The 1931 crisis

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The 1931 crisis

• Was Ramsay MacDonald a traitor to the Labour
  Party?

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The overview

• Labour was elected in 1929
• Only second time it had been in government
• 3 million unemployed by 1931
• Party was divided over policy
• Ramsay MacDonald had to make some difficult
  decisions

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The problem

• Growing unemployment led to rise in spending on
  dole
• This rise worried the Treasury did not like the
  idea of money being spent on handouts
• Welfare encouraged people to be lazy, in their
  opinion Orthodox view
• Other argued that even more needed to be spent to
  improve the conditions faced by the working
  class Socialists

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• Growing splits within the party about how to move
  the country out of Depression
• Oswald Mosley argued for public works schemes to
  create cycle of prosperity
• These ideas were rejected by Snowden, the
  Chancellor. Mosley left the Labour Party and
  founded the British Union of Fascists

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• Britain faced a budget deficit
• MacDonald commissioned the May Report
• It recommended the reduction in public spending
  and increased taxation
• Loans arranged from US depended on the cuts being
  made
• For Labour MPs this would go against the
  policies they believed in
• PM lost the support of the Cabinet for the cuts,
  even though loans from US depended on the cuts
  being made

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• So what should RMD do
• Ignore his party and make the cuts
• Refuse to make the cuts and resign

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The plot thickens.

• RMD went to King to offer resignation of himself
  and the cabinet
• King had idea this would happen from earlier
  meeting
• King had spoken to Opposition leaders, Samuel and
  Lloyd-George
• King suggested that RMD should form a National
  Government of all parties to steer Britain
  through the crisis
• RMD accepted
• RMD goes back to Cabinet and only 3 ministers
  support him

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Why did he do it?

• Construct a case for and against RMD
• Why had he lost the support of most of his own
  party?
• Did he have any option but to do what he did?
• Why was Britain in such a mess economically?

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