From the February 1977 issue of the Socialist Standard
One of the most frightening things about the present depression to large numbers of people is the destruction of their belief that “bad times” would never come back. After the long post-war period without unemployment on the pre-war mass scale, it was widely assumed that chronic depression belonged to a past era which had ended. When the crisis took hold, the spectre of 1929 was raised by journalists and commentators; and as its effects intensified, the feeling spread of an old film with a cast of millions being shown again. Are the nineteen-thirties being re-enacted? There are differences as well as similarities. Some of the factors in the pre-war situation were apparent opposites to those at work today, showing that they are neither causes nor remedies of the depression. A comparison is of interest.
The 1929 crisis originated in agriculture, and was marked by the collapse of a speculative fever in the United States. In Britain it was preceded by a short boom period in new industries such as electricity, chemicals and motor-cars. It took place when — as a result of government restriction of the note-issue — the pound sterling had risen, i.e. was dearer abroad: this, and a close-down on lending in America following the Wall Street crash, killed purchases of British exports in the USA. Prices fell throughout the period 1929-33 when the depression was most acute. The British Index of Retail Prices of Food went down from 160 in 1927 to 154 in 1929, 131 in 1931, and 120 in 1933.
The present depression was preceded by minor crises which increased in severity from the nineteen- fifties onwards. Its strongest industrial features were the break in the motor-car boom and the slump in house-building; but it has been accompanied by continuing price rises now running at an annual rate of 15-20 per cent. This has been the result of inflation promoted by Labour and Conservative governments alike since the war, and one aspect of the crisis is the long run of that economic policy. Previously in the 19th and 20th centuries the operation of any policy was interrupted after a few years by a prolonged depression or a war.
The inflation policy was started by the post-war Labour government, and until now no economic or political catastrophe has baulked it. In the early nineteen-sixties party leaders were clearly unsure how to continue it, or if it could continue. Thus, immediately the 1964 Labour Government was elected Wilson and Callaghan announced measures to deal with an economic “Dunkirk” which was upon Britain, while the Tory leader Douglas- Home denied that a crisis existed (reversing the position a year earlier, when Home claimed there was a crisis and Wilson disputed it).
The world’s finance ministries in 1929 were firmly against using government expenditure to try to remedy the fall in demand. Later, groups of MPs of different parties argued for State interference and planning — Torv MPs (including Macmillan) from the depressed north-eastern areas, as well as Labourites and Lloyd George, the Liberal. Against this, the recovery in Germany took place with the ruling Nazi party declaring opposition in principle to State management; the Nazis in fact de-nationalized many undertakings. In the Economic Journal R. F. Kahn contended that “the creation of money” could do nothing but good when there were idle resources and unused productive capacity, and this was taken up by Lord Beaverbrook in his papers: the remedy for the depression, said the Daily Express, was inflation.
The Express and the Mail also campaigned for import controls — taxing all imported goods, but giving preference to those produced in the British Empire. In 1932 a 10 per cent duty was imposed on all imports except wheat and meat, and the Ottawa Agreements establishing Empire Preference were signed. Though Labour and Liberal MPs opposed Protection, both parties supported a campaign to “Boycott Japanese Goods”. This was presented as a moral stand in view of Japan having invaded Manchuria and left the League of Nations, but a flood of cheap Japanese goods into Britain was held to be putting British workers on the dole: at the 1935 Jubilee and George VI’s Coronation, girls stood in Japanese stockings and waved Union Jacks made in Japan while they watched the parades.
The popular cries on all sides were remarkably similar to those of today. “The right to work” was demanded in marches and demonstrations on behalf of the unemployed. This “right”, incidentally, was a constitutional one in Nazi Germany, and is part of the Russian constitution also. C. W. Guillebaud’s 1939 book The Economic Recovery of Germany, 1933-38, described the position:
Rather than permit this [prolonged unemployment] the State will itself provide alternative employment in some form—if not 'regular’ then ‘substitute’ employment. As a corollary to this recognition of the right to work the State imposes the duty to work, and this is a very far-reaching obligation.
The “training centres” for unemployed young men set up half-heartedly — as now — by the Government in Britain were opposed by the National Unemployed Workers’ Movement, but in letters to The Times supporting the centres there was a lot of praise for the German labour camps for the unemployed.
As now and always, the working class was blamed for everything and it was commonly said that the unemployed were layabouts living too well on the dole. The magazine Good Housekeeping referred to “profiteers, dole-drawers, music-hall artists — in fact the only people who have money today”. (Quoted in The Long Week-End by Graves and Hodge). The National Confederation of Employers’ Associations claimed in 1931 that unemployment pay was sapping the nation’s strength by preventing "unemployment acting as a corrective factor in the adjustment of wage levels”. There was pressure also to stop married women being either employed or registered as unemployed, under the Anomalies Regulations of 1932. This can be compared with the discovery by “a top doctor”, headlined in the News of the World on 2nd January 1977, that married women going to work are in dire peril of bad health and infertility.
The birth-rate was low in the nineteen-thirties. In 1933 it touched he lowest point of any peace-time year before or since, and it was predicted that by 1961 the population of Britain would be under 40 millions. Family allowances were proposed to try to turn the tide. The question was debated in Parliament in 1937 with reference to the “danger to the maintenance of the British Empire” from under-population: Malthus was stood on his head. There was no shortage of particular scapegoats for the plight of the time, immigrants and Jews. The British Union of Fascists, like the National Front today, traded in this kind of ignorance, and it is a melancholy reflection that the fascist-fighting Communist Party recruited numbers of Jews who were unaware then of what happened in the Communists’ beloved Russia.
The CP and other ’‘militant” groups based much of their propaganda in the ‘thirties on the belief that the capitalist system would collapse, and this fallacy has risen again in the same guise of a serious theory. It was contended that radicals of all varieties should rally together; the Communists sucked up to the Labour Party they had recently been ready to attack physically, and sought an alliance with the ILP. Another still-persistent belief was that the crisis itself was a manoeuvre by powerful agents of reaction; the Labour Daily Herald said it was “a bankers’ ramp”. Radical factions formed and re-formed, with titles remarkably like those of today; and there was a fear among trade-union and labour leaders of subversion by “revolutionary” movements.
Throughout the depression, it was all right for some. The first knighthoods of trade-union leaders were given in 1935: Sir Arthur Pugh and Sir Walter Citrine, for services to capitalism. The violent contrasts between the lives of rich and poor furnished material for damning (but reform-minded) reports similar to the Inner City Studies published on 12th January 1977. The crisis and the depression affected the rich very little. Colin Clark, the economist, estimated a fall of 9-11 per cent, in personal expenditure of those with incomes over £250, from 1929 to 1933 — a figure well balanced by the sharp fall in prices.
The depressed areas of the ‘thirties were those with older industries such as shipbuilding, iron and steel, coal, and textiles. The new light industries in other areas expanded, and the multiple stores selling cheap shoddy goods paid high dividends (a table published by the News Chronicle called Woolworth’s and their like “depression-proof investments”). It was a chaotic, insensible time brought about by the senseless chaos of capitalistic production, and that applies with undiminished force in the nineteen-seventies. What were proposed as cures for the economic and social problems then are in operation in the depression today, but are regarded as part of the trouble: inflation and the Welfare State. Conversely, today’s alleged solutions were part of the situation in the nineteen-thirties: a “strong” pound, import controls, and low prices (including wages).
One more similarity is the circuses provided to mollify the breadless. In the midst of mass unemployment, they had a Royal Jubilee and a Coronation; by what may be thought a nice coincidence, 1977 offers a Jubilee too. In Coronation week, 1938, everyone registered with the Unemployment Assistance Board was paid an extra 2s.6d. What overwhelming bounty is in store this year? W.H. Auden called the nineteen-thirties a "low, dishonest decade”. No more so than any other decade under capitalism, Mr. Poet; and that isn’t the point anyway. The ’thirties and the ’seventies show the capitalist system in its cycle, which will come round again if it is not stopped. On a brief inspection, plainly the only alternative is Socialism.