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Time for a National Government? Lessons from 1931
It is an interesting question as to whether the formation of a National Government would help solve the current Brexit impasse. It has certainly worked in the past.
In 1931 a National Government was formed to get us out of the Depression and overall it did a pretty good job. Britain recovered faster than any other major economy, helped by coming off the Gold Standard, restructuring War Loan, tax cuts and embarking on a housebuilding boom.
When the crisis began that year there was a minority Labour Government, the pound was under pressure and the Cabinet was divided. An Austrian bank called Credit Anstalt had gone bust and contagion had spread to London’s financial markets. The budget deficit was spiralling out of control due to faltering tax revenues and the cost of rising unemployment benefits.
During the summer, the Prime Minister Ramsay MacDonald was trying to get agreement among his Labour colleagues to cut government expenditure and raise taxes. Balancing the budget was a prerequisite to the approval of an emergency loan being arranged by JP Morgan in New York. The Conservative and Liberal parties refused to countenance the £100m in tax rises which the Cabinet agreed to and instead demanded further economies.
Throughout August the political arguments raged and there was an impasse. The critical intervention finally came from King George V, one of the most underrated monarchs in our history. The best narrative of events is in Kenneth Rose’s excellent biography of the King.
On Saturday August 22nd, having only just arrived in Balmoral, the King turned straight round to see MacDonald at Buckingham Palace the following morning.
The Prime Minister tried to resign, but the King talked him out of it at two meetings on the Sunday. The second one took place after the King had a private dinner with Edward Peacock, a director of the Bank of England and partner in Baring’s Bank, who helped manage the King’s affairs. Left-wingers claimed that Peacock was at the centre of a “bankers’ ramp” and had a role in advising the King what to do. He had been summoned at short notice, but he himself said that all they talked about at dinner was the recent fluctuation in wheat and barley prices.
The King told MacDonald he was the only one who could lead the country at that time and he believed he could depend on Conservative and Liberal support. The King then summoned all three parties to a meeting at Buckingham Palace the following day. The Conservatives were led by Stanley Baldwin and the Liberals represented by Sir Herbert Samuel, as their leader Lloyd George was convalescing from an operation.
The King told MacDonald that it was “out of the question” he should resign and told the three men to go into a room, to come to an agreement and they were not to emerge until they had drafted a communiqué which would restore confidence at home and abroad. This took about an hour and the three agreed to form a National Government under MacDonald. This was not a formal coalition, but a “co-operation of individuals” to tackle the economic emergency.
Lord Wigram, the King’s private secretary, noted in his diary:
“His Majesty congratulated them on the solution of this difficult problem, and pointed out that while France and the other countries existed for weeks without a Government, in this country our constitution is so generous that leaders of Parties, after fighting one another for months in the House of Commons, were ready to meet together under the roof of the Sovereign and sink their own differences for a common good…”
Amen to that.
The Labour party subsequently split, but the National Government won a landslide victory in an autumn election demanded by the Conservatives. Churchill transformed it into a “Grand Coalition” in 1940 and it remained in office, broadly successfully, until 1944.
Would such an approach work now? It is hard to see either the Queen intervening or the current party leaders taking a similar approach. But anecdotally, the public appetite for “banging MPs heads together so they sort things out” is very high and they are not immune to this sentiment. It is also noteworthy that first steps in cross party co-operation, both by backbenchers and in formal talks between Theresa May and Jeremy Corbyn, have already been taken. Let’s see what happens in coming weeks.
Christmas cheer from Thomas Chippendale – The 1721 Naval Store Act had unexpected benefits
Earlier this year Boscobel moved into new offices at 60 St Martin’s Lane, in Covent Garden, the historic creative hub of London. Some research about a talented previous occupant shows how unexpectedly good things can come if we have the wit to encourage enterprise and civility.
A plaque by the door reminds us that it was on this site that the furniture-maker Thomas Chippendale and his son rented their workshop from Lord Salisbury. It is from here that they manufactured their distinctive elegant hard-wood furniture when the Industrial Revolution was getting into full swing from the 1750s onwards.
1721 Naval Stores Act
What is not commonly appreciated is that the very existence of Chippendale’s innovative English Rococo designs was only made possible by the 1721 Naval Stores Act, which repealed duties on commodities required by the voracious Royal Navy. Among these were mahogany from Jamaica and walnut and pine from North America.
An abundant supply of imported hardwoods stimulated domestic craftsmen, joiners and cabinet makers. Thomas was born in Yorkshire, the son of a joiner and in 1718 and later moved to London.
The Director
In 1754 Chippendale published his celebrated catalogue of slim and lightweight designs, called The Gentleman and Cabinet Maker’s Director. This, it proclaimed reflected ‘. . . MODERN TASTE, as improved by the politest and most able Artists’.
In so doing, he pioneered an interesting business model. The Director was sold to an initial 400 subscribers at £1. 10 shillings each, making him £130,000 in today’s money. Not only did this provide working capital for his business, it advertised his prowess to an influential clientele. It was reissued twice with additional plates.
The initial subscribers included 28 titled persons, 21 designated Esq, and numerous craftsmen, keen to copy his designs. Four subscribers were ladies. Many of the subscribers, such as the Countess of Shaftesbury, the Dukes of Beaufort and Norfolk, and the Earl of Dumfries, went on to commission works from Chippendale.
It was a time of abundance. The Georgian aristocracy were growing ever more wealthy on the newfound prosperity which they benefited from as investors or as landowners collecting revenues from canals and turnpikes or from the mining of coal (and in some cases, it should be admitted slave-owning plantations). There was also a growing, rising, affluent class of entrepreneurs, inventors, scientists, merchants, tradesmen, craftsmen, artists and City professionals. A step change in the human condition, originating in Britain, was underway.
Following Adam Smith’s advice
At times of uncertainty we should take comfort from history, reminders of which are frequently around us. There are lessons to be learned and it helps give perspective. When MPs passed the Naval Stores Act nearly 300 years ago, they cannot have imagined the unexpectedly good things which would ultimately come from following Adam Smith’s advice – coincidentally given to Glasgow students in the same year The Director was published: “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.”
Happy Christmas and fingers crossed, on both hands, for all of you in 2019 from the Boscobel team.