The ‘Hungry Thirties’ saw Britain struggle with economic depression, political instability, and stark regional inequalities, shaping society until the outbreak of World War II.
The Fall of the 1929–31 Labour Government
Labour’s Return to Power
In 1929, the Labour Party, under Ramsay MacDonald, formed its second minority government after a general election produced a hung Parliament. Despite lacking an outright majority, Labour aimed to implement moderate social reforms.
Rising Unemployment and Economic Crisis
The government faced soaring unemployment, exacerbated by the Wall Street Crash of October 1929, which triggered a global economic downturn.
British exports plummeted due to shrinking international markets and falling demand, severely affecting staple industries such as coal, shipbuilding, and textiles.
Unemployment rose from around 1 million in 1929 to over 2.5 million by 1931.
Budget Deficits and Internal Divisions
The government was torn between maintaining traditional fiscal orthodoxy (balanced budgets and the Gold Standard) and expanding welfare spending to alleviate hardship.
Rising unemployment benefit payments created a budget deficit, prompting demands for cuts in spending and benefits.
The Labour Cabinet split bitterly over whether to reduce unemployment benefits; many on the left opposed cuts, seeing them as a betrayal of working-class interests.
Collapse of the Government
In August 1931, after failing to agree on budget cuts demanded by the financial markets and international creditors, MacDonald resigned.
He agreed, under pressure from King George V and financial institutions, to lead a cross-party emergency government to stabilise the economy — effectively abandoning his party and causing a deep split within Labour.
Formation and Role of the National Government
Establishment
The National Government was formed in August 1931, initially intended as a temporary measure to address the immediate financial crisis.
It brought together moderate members of Labour, the Conservatives led by Stanley Baldwin, and the Liberals.
Purpose and Policy Response
Its primary goals were to restore financial confidence, protect the pound, and maintain economic stability.
To reassure investors and foreign lenders, the National Government announced austerity measures:
10% cuts in unemployment benefit and public sector wages.
Increased income taxes to boost revenue.
These deflationary policies caused considerable hardship but were deemed necessary to prevent a full-scale currency collapse.
Public Backing and Longevity
In the general election of October 1931, the National Government won a huge majority, with Conservatives forming the bulk of its MPs.
Despite being created as a short-term crisis response, it remained in power throughout the 1930s due to sustained public support for its steady leadership amid economic uncertainty.
Leadership Styles and Decisions
Ramsay MacDonald
MacDonald is often remembered controversially for ‘betraying’ Labour by leading the National Government.
His leadership style was pragmatic but seen as lacking decisiveness; he was increasingly marginalised by Conservative dominance within the coalition.
He became a figurehead Prime Minister, with real power shifting towards Conservative leaders.
Stanley Baldwin
Baldwin, leader of the Conservatives, was viewed as a moderate and reassuring figure.
He prioritised consensus and social harmony, skilfully managing internal party divisions.
His calm style maintained public confidence, and he resumed the premiership from MacDonald in 1935.
Neville Chamberlain
As Chancellor of the Exchequer and later Prime Minister (from 1937), Chamberlain was the driving force behind economic policy.
He supported protective tariffs and imperial preference, aiming to shield British industry from global competition.
His leadership combined administrative efficiency with an ambition to tackle long-term unemployment through controlled rearmament and limited public works.
Key Economic Strategies
Departure from the Gold Standard (1931)
Britain abandoned the Gold Standard in September 1931 when a run on the pound made its fixed exchange rate unsustainable.
This allowed the pound to float and devalue, making British exports more competitive.
Although initially viewed as humiliating, the move helped moderate the Depression’s worst effects by stimulating demand for British goods abroad.
Tariff Reform and Imperial Preference
Tariffs were introduced under the Import Duties Act 1932, ending decades of free trade.
A 10% general tariff was applied to most imports, with exemptions for parts of the British Empire to encourage intra-Empire trade.
At the Ottawa Conference (1932), imperial preference was formalised, promoting economic ties within the Empire to counteract reliance on unstable global markets.
These protectionist policies aimed to revive domestic industries by sheltering them from cheap foreign competition, though their effectiveness remains debated.
Regional Economic Imbalances
Prosperous South vs Depressed North
The Depression exposed and deepened stark regional disparities:
The South and Midlands (London, Home Counties, parts of the Midlands) saw relative prosperity due to newer industries like electrical goods, car manufacturing, and chemicals.
The North, Scotland, and Wales, reliant on traditional heavy industries, suffered prolonged economic decline.
Consequences for Communities
In areas like South Wales, Tyneside, and Clydeside, unemployment rates exceeded 70% in some towns, leading to widespread poverty, malnutrition, and social despair.
These regions experienced significant out-migration as families moved in search of work, contributing to urban decline and depopulation.
Government efforts to address imbalances, such as the Special Areas Act 1934, aimed to attract new industries to the worst-hit districts but achieved limited success.
Social and Political Impact
Hardship in the depressed regions fuelled resentment towards the government’s perceived neglect.
Political radicalism, including support for the Communist Party and hunger marches like the famous Jarrow March (1936), highlighted working-class discontent.
The regional divide persisted into the 1940s, influencing debates about post-war reconstruction and the welfare state.
Though the National Government stabilised Britain’s finances and laid foundations for cautious recovery, mass unemployment and uneven regional development defined the decade. These challenges shaped British politics and society until the transformative pressures of World War II redirected economic priorities and political consensus.
FAQ
The Great Depression fundamentally reshaped British political attitudes towards welfare spending. Before the crisis, there was an expectation among policymakers that unemployment was temporary and localised, manageable through the traditional Poor Law and limited insurance schemes. However, mass unemployment exposed the inadequacy of these systems. The scale of demand for unemployment benefits created a severe fiscal strain, forcing policymakers to confront whether the state should maintain spending during economic downturns or cut back to balance the budget. The National Government’s decision to cut unemployment benefit by 10% in 1931 demonstrated the persistence of traditional economic orthodoxy — prioritising a balanced budget over welfare expansion. This was hugely controversial and fuelled resentment among the unemployed. Yet paradoxically, the Depression planted seeds for later reforms by showing that cyclical unemployment needed systemic solutions. This realisation influenced political thought, pushing some Conservatives and moderate Liberals towards accepting a greater state role in welfare by the end of the decade.
In depressed regions hit hardest by the Depression, women and family life were deeply affected in ways that often went unrecognised in official statistics. High male unemployment meant that many households lost their primary source of income, placing immense pressure on women to stretch limited family budgets and maintain household stability. Women often took on informal work, such as sewing, cleaning, or running small home-based businesses, to supplement meagre unemployment benefits. Rationing money for food and rent meant mothers frequently went without meals to feed children first, leading to widespread reports of malnutrition among working-class mothers. Family dynamics also shifted as traditional gender roles were strained; unemployed men sometimes struggled with the loss of their breadwinner status, creating domestic tensions and, in some cases, contributing to rising mental health issues. Despite such hardships, many women played a vital role in community support networks, organising soup kitchens and charity collections, highlighting their resilience during economic adversity.
Industrial diversification in the 1930s played a significant role in widening regional disparities across Britain. Older industrial regions like South Wales, the North East, and parts of Scotland remained heavily dependent on staple heavy industries such as coal mining, shipbuilding, and textiles. These industries faced declining global demand and structural overcapacity, leading to chronic unemployment. In contrast, parts of the South and Midlands saw the growth of newer industries — car manufacturing, electrical goods, light engineering, and chemicals — which proved more adaptable to shifting consumer demands. Cities like Coventry and Birmingham experienced relative economic buoyancy, attracting new factories and workers, while places like Jarrow and Merthyr Tydfil languished. Government policies to encourage new industries to relocate to depressed areas met limited success because businesses preferred better transport links, skilled labour, and proximity to affluent markets found in the South. This imbalance entrenched economic divides that persisted well beyond the 1930s, shaping patterns of internal migration and urban development.
Public opinion during the 1930s exerted a subtle but important influence on National Government policies. Initially, there was significant support for the National Government’s tough measures to restore confidence during the 1931 crisis, as fear of economic collapse loomed large. The sweeping election victory of October 1931 reinforced the perception that austerity had broad public backing. However, as hardship continued, there was mounting frustration, especially in the worst-affected areas, over persistent unemployment and the apparent lack of direct aid. Public protests, such as hunger marches — most famously the Jarrow March in 1936 — attracted national sympathy and embarrassed the government. Media coverage and charitable campaigns brought the plight of distressed communities to wider attention. While the National Government never fully abandoned cautious fiscal policies, this groundswell of public sympathy did push for modest intervention, such as the Special Areas Act of 1934 and limited public works schemes. These efforts were symbolic of government responsiveness to growing social pressure, though critics argue they were too limited to bring meaningful change.
Local governments and charities were crucial in coping with the social consequences of the Depression, especially where national measures fell short. Local authorities managed the distribution of unemployment benefits and poor relief, often stretched beyond capacity as demand soared. Some councils, especially in industrial towns, tried to create local job schemes or maintain basic services despite shrinking budgets and ratepayer resistance. However, local tax bases were eroded by unemployment, limiting their scope for action. Charities stepped in to fill gaps, providing soup kitchens, clothing drives, and funds for coal and food parcels to families in crisis. Religious organisations, particularly churches and chapels, often coordinated relief efforts and offered moral support to struggling communities. Voluntary organisations like the Salvation Army expanded their services, offering shelters and training schemes. While these local and charitable responses could not solve structural unemployment, they played an essential role in mitigating extreme poverty and sustaining communal morale during a period of deep economic and social strain.
Practice Questions
Explain why the Labour government fell from power in 1931.
The Labour government fell in 1931 primarily due to its inability to resolve the economic crisis triggered by the Great Depression. Soaring unemployment and a growing budget deficit caused fierce cabinet divisions over how to balance the budget. Ramsay MacDonald’s decision to cut unemployment benefits alienated much of the party’s left wing, resulting in a loss of internal support. Additionally, international financial pressures and a run on the pound forced MacDonald to form the National Government with Conservative and Liberal backing, effectively splitting Labour and ending its fragile minority rule.
How significant was the departure from the Gold Standard in Britain’s response to the Depression?
The departure from the Gold Standard in 1931 was highly significant as it marked a major shift in economic policy. By abandoning the fixed exchange rate, Britain allowed the pound to devalue, which made British exports more competitive and slightly boosted industrial recovery. This move alleviated deflationary pressure and improved confidence domestically. Although other policies like tariff reform and imperial preference also shaped recovery, leaving the Gold Standard demonstrated Britain’s willingness to adapt orthodox economic thinking, helping the country to weather the Depression better than some European neighbours.
