 1x500,000 in doles, but this figure was probably greatly exaggerated, considering the very slow rate of guarantee conmitments. After almost four years of operation, fc7 million in guarantees had g still not been allocated. Presented to the Carmans just prior to the summer recess, the Government’s unemployment program seemed less than heroic, considering the circumstances. The Ministry's spokesman, Sir Montague Barlow, prefaced his remarks by asserting "the main line of our policy in the past, as it will be in the future, is the stimulation of trade both home and foreign". Any other step taken to relieve unemployment was "merely a palliative".

His list brought to light virtually nothing that was new except for a modest L3 million increase in road expenditure. Again, this did not reflect the true cost to the Treasury because the central government paid only half the cost. In all, these projects would supply work to "at least 200,000 during the winter, and at least another 100,000 indirectly." ^ Speaking for the Labour Party, Sidney Webb asked how it was possible to justify aid for 200,000 and refuse it "to the

9C.U. 540 (4 June 1923), "Continuance of the Export Credits Scheme, "Memorandum by A. Buckley, Cab. 27/193.

10H of C Deb. CLXVII (1 August 1923), 1560, 1562, 1563, 1576. 308 other 1,000,000?" He demanded to know why the Government was subsidizing mainly "revenue producing enterprises, such as tranways, power stations and waterworks while making no provision for the great shortage of schools and hospitals." He suggested that there was a huge amount of capital waiting to be used for these and other public purposes. "The Government could borrow IJLQ1,000,000 perfectly easily if it chose, at rates which would be quite satisfactory. . . you could do the work that is required if there was any desire to do it, but apparently, for sane reason, the Government will not do that." Webb pointed out that many of the unemployed had been excluded from the uncovenanated insurance benefit by the regulation of the Minister of Labour despite earlier payments into the system. ^

The weakness of the Government position was also exposed by a Tory backbencher, Colonel Grant Morden who was not a member of the Party's left wing. He agreed with Webb's charges and called Barlow's proposals "almost ridiculous." The Minister of labour had called the Trade Facilities Act a great success, but Morden noted that in two years only tr26 million in guarantees had been granted out of the fc50 million authorized, and he could only conclude that it was "an absolute failure." It was obvious that the Government schemes did not adequately meet "the conditions we have to face." He called upon the Prime Minister "as one of

n ibid., 1590-1591, 1595. 309 his humble followers . . . to put the same ability, imagination and courage which his forefathers showed in the establishment of the great industry of which he became the principal inheritor. . . provide revenue-earning work and employment and not doles." 12 In a weak reply, Neville Chamberlain admitted that the Government was only dealing with a small part of the problem. "I am afraid that it will always be so when you have unemployment on this sort of scale. Any schemes of relief, whatever form they may take, are more or less artificial." He explained that it was very difficult to provide work for a large number of people without absorbing at the same time "an altogether disproportionate amount of capital." 13 The unambitious nature of the Government's proposals did not go unnoticed in the opposition press. The Manchester Guardian observed that altogether, the proposals announced by Sir Montague

Barlow fell far short of what was needed. It questioned the impact of a guarantee of fa26 million "compared to the total volume m of British trade". A leader in the Liberal Magazine described the Conservative unemployment plans as "too late, and in other respects too feeble." It was no longer possible to deal with unemployment by devising a quick solution to the reparations problem.

12Ibid., 1638-1639, 1641. 13Ibid., 1652. 1J*The Manchester Guardian, 2 August 1923. 310 A Tory program of domestic measures was a "sterile repetition of the plans that Mr. Lloyd George concocted two years ago." It called upon the Government "to get as big a move on as they would if hostile armies were marching on London." 15 As a counter to the Conservative unemployment plans, the Labour Party formed an Emergency Committee to propose alternatives.

Labour's solutions were not radical but they went far beyond anything considered by the Baldwin Government. Among the principal suggestions were: a greatly extended housing program, the immediate expenditure of L60 million forlhe electrification of railways, establishment of an improved electric power supply system, and construction of school buildings to provide far the full operation of the Fisher Act of 1918. The recommendations called for an end to the distinctions between uncovenanted and covenanted unemployment benefits, and the launching of a greatly expanded industrial training 16 program for unemployed women and young people. No price tag was placed on these proposals, but with the exception of the expansion of education, it could be financed from laans rather than from current revenues. Only a year earlier in July 1922, Sir Allan Smith had submitted a memorandum to the Cabinet suggesting unemployment remedies as a part of the Coalition's never completed study of

^ The Liberal Magazine XXXI (), 513-515.

^ T h e Times, 3 August 1923). 311 unemployment and trade conditions. A modified version of Smith's memorandum served as the basis of the Industrial Group's proposals.

Lloyd George had asked Smith to arrange a meeting with a number of industrialists to discuss the unemployment problem and suggest seme new approaches to alleviate it. It was generally agreed that both the Export Credits Scheme and the Trade Facilities Act had failed to stimulate trade because they were too cautiously administered. Acting like a "superior banking house" instead of taking the minimum amount of risk the bodies concerned had allocated the available funds so slowly that the total impact on the unemployment situation was limited. Moreover, the work relief projects provided by the St. Davids Committee were mainly suitable only for those who were accustomed to unskilled outdoors work. What was really needed was a program that could put the skilled employees to productive work in their own factories.

Smith's committee concluded that a program of railway electrifica­ tion and reconditioning would be the fastest method to stimulate trade. It was estimated that within six weeks, work could begin on a L50 million program of electrifying many of the major suburban lines. Such a project would have considerable secondary effects on the steel, coal, and electrical industries. Smith thought that electrification projects would provide employment for 112,000 men over three years, and 168,000 for two years. There was also a vast amount of reconditioning work in the form 312 of rolling stock, locomotives and rail, which would modernize the railways as a complement to the electrification program. Finance could be provided through a Government guaranteecf the capital 17 expenditure at little cost to the taxpayers. After a month of silence concerning the recommendations, Smith appealed directly to Lloyd George, asking for implementation of the suggested projects. Since he had submitted the memorandum to the Government, a number of business leaders had been approached 18 on the subject, and they all seemed enthusiastic. Over a month later, Smith received a reply from Lloyd George. From the tone of his answer it was obvious that the Government was not interested in the proposal, and had not pressed the railways to initiate it.

With regard to modernization, Smith was informed that "the Railways have been carefully maintained, and there is no question of reconditioning". This was a virtual evasion of the issue of needed capital investment for an industry that had been run down 19 as the result of the War. Just before the Coalition's fall Smith sent out another letter to the Prime Minister, emphasizing the seriousness of his proposals, and the reliability of his information. He maintained that all previous methods of unemployment

17Premier File 1/30 (31 July 1922), T. P. F. "Note by Sir Allan Smith". Hereafter cited as Premier. Sir Allan Smith to Lloyd George 26 August 1922.

^9Ibid., Lloyd George to Sir Allan Smith 27 September 1922. 313 relief had "been tested and found wanting". It was the demoral­ ization of the workers that worried him most. Even after trade revived, the morale of the skilled workers would remain a major problem. 20 Although the Bonar Law Government had made representations to the railway managers, asking for the acceleration of work suitable for unemployment relief, little had been accomplished by the summer of 1923. Faced with the unimaginative and complacent attitude of their own Party leaders and realizing that unemployment was entering into a chronic stage, the Industrial Group revived Sir Allan Smith's proposals, and added a further list of projects. Among the most important of these included a vast expansion of the London Underground, a highway terminal under the Lower Thames, a floating dock at Grimsby, an expansion to the Labour facilities for the Port of London, and the repair of a number of waterways and canals. The entire package was submitted to the Prime Minister with an expression of "grave apprehension", about the current unemployment situation. 21 The details of the proposals were leaked to the press, and the reaction was generally very favorable. The Spectator thought the Industrial Group had approached the Government in the "right spirit". It remarked that it was the duty of all "who are not

20 Ibid., Sir Allan Smith to Lloyd George, 4 October 1922. 21Ibid., House of Cannons Industrial Group to Rt. Hon. Stanley Baldwin, 24 July 1923. 3 m Socialists" to cane up with a "large and positive policy". A bold program was required unless the country was content "to drift on, merely consenting to demoralization and paying out doles. Talk about the risks and uneconomic aspect of a bold remedy leaves us distinctly cold when we consider the financial and moral terror of continuing on our present course of doing hardly anything." Viewing the Industrial Group's program as a whole, the paper regretted the amission of a large road construction program. 22 A railway expert wrote to the Economist that railway electrification was demonstrated to be successful and profitable overseas, but that the major obstacle to its expansion in Britain, was a "deep-rooted conservatism in favor of the steam locomotive". Placing contracts for electrical equipment and other material would not only stimulate industry, but would produce business confidence. Moreover, railway modernization was badly needed, and it might lead entirely to a decline in rates and an expansion 23 of traffic and profits. Even the Saturday Review, a strong supporter of Government policy, thought that the Industrial Group's proposals had considerable merit in employing skilled workmen. Relief projects financed out of the rates were unsuccessful, and merely placed an additional burden on local industry, but the publication concluded that a comprehensive attempt to stimulate

22The Spectator CXXXI (11 August 1923), 181-182. 23The Economist XCVII (25 August 1923, 302-303). 315 employment through the use of State credit, was the ultimate answer to the problem. 2*+ All of these arguments were forceful and carried consid­ erable weight because the sponsors were responsible businessmen.

Baldwin requested Wilfrid Ashley, the Parliamentary Secretary to the Minister of Transport, to conduct an investigation of the railway companies' attitude toward further expenditures but no attempt was made to press them into taking any action. While the Government agreed with the Industrial Group that electrifi­ cation was highly remunerative, it thought that the companies should take the initiative and finance the improvements from their own resources. On the other hand, it was obvious that the railways were awaiting some State assistance before embarking on 25 any large scale modernization program. The Prime Minister's reply to Sir Allan Smith demonstrated that the Government had little interest in financing a massive program of public improvements. Emphasizing that the only "real

and lasting cure for unemployment lay in the restoration of stable

conditions throughout the world", Baldwin pointed to the efforts of his Government in seeking a settlement of the reparations

9U The Saturday Review CXXXVI (18 August 1923), 183. 25Premier 1/32 Wilfrid Ashley to S. Baldwin. Conversation between the Railway Companies and the Parliamentary Secretary to the Minister of Transport; C.P. 356 (23) (27 July 1923) Report of Cabinet Conmittee on Unemployment", Cab. 24/161. 316 question and an expansion of imperial trade. He added that it was "particularly the object of the Government to improve employment by assisting and facilitating the nornal flow of trade, and the placing of industrial orders." 26 No mention was made regarding the merits of the Industrial Group's proposals, nor was there any suggestion of a large program of public works. Judging from the tone of Baldwin's reply, and an accompanying statement by Montague Barlow, it was apparent that the Government would look elsewhere for a remedy to unemployment. Beginning in the summer of 1923, the critics also began to attack fiscal policy as a factor in the economic depression. presented a paper at the Liberal Sumner School in August, which attacked the evils of deflation. In his view, fear of continued deflation— not inflation, as so many experts had contended— had inhibited the revival of trade. There were other factors associated with unemployment, such as political uneasiness, but deflation more than anything else had caused a loss of business confidence. Keynes caustically observed that

"scare fanatics think that deflation is morally so admirable that unemployment is a price worth paying for it." While proposing no real solution, Keynes suggested that both the Treasury and the Bank of England could at least avoid aggravating the situation by ending the deliberate policy of forcing down prices. 27

26 Manchester Guardian, 14 August 1923.

27Ibid., 9 August 1923. With a strong endorsement from Reginal McKenna, J. St. Loe

Strachey lent additional support to Keynes in his Spectator. McKenna’s imprimatur was especially significant because he was one of the most important spokesmen for the City financial interests. Convinced that deflation had "a great deal to do with the present unemployment", Strachey attacked the experts at the Treasury and the Bank of England who had maintained a

Bank Rate of 7 per cent for over a year. The high price of money had severely limited credit, and virtually caused the mechanism of international and domestic trade to break dcwn. He also opposed the Treasury’s policy of debt repayment. Instead, the current obligations should be paid by further borrowing "to increase the floating debt". Although it appeared that Strachey was not advocating a policy of planned deficits, his criticism of the

Treasury's intensely deflationary program of debt retirement, 28 pointed in the right direction. Like the proposals of the Industrial Group, the anti-deflationary critics used a fresh approach to the continuous problem of unemployment. It appeared that these ideas might have had some chance of acceptance had not the General Election taken place. Amid the cries of the old orthodoxies of free trade and protection, any really new or radical program for dealing with unemployment was unlikely to

28J. St. Loe Strachey, "Deflation Means Unemployment", The Spectator, CLXXXI, (20 October 1923), 545-547. 318

gain a hearing. Conservatives found the traditional appeals of Empire and preference much more attractive than a policy which seemed to run counter to the traditions of a free market economy.

Imperialism and Unemployment The political themes of tariff reform and Empire free trade that had divided the Tory Party prior to 1914 had not vanished, but merely had gone underground during the Coalition era. All but the extreme left of the Party shared in varying degree an enthusiasm for the Empire and for the possibilities of its development through loans, immigration and freer trade. Of the leading figures in the Party, Leopold Amery was perhaps the foremost advocate of imperialism unity. Taking up the cause of his friend and former chief, Lord Milner, Amery never lost an opportunity to promote some aspect of imperial unity.

Perhaps the least controversial form of Empire development

involved the promotion of British emigration to the white Dominions. Fran the first meeting of the Cabinet Unemployment Committee, Empire emigration had been considered as one of the most useful palliatives for unemployment. Despite rather limited success with a special provision for the free passage of ex-servicemen overseas, Amery and other imperialists induced the Coalition to bring in an Empire Settlement Bill in April 1922. In his introductory speech, Amery made no claims for Empire migration as 319 a panacea for unemployment but it was clear that he looked upon the expanding population of the Dominions as a surrogate for the 29 lost markets of Europe. It was a popular measure, particularly with the Coalition Conservatives and passed without amendment. Although the Act appropriated L3 million a year to assist emigration Amery admitted to Bonar Law that it would take several 30 years before anything like the total amount could be spent. In view of the earliest results of the legislation this estimate seemed considerably over-optimistic. By the end of April 1923 only 16,270 had been approved for the assisted passage and it was estimated that the total might rise to 50,000. This compares to an average of approximately 200,000 emigrants a year prior to the

War. Furthermore, great difficulty was experienced in oi.-t ining cooperation and only seemed likely to welccme a large number of migrants. 31 While these results were discouraging Amery had always

looked upon emigration as only one aspect of a program to improve imperial ties. In order to stimulate the Dominions as important

British markets a sizable increase in capital as well as population was needed. 32 As part of the general study of unemployment

29H of C Deb. CLIII (26 April 1922), 576-580, 587-589. 30 Premier 1/22 L.S. Amery and Montague Bar lew to Bonar Law, 1 December 1922. 3^C.U. 542 (7 June 1923), "Progress and Prospects Under the Empire Settlement Act" memorandum to A. Buckley, Cab. 27/193. 32Bonar Law Papers 107/2/31 L.S. Amery to Bonar Law 5 April 1922. 320 conducted by the Cabinet Trade Policy Committee in the last days of the Coalition Amery drafted a memorandum proposing a comprehen­ sive scheme of Empire development. Such a program was the key to prosperity. It would "insure steadily expanding trade and development" for Britain and at the same time would "provide as far as possible, immediate relief to the present acute crisis of unemployment." Based on the lines of the Empire Settlement Act, the legislation would authorize the expenditure of LIO million annually over a period of fifteen years for schemes associated with Empire development. Among his proposals were improved cable, wireless, and steamship communication links within the Empire as well as specific development programs involving railway development in India, hydro-electric works in and irrigation projects in Australia. All of these would bring immediate orders to British industries and would directly 33 stimulate employment. To promote the program in the Dominions, Amery proposed a fall trip to Canada where he might convince Mackenzie King, the Prime Minister, to participate in both the settlement and develop- 34 ment programs. Meanwhile, the Chanak crisis intervened and he was appointed First Lord of the Admiralty in the new Government. More insistent than ever, Amery continued to press for Empire

33 T. P. 43 (6 October 1922), "A Programme of Empire Develop­ ment" memorandum by L. S. Amery, Cab. 27/179. 34 Lloyd George Papers F/3/2/73 L. S. Amery to Lloyd George 9 October 1922. 321 development as the most efficient means of relieving unemployment as well as providing a sort of "hopeful" atmosphere that would build up business and public confidence. Moreover, a program of this sort would convince the Dominions at the forthcoming Imperial

Economic Conference that Britain was ready to provide some of 35 the needed investment capital. A decision for a development loan was postponed until the fall of 1923 but Amery continued to promote a third aspect of his imperial policy— protection. Long a supporter of he grasped at the opportunity for using protection as a means of stimulating employment. In January 1922 Amery proposed to Austen Chamberlain that a general revenue tariff of 33 per cent be established on all manufactured goods which would immediately encourage home production. With the additional revenue income taxes could be significantly cut to aid hard pressed industries.

Although it was not feasible to place a tariff on wheat or meat other food items might be subjected to a large enough duty to provide at least a 50 per cent preference for Dominion agricultural products. Amery suggested that such a preference was "worth more than we are ever likely to get out of the improved state of Europe, 36 especially if we help on their development in other ways."

C.U. 481 (20 November 1922), "Empire Settlement and Development", Letter from L. S. Amery. Cab. 27/179. ^6Austen Chamberlain Papers AC 24/4/1 L. S. Amery to Austen Chamberlain, 26 January 1922. 322

Over the next year and a half Amery developed his argument

for unemployment relief through protection. The policy of high taxes to relieve unemployment was a serious handicap to British industries, but with a tariff, prices could be equalized with foreign competition while producing additional revenues for the Exchequer. 37 With the growth of criticism directed against his Government's failure to meet the unemployment crisis Baldwin was more inclined to listen to Amery, Lloyd-Greame and Chamberlain, all devoted advocates of protection. Just prior to the summer recess on 17 August, the Prime Minister had a long conversation with Montague Barlow about unemployment which apparently left him disturbed. He asked Worthington-Evans to call the Unemployment Committee back to consider further relief programs while he spent his holiday at Aix-les-Bains mulling over the economic situation 38 and considering a course of action. By early October Baldwin had been converted to protection and informed Neville Chamberlain of his decision. He became convinced that protection was the answer to unemployment and would also lead to a return of Austen Chamberlain and his followers to the Party. The chief obstacle seemed to be Bonar Law's pledge in the 1922 election that there would be no fundamental economic 39 change without prior reference to the electorate.

^Middlemas and Barnes, Baldwin, pp. 215-216. 38 Ibid., 217; James, Memoirs of a Conservative, p. 182. OQ Keith Feiling, Neville Chamberlain (London, 19lf6), p. 108. 323 A surprised Amery was informed of the Prime Minister’s decision only a few days later. 40 The opening of the Imperial Economic Conference provided an opportunity to couple protection with a system of Empire preference and development. Lloyd-Greame along with Amery recognized that solid tariff concessions would have to be made 41 if the Dominions were to be lured into cooperation in other areas. Stanley Bruce, the Prime Minister of Australia, smoothed the way by advocating a British protective tariff linked with a system of sliding scale tariffs and preferences for Dominion agricultural products. Lloyd-Greame promised some limited concessions and 42 Chamberlain hinted that there would probably be more. Mackenzie King was less ready to be a stalking horse for Tory political maneuvers but he cautiously agreed to accept any preferential 43 tariff treatment that Britain would grant. With solid support from the two most important Dominions,

Baldwin began to make plans for an announcement of a tariff program at the Party Conference at Plymouth to be followed by

Amery, My Political Life, II, p. 280. ^Viscount Swinton, I Remember (London, 1948), p. 31 UO Parliamentary Papers Cmd. 2009, 1924, "Imperial Economic Conference Record of Proceedings and Documents." pp. 57-83, 174-178, 198-199. 43 R. MacGregor Dawson, William Lyon Mackenzie King I, pp. 470-471. 324 a General Election on the new program sometime after the middle of January. Preparations had been so rapid that seme members of the Cabinet had not been consulted privately before Baldwin's 44 formal announcement in front of his colleagues on 23 October. Just prior to the meeting Neville Chamberlain wrote his brother that food taxes were "off" because "it seems to be generally 45 agreed that we could not carry them— at present, at any rate." This decision destroyed much of the rationale behind preference since the Dominions' principal exports were food products. Baldwin carefully explained the reasoning behind his decision to his colleagues: "Unemployment was the outstanding problem in the political life of the country and failure to deal with it might wreck the Government." There was "only one way, not to cure, but to fight unemployment and that is to protect the heme market against foreign manufacturers." There was no need for an immediate election but in the meantime the existing 46 duties could be extended without violating Bonar Law's pledge. The chief objections came from Lord Robert Cecil, a confirmed free trader, while Curzon was doubtful about public reaction to a tariff. A compromise proposal suggested by Cave allowed Baldwin

44 Middlemas and Barnes, Baldwin, pp. 223-224. 45 Austen Chamberlain Papers AC 5/1/294 N. Chamberlain to A. Chamberlain, 23 October 1923.

^Cabinet 50 (23) (23 October 1923), Cab. 23/46. 325 to announce his policy without committing "the Cabinet as a whole or embanassing those of his colleagues who, owing to election pledges or others required time to consider their attitude." Baldwin carefully averted a split but he secured

a free hand for a tariff. Before the Party Conference at Plymouth on 25 October, Baldwin based his appeal for a tariff on the need far a remedy for unemployment. He announced to the delegates that he was willing to fight unemployment but added: I cannot fight it without weapons. I have for myself come to the conclusion that owing to the conditions which exist in the world today,having regard to economic environment having regard to the situation of our country if we go on pottering along as we are we shall have grave unemployment with us to the end of time, and I have come to the conclusion myself the only way of fighting this subject is by protecting the home market. The delegates were enthusiastic and passed a resolution calling for Empire preference and development "to provide productive employment for the unemployed population." Anticipating an early election the Conference also passed resolutions in favor of a contributory retirement plan for all workers and pensions for widows with children "as soon as the financial condition of the country permits." 118 In a speech at Free Trade Hall in Manchester on 2 November, Baldwin outlined his program in seme detail. It included protection

47 Ibid., Middlemas and Barnes, Baldwin, pp. 226-227. 48Minutes of the Conservative Party Annual Conference, Plymouth, 25-26 October 1923. 326 but no taxes on wheat or meat, a possible subsidy for agriculture,

Empire development and a combined scheme of health, unemployment 49 and old age insurance. There had been no commitment to an early election but rumors that Lloyd George would return from his

American lecture tour and come out for protection in an effort to recapture the allegiance of the Coalition Conservatives probably pushed Baldwin into a December election. Lloyd George came out for free trade but Baldwin and some of the Party officials feared that Lloyd George’s political fund and talent for demogoguery might encourage a rebellion among the Tory free trade elements. ^ On 13 November, the Prime Minister announced to the Cabinet "that the march of events had compelled him to decide to recommend to the King the immediate dissolution of Parliament." 51 The Tories had decided to ccmmit themselves to remedies for unemployment without making a thorough study of the alternatives or conducting a campaign of education on the protection issue.

The 1923 Election and After In the short fall pre-election session of Parliament, Labour challenged the Government, moving a vote of censure. In the process of the ensuing debate Baldwin commented on his great concern with

49 The Times, 3 . ^Middlemas and Barnes, Baldwin, pp. 234-235, 239. 51Cabinet 54 (23) (13 November 1923), CAb. 23/46. 327 unemployment. He remarked that "he was the only one of his colleagues who has lived for years under the smoke of factory chimneys. I know what unemployment means from seeing it and helping to deal with it at close quarters." John Wheatley interrupted the Prime Minister asking if he "had ever suffered it."

Baldwin answered "No, I have not, and you know it." To this reply 52 Wheatley quipped: "You will next month." It was a prophetic witticism because Baldwin's surprise General Election was a virtual blueprint for a Tory defeat. Party funds were at a lew ebb, a program of tariff and imperial preference had alienated the farmers and had brought Liberal Party reunion. To make matters worse the departmental conmittee preparing the new tariffs under the chairman­ ship of Lord Milner did not have time enough to complete a detailed program of the proposed new rates. 53 Fran the standpoint of social policy the protection campaign served to push all other questions into the background.

Meanwhile the Cabinet Unemployment Conmittee had completed additions to the much criticized program of 1 August. In terms of direct relief the most significant figures were sane M O million more for the St. Davids Caimittee, and LIU million for road and bridge construction or repair. To assist the hard pressed shipbuilding industry the Admiralty was to accelerate the

52H of C Deb. CLVIII (15 November 1923), 481. 53W. A. S. Hewins, Apologia of an Imperialist, II pp. 277, 279. 328 construction of some '*7 light cruisers which were to be built in 5 4 the areas of heaviest unemployment. Under the Trade Facilities

Act some U.2 million in loan guarantees were granted for further extension of the London Underground as well as for a dock construc­ tion program undertaken by the Fort of London Authority. As a result of the Industrial Group's prodding the railways promised to undertake some t35 million in various works. This was far short of the L60 million the Government considered available for reconditioning while the Industrial Group estimated L50 55 million was needed for electrification alone. The Liberal Magazine made an analysis of these announcements exposing the exaggerated claims of the Government. Much of the announced work was not to take place until several years later so that their immediate impact would be limited. Moreover, very little of the funds came from the Exchequer. The railway expenditures, of course, cost nothing and were extremely vague and indefinite. As for the L12 million for the Trade Facilities Act, this was merely a guarantee and probably involved no threat of any expenditure for the taxpayers. Of LiL4 million for road construction less than half was paid by the central government and even most of that was derived from the Road Fund and had to be spent on highways 56 whether there was unemployment or not. As we have seen earlier

*iU CP 420 (23) (17 October 1923) Report of Unemployment Conmittee, Cab. 24/162; Cabinet 49 (231 22 October 1923). 55H of C Deb. CLVIII (15 November 1923), 524-530.

^ The Liberal Magazine XXXI (November 1923), 664-665. 329 the St. Davids Committee funds were only partial loans so that very little of the additional falO million was obtained from current Treasury revenue. The Conservative Election Manifesto was released on

18 November in the form of a letter by Baldwin to his own constituents. In it he outlined the difficulties of chronic unemployment which threatened to "inpair permanently the trained skill and the independent spirit of our workers, to disorganize the whole fabric of industry and credit, and, by eating away the sources of revenue, to undermine the very foundations of our national and municipal life." Many of the arguments used for protection pointed to Amery's influence. The existing unemploy­ ment remedies were rejected as mere palliatives because they "must inevitably add to the burden of rates and taxes and thereby still further weaken our whole economic structure." This was, of course, one of the unspoken advantages of protection as an unemployment remedy— most of the cost would be taken from the middle and upper class taxpayers and spread over consumers of all classes. The Prime Minister called the "solution of the unemployment problem" the "key to every necessary social reform," but premised to investigate the reorganization of health, unemployment and old age insurance. Particular attention was to be devoted to the "discouragement of thrift . . . associated with the working of the Old Age Pensions Act" which inplied the adoption of an expanded 330 but contributory retirement system. In the spirit of nineteenth century self-help Baldwin added that the encouragement of thrift and independence must be the underlying principle of all social 57 reform. The Manifesto developed no detailed scheme for this insurance proposal because an investigation into the subject conducted by Sir John Anderson, ordered by Baldwin earlier in 58 the year, was not completed until January 1924. Conservative campaign literature reflected the preoccupa­ tion with protection. One pamphlet explained in detail how a tariff would shelter employers and working men from "the merciless attack of foreign competition." It predicted that the protection 59 of home markets would decrease unemployment by "25-30 per cent." Another pamphlet offered protection as the simple "remedy" to 60 unemployment which put "the welfare of the British workman first." The Conservative record in housing was lauded as being cheaper than the Coalition's program and better because it did "not interfere with Private Enterprise but gave assistance for the Genuine Working 61 Man's house." Baldwin's proposal for a comprehensive insurance

^Cabinet 57 (23) 16 November 1923, Cab. 23/46, Appendix.

CO Middlemas and Barnes, Baldwin, pp. 284-285. CQ National Unionist Pamphlet no. 2223 (1923) "Unemployment and Self-Protection of Labour." 60Ibid., no. 2271 (1923) "One and a Quarter Million Unemployed, Why?"

6^Ibid., no. 2289A (1923) "Conservative Housing Policy." 331

scheme was praised as "real social betterment," while Socialism 62 meant "revolution and suffering." The Conservatives were also handicapped in the election by a lack of press support. Only The Times, Daily Telegraph,

Morning Post and the Saturday Review gave unquestioned support to Baldwin's policy. Beaverbrook remained uncommitted, and the Rothemere Press swung to the opposition, leaving the Tories 63 without support from the mass circulation papers. On the key question of unemployment relief Strachey's Spectator commented that Baldwin's policy of protection should be universal to really influence foreign trade. It preferred instead to see implemen­ tation of an anti-inflationary policy as a permanent solution to the problem. ^ From the very first returns on election day, 6 December 65 1923, the Tories suffered a shocking series of defeats. If the left had been united the Conservative defeat would have been comparable to 1906. In the popular vote the Tories received

38 per cent while Labour had 30.5 per cent and the Liberals 29.6.

In total seats the Conservatives held 258, the Liberals 159 and

Labour 191 with no single party having a majority.

62Ibid., no. 2198 (1923) "Sickness, Old Age and Unemployment." ^3The Saturday Review CXXXVI (24 November 1923), 562. fill The Spectator CLXXXXI (17 November 1923), 728-729.

®^See Middlemas (ed.), Whitehall Diary, I p. 258. 332

Absolutely safe Conservative seats were lost when many of the agricultural seats shifted to the Liberals. The cotton and woolen districts of Yorkshire and East Lancashire also went

heavily Liberal. In 1922, in Manchester, the Conservatives had won 9 out of 13 seats but now they were able to elect only one. Sir Montague Barlow who ran unopposed in Salford in 1922 was

defeated and never returned to political life. J. C. C. Davidson, Baldwin's close friend and Parliamentary Private Secretary, lost his safe seat in Hemel Hempstead to an unknown Liberal by 17 votes. 66 Only Birmingham, and suburban London gave the Conser­ vatives a majority. With a Coalition of Liberals and Conservatives out of the question because of their opposing views, a Labour Government supported by the Liberals seemed the only feasible alternative. Rather than resign immediately Baldwin decided to stay in office until defeated by a vote of censure in the Commons. In the King's Speech a policy of recognized Empire Preference was announced, but there was no mention of a general tariff. Politically the Tories considered it senseless to make another appeal for protec­ tion thus delaying the implementation of a general tariff for

almost ten years. Asquith proposed a vote of no confidence and the Conservatives were voted out by a majority of 72. On 22 January 1924, Britain's first Labour Government was installed.

66 James, Memoirs of a Conservative, p. 189, Kinnear, The British Voter, pp. 43-44. 333

Epilogue The return of the Tories to power ten months later brought about no repetition of the crisis atmosphere of the sunnier of

1923. Despite continuing chronic unemployment that never fell below the million mark, the second Baldwin Government made no real effort to deal with the problem. In fact, work relief projects declined to a mere trickle while Unemployment Insurance became 67 the indispensable palliative. Baldwin's program for an "all in" insurance scheme never came to fruition falling victim to further demand for economy and fiscal responsibility. 68 Chamberlain did manage some solid administrative accomplishment in his reform of the Poor Law and the system of local rates. Furthermore, his system of contributory pensions established in 1925 contributed to the development of the contemporary retire­ ment plans. In education reforms especially on the secondary level, the Conservatives contributed little. Just before the Tories left office a special committee rejected the idea of raising the school leaving age to 15 on the grounds "that if such a concession were made it would be a most embarrassing and 69 undesirable precedent and should in any case be rejected." Sane minor changes were introduced by Lord Eustace Percy, who

67 Hancock, "Reduction of Unemployment," Economic History Review XV, 336. 6ft Middlemas and Barnes, Baldwin, pp. 285-286. 69CP 483 (23) (15 ), "Report of Juvenile Unemployment Committee," Cab. 24/162. 33M-

served as President of the Board of Education in Baldwin's second government but major reforms had to await the Butler Act

of 19*+4. In the thirties the Conservative dominated National

Government displayed less imagination in dealing with unemployment

than had been the case of the previous decade. Despite the full blown exposition of Keynes' theories, the example of the New Deal in the United States and similar schemes on a smaller scales in , the Conservative leadership rejected virtually all fresh approaches to the problem. Only the painfully slow and relatively ineffective schemes for assisting depressed areas and rational­ izing obsolete industries were introduced on any large scale. Since World War II the Conservatives have again demonstrated their ability to meet changing circumstances by accepting the Labour Party's welfare state and initiating legislation to improve it. When viewed from the perspective of the twenties this transformation was astounding. In large part it was the result of the influence of a creative left wing ginger group that had developed in the thirties and had come to power after the War. The absence of a strong left definitely contributed to the paucity of Conservative

of Conservative reform in the twenties. The Tory tradition of reform is a strange mixture of reality and myth. Since the time of Peel the Conservative Party has managed to enact a substantial body of social legislation but this record often has been interrupted by periods of reaction. New recruits from the middle class espousing the tradition of individualism in the 1880's and 1890's served to check the intro­ duction of further Conservative reforms. Distracted by imperial­ ism and lacking the support of the Party leadership programs such as pensions were postponed indefinitely. This neglect of social issues produced a strong reaction against the Tories and contributed to the Liberal landslide of 1906. Under the influence of the anti-Horne Rule agitation and the renewed interest in tariff reform the Conservatives demonstrated definite reaction­ ary attitudes toward Lloyd George's most important reform, the National Health Insurance Act of 1911. Even the productive work of the Unionist Social Reform Committee could not counteract this trend but, it did provide the Party with needed fresh thinking on neglected social issues. In addition many of its member’s were influential policy makers in various Governments after World War I. The Coalition had an enormous inpact on the development of Conservative social policy. Under the dynamic leadership of

Lloyd George the Tories came under the influence of the most progressive wing of the Liberal Party. By sharing in the respon- siblity for the planning and implementation of the Coalition's vast program of social reforms the Conservatives committed themselves to a series of unprecedented Governmental initiatives in housing, industrial relations, and education. Of course, fear of the increased militancy of the working class and the newly 336 reorganized Labour Party contributed to the introduction of these programs but this does not detract from the genuine advance in

Tory thinking. Much of the impatient criticism of the Coalition's program reflected the natural reaction that follows any War but the Conser­ vative Party and its supporters must bear a large part of the responsibility for the ultimate failure of reconstruction. Both the rapidly expanding middle class and the business interests were convinced that economy and retrenchment were more important than costly adventures in social reform. Linked to both of these groups, the Die-Hards kept up a constant barrage of attacks on the Coalition and its policy. However, all the blame for the scuttling of the Coalition program does not lie with the extreme right. The Die-Hards were only the most visible of a large number of Tory backbenchers who thought only in terms of economy. Moreover, the Party leaders, and Austen Chamberlain in particular, panicked at the first sign of opposition and hastily abandoned a program adopted only two years earlier. One of the least noticed, but most important contributions of the Coalition was its innovations in unemployment policy, many of which were copied by succeeding Conservative and Labour Governments over the next decade. Bonar Law's Government represented an attempt to turn back the clock, but the precedents set by the Coalition were inescapable. 337

Much of the Conservative social legislation was lifted directly

from the Cabinet Office files and modified to meet changed conditions. Sir Alfred Mond was really the unrecognized author of the Chamberlain Housing Program, but Ibis is only the most prominent example. An awareness of social discontent and more importantly a much stronger opposition also contributed to the shift from a policy of "tranquility"

to one of mild reform. Pressure from the opposition, the Industrial Group and a hostile press convinced Baldwin that some greater effort was needed to deal with unemployment. His choice was unfortunate because the failure of protection left the Tories with really no alternative policy. The years between the Wars narked the peak of business influence in the Conservative Party, with three Prime Ministers,

Bonar Law, Baldwin and Chamberlain coming from its ranks. This influence cannot be equated to that of powerful American corporate

giants, but instead reflected the attitude of small or middle enterprises which really feared the power of the unions and the

threat of a revolution. This influence was balanced by the force of precedent and by the Party's tradition of political opportunism that forced the

leadership to keep the interests of the working class in mind. Real innovation required continued pressure frm vigorous "ginger groups" but in the early twenties this element was lacking. The

few really radical Conservatives had little influence or, like 338 Mosley, left the Party becuase it offered so little opportunity for the adoption of new programs. Most Tories were basically uninter­ ested in social questions and took an interest in these matters only when political necessity required. Only a handul of figures such as Neville Chamberlain or Montague Barlow and Sir Kingsley Wood devoted much time to become familiar with social questions. As a result they were then able to exert unquestioned authority with little fear of opposition from their own Party. The real limits of Conservative social policy, however, were those set by the costs to the taxpayers. The Tories were willing to grant a large measure of Government intervention but they were unwilling to tax their strongest supporters to carry these plans out. Consequently, the ultimate test of every Tory program was financial. Only when a new generation of more socially conscious Tory leaders became prominent in the Party after 1945 did the Party once again return to an earlier tradition of responsible social reform. BIBLIOGRAPHY

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