ABSTRACT
By international standards, Britain’s experience of the Great Depression was relatively mild and its subsequent recovery was strong, sustained and impressive as rising real wages stimulated dramatic improvements in living standards during an era of remarkable economic growth and prosperity. But alongside this increasing affluence in the booming new industries in the Midlands and South, there existed the grim reality of another face of Britain during the 1930s – one characterised by the dole queue, hopelessness and poverty in the north of England, South Wales and industrial Scotland where mass unemployment and industrial collapse appeared endemic and intractable. Although only part of the picture, this was the vision of Britain in the 1930s immortalised in George Orwell’s The Road to Wigan Pier (1937) and Walter Greenwood’s Love on the Dole (1933) and for many people even today it remains their abiding image of the so-called ‘devil’s decade’. As a result, both for his own generation and for many who followed them, the persistent spectre of mass unemployment in such areas has cast the greatest shadow over Chamberlain’s reputation as Chancellor. In recent years, the traditional picture of governments during the 1930s being hopelessly wedded to a failing version of laissez-faire has been replaced
by what has accurately been described as ‘the “crumbling-adherence-to-laissezfaire-and-not-quite-a-managed-economy” school’ of thought, which seeks to combine an acceptance of the National Government’s tentative promotion of interventionist policies with an underlying proposition about its fundamental desire to preserve untouched the market framework.1 In this context, economic historians have been particularly dismissive of the National Government’s ‘piecemeal and opportunist’ efforts with regard to industrial and regional policy. As Derek Aldcroft encapsulates the indictment: ‘If regional policy failed to create many new jobs, the government’s industrial policy produced even less. Not that there was a consistent and coherent industrial policy worthy of the name, more a hotch-potch of ad hoc measures to meet particular circumstances.’2 As Chancellor, Chamberlain is thus accused of remaining so ‘resolutely committed to the free market economy’ that he had little sympathy or understanding for the burgeoning ‘middle opinion’ of the decade moving towards new notions of planning and more interventionist forms of capitalism.3 When considered from the perspective of measurable success in promoting economic recovery and employment, it is unquestionably true that industrial and regional policy during this period was small-scale in terms of investment and impact. It is also true that these policies evolved gradually as the decade progressed without any broader theoretically coherent blueprint of the sort later provided by Keynesian economics. The fundamental objection to such criticisms, however, is that their focus upon policy outcomes obscures any proper consideration of the underlying intent and the economic rationality of policymakers attempting to forge new policy instruments to combat unprecedented problems in uniquely difficult circumstances. Ultimately, when viewed from this alternative perspective, Chamberlain’s Chancellorship emerges in a far more favourable light as the period in which Britain took its first significant steps towards ‘supportive’ management of the economy – albeit, admittedly, a ‘managed economy’ of a distinctly non-Keynesian variety.4 Certainly this was how Chamberlain regarded his own ambitions. As he told his sisters in 1934, ‘how false is the suggestion that this is a safety first Govt destitute of new ideas, & how in fact it is continually introducing changes of a really revolutionary character’.5 Nowhere was this interventionist spirit more evident during the 1930s than in Chamberlain’s promotion of recognisably post-war forms of industrial and regional policy against the scepticism, hostility and parsimony of his Treasury officials. In 1926 Keynes had argued that Conservatives ought to be ‘evolving a version of individualist capitalism adapted to the progressive change of circumstances’, but that ‘capitalist leaders in the City and in Parliament are incapable of distinguishing novel measures for safeguarding capitalism from what they call Bolshevism’.6 Yet in many ways this was precisely what Chamberlain aspired to achieve throughout his political career. As he once told Philip Snowden, ‘he was not deterred from extending municipal and public enterprise because some people call it Socialism’. Indeed, he regularly boasted that he and Sam Hoare were ‘the only Socialists in the [Baldwin] Government’
and it amused him greatly when ‘a real old hard shelled crusted Tory’ described him as a ‘rank Socialist’.7 In reality, what Chamberlain meant by ‘socialism’ in this context, was that he supported a variety of collectivism. But whatever one calls it, his faith in the benefits bestowed on the people by the intervention of the State was as substantial as it was far-reaching. Chamberlain’s pragmatic belief in the obligation upon government to resolve the defects of the market mechanism in the interests of social and economic efficiency led him to support international cartelisation, state subsidy and control of ailing industries and even the nationalisation of canals, coal and railways in the immediate aftermath of the Great War.8 A few months before his death, he still claimed that he had ‘no prejudice against land nationalisation’. ‘With me it is merely a matter of expediency’, he told Lord Bledisloe. ‘In the public interest I would have no hesitation in handing over to public ownership any particular piece of land if that would give better results.’9 In this sense, as in so many others, Neville Chamberlain was (far more than his half-brother) the true political heir of ‘Radical Joe’. Certainly his predilection for collectivist and statist solutions to the failings of the market refute allegations of an unreconstructed faith in laissez-faire. The importance of a proper understanding of Chamberlain’s motivations and economic rationality can be demonstrated by reference to his most famous economic innovation – the introduction of the full ‘scientific’ tariff in February 1932. Although a profoundly emotional moment for the many old tariff reformers who had rallied to Joseph Chamberlain’s banner almost thirty years before, it is simply nonsense to claim (as many historians do) that ‘Protection was advocated for its own sake’ and that ‘when Neville Chamberlain introduced the Import Duties Bill he was fulfilling the dreams of his father as much as prescribing for the depression’.10 Far from being the final backward-looking symbolic act in a drama dating back to 1903, Chamberlain had devised the general tariff as part of the government’s ‘flexible and many-sided policy’ designed to overcome economic depression and he commended the Import Duties Bill to Parliament as a panacea for virtually all Britain’s industrial and economic ills.11 With the benefit of hindsight, it is clear that the general tariff was far less successful than policy-makers hoped and believed at the time. But without the benefit of complex (and still contested) retrospective econometric analysis, the perceived reality for Chamberlain and his colleagues during the 1930s was that by protecting domestic industry from foreign competitors ‘the tariff proved on balance of significant and essential value in aiding British recovery, not only by giving an initial stimulus to rise from the slough, but in the longer-term also’.12 Moreover, as with the evaluation of ‘cheap money’, the fundamental point is that whatever the retrospective outcome of tariff policy during the 1930s, the contemporary intent was consciously and explicitly to arm the government with a flexible tool with which to manage the economy and restore industrial prosperity. In this respect, the Import Duties Act represented a victory for the pragmatic protectionists like Chamberlain over the vague but grandiose aspirations of sentimental imperial visionaries like Amery. Ultimately, for
Chamberlain, tariff reform was to be sought less as an end in itself than as an instrumental step towards a far broader and more ambitious economic objective. Indeed, on this basis some have argued that between 1931 and 1935 the National Government ‘laid the foundations of the Managed Economy’.13 Nowhere was this link more apparent for Chamberlain than in the perceived relationship between the Import Duties Act and the reorganisation of industry, at a time when it was already clear that ‘industry … has neither the will nor the power to reorganise itself’.14 This had certainly been the Conservative experience with ailing staple trades like iron and steel during the 1924-29 Government, while Baldwin’s electoral pledges and Churchill’s free trade obstructionism made rationalisation appear to be an alternative rather than an adjunct to tariff protection.15 In June 1930, however, the Conservative Research Department’s report on iron and steel convinced Chamberlain that he now possessed the opportunity to make the latter conditional upon the former because ‘in return for a measure of protection the industry is in a mood to pledge itself to almost anything’. A month later, the CRD came to a similar conclusion with regard to cotton.16 As Chamberlain explained to Snowden in January 1932:
the coupling with this flat rate tariff of additional powers [to impose selective surtaxes] provides us with such a lever as has never been possessed before by any Government, for inducing or, if you like, forcing industry to set its house in order. I have in mind particularly iron and steel and cotton: and my belief in the advantages of Protection is not so fanatical as to close my eyes to the vital importance of a thorough reorganisation of such industries as these, if they were even to keep their heads above water in the future.
