The Mongrel Collective: Britain and the Global Economy, 1929–1934
THE MONGREL COLLECTIVE
BRITAIN AND THE GLOBAL ECONOMY, 1929–1934
ROBERT SKIDELSKY
1965
Next to war, unemployment has been the most widespread, the most insidious, and the most corroding malady of our generation: it is the specific social disease of Western civilisation in our time.
The Times of St. John’s, 23 January 1943
In the advancement of this immediate policy we surrender nothing of our socialist faith. The immediate question is not a question of the ownership, but of the survival of British industry. Let us put through an emergency programme to meet the national danger; afterwards political debate on fundamental principle can be resumed.
“The Alliance Manifesto”, issued by the PLUA
8 November 1928
The Times of St. John’s, 23 January 1943
In the advancement of this immediate policy we surrender nothing of our socialist faith. The immediate question is not a question of the ownership, but of the survival of British industry. Let us put through an emergency programme to meet the national danger; afterwards political debate on fundamental principle can be resumed.
“The Alliance Manifesto”, issued by the PLUA
8 November 1928
Two things are generally known about the year 1929, even amongst non-historians: first, that this was the year of the final victory of the syndicalist revolution in Britain; and second, that the last months of the year, starting with the Wall Street Crash in October, saw the devastation of the global system of market capitalism, leading to the lasting discredit of received economic orthodoxies. Global lending, after the Great War driven by Washington, virtually disappeared as economies on both sides of the Atlantic retreated into various forms of insularity. Calls for autarky could be heard from Germany to the United States as consumer and producer credit slumped and unemployment soared. Against this troubled backdrop, Oswald Mosley began work directing the reconstruction of the British economy following a decade of unabating turbulence and upheaval.
The basic principles of the economic reforms of the early 1930s had been outlined over the previous few years by a number of figures on the Left. Aside from the persistent calls for Marxist-Leninist reconfiguration by the CPGB, Mosley’s “Birmingham Proposals” (1925) stands out as the most innovative economic manifesto of the period. Formulated not from the basis of ideology, but in answer to the immediate twin problems of unemployment and unrest in the coal industry, the proposals outlined a departure from the orthodox economic thought of both the Right and the Left in Britain at the time. Prior to the Great War, Britain had been the world’s largest importer nation and sat at the centre of the global economic system. Reliant on the rest of the world in a network of mutual interdependence, at the heart of Britain’s economic dominance was an unswerving faith in the principle of free trade, and a stable currency pegged to the gold standard. After 1914, with the rise of the United States as a global industrial power, the economies of Europe were pushed aside following the ruination brought about by the Great War. Kept buoyant by credit extended from Washington, Europe experienced a series of economic shocks in the 1920s as its largest powers adjusted to the post-War market system. In particular, the punitive reparation measures imposed upon defeated Germany at Versailles sparked a period of lasting political and economic instability, culminating with the rise of the Nazi Party in 1933.
Having assumed the role of international economic arbiter, the United States demonstrated little outwards commitment to the maintenance of global economic stability. Whereas the British were reliant on the rest of the world, and thus had a vested interest in upholding international stability, the Unites States had no such considerations to take into account. Washington took no measures to keep the value of the Dollar stable, for example, despite its new position as the central currency of the world’s system of payments. Hence the new European economic order, with its foundations built on borrowed American capital, was thus inherently unstable. When the US experienced widespread price collapses in the late 1920s, climaxing with the Wall Street Crash at the end of the decade, a whole system founded on American credit was thus brought to its knees.
The Wall Street Crash of 1929 came only months into the presidency of Andrew Mellon, formerly a respected economist, during which period the United States and the rest of the market-capitalist world suffered under dire economic conditions.
In Britain, the timing of the revolution and the preceding General Strike (1927–29) left the economy uniquely positioned when confronted by the arrival of the Great Depression. Britain’s leaders after 1918 had on the whole managed the economy as if the Great War had not happened, a reflection of the belief of many capitalists and orthodox economists that the War represented an interruption to the prevailing system, but not an ending. In this respect, they were deeply misguided. Rather than pursuing a policy of economic reconstruction in the years after the Great War, Britain returned to the comfort of old orthodoxies, with the result that during the pre-revolutionary period (1918–27) the country suffered an economic slump. Winston Churchill’s decision to return the Pound Sterling to the gold standard in 1925 set the value of currency too high against the Dollar by about 10 per-cent, hence British coal, textiles and machine parts produced for export were suddenly only competitive if sold for about 10 per-cent less than market value. This change in policy contributed in large part to the crisis in the coal industry that later set off the events leading to revolution, driving down wages and leading to the immiseration of countless members of the working class. On the other hand, the collapse in the prices of raw goods and commodities spurred on a period of increased consumption for the well-off, thus inequality greatly increased in the years before the General Strike.
To combat this disastrous attempt at influencing monetary policy, Mosley’s proposals laid out a system of control whereby prices, credit and trade would be managed by a small executive committee. The ultimate aim was to insulate the British economy from the shocks of a volatile international market abroad, while creating artificial demand at home via a system of credit expansion amongst producers and consumers, the control of banking and monetary policy by the government, and the revaluation of Sterling according to a floating exchange rate. The inclusion of an immense programme of public works to combat the immediate problem of unemployment gave the proposals a distinctly Keynesian feel, even if Mosley’s thought is ultimately of its own school.
In putting forward this view as early as 1925, Mosley was the first mainstream political figure to challenge the dominant position of the Treasury, maintained by Churchill and others and long since discredited, that the channeling of funds into public works could never ease unemployment as it would simply drain capital from private enterprise, which would otherwise create an equal number of jobs. This was a view which, prior to the revolution, had birthed stagnation and widespread unemployment. It is hard to imagine any scenario in which it might have successfully mitigated the most damaging consequences of the slump.
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Mosley was appointed to direct the new Office for Economic Planning (OEP) in June 1929. He held onto the post throughout the Great Depression and beyond, retaining various powers over the management of the economy of the Commonwealth until 1945. Initially, the OEP included three ancillary departments: the Bureau of Coal and Steel, the Bureau of Trade and Import Control, and the Bureau of Transport and Infrastructure. It also oversaw the operation of the new Central Bank of the Commonwealth, directed at Mosley’s urging by the socialist former civil servant E. M. H. Lloyd. According to Mosley’s proposed governmental reforms that accompanied his economic programme, the Office for Economic Planning was to have been accountable to the legislature but otherwise separate from the rest of government and empowered to act more or less as it saw fit to resolve the crisis. This vision was not reflected in the ultimate reality: while undoubtedly the largest and most powerful of the new government departments, the OEP was nevertheless subordinate to the wider Executive Committee (Exco). For the six years between 1929–34, the Exco was dominated by a succession of Communist organisers keen to enact their own programme for the reconstruction of Britain. Mosley’s battle to enforce his programme over the Marxist-Leninist programme of the CPGB resulted in a system described by Mosley himself in 1965 as a “mongrel collective”: something halfway between his own idea of a planned economy, and a collectivised system modelled on Stalin’s programme in the USSR.
For the most part, the desires of the CPGB and the Mosleyite OEP were in concord. Even if arrived at from different philosophical bases, the immediate programme of economic restructuring was materially consistent across both camps. (Mosley, after all, remained a socialist even if not a communist.) Ultimately, the programmes of reconstruction and collectivisation were divided between the OEP and the Bureau of Domestic Affairs, which was directed by five different people in six separate spells over the six years between 1929–34. The Domestic Bureau included the secretariats of agriculture, education, healthcare and housing. In contrast to the OEP, which remained on the whole an enclave of PLUA organisation within the Communist-dominated governments of the period, the Domestic Bureau was under the solid control of the CPGB, with the exception of 1931 when it was under the direction of Arthur Cook – a communist by philosophy but not by party.
The revolutionary nature of the programme enacted by the Domestic Bureau between 1929–34 must not be underestimated. Agricultural reform pursued from winter 1929 was one manifestation of a wider campaign against landlordism and greatly involved the restructuring of land ownership. Large farms were requisitioned by the state and leased back to farmers at new rates. Smaller farms were collectivised and organised into worker co-operatives. All agricultural workers were organised into the new General Agricultural Workers’ Union (GAWU), which in tandem with the Secretariat of Agriculture controlled wages, labour conditions and working hours. After 1932, industrial and technological advances led to the introduction of tractor ploughs across Britain and by the end of the decade the country saw further advances as combine harvesters became more common, although they were not widespread until the 1940s. More so than collectivisation itself, mechanisation led to increases in efficiency and output – although it must be said that the co-operative system, along with credit extended by the state, hastened the proliferation of new machinery.
The policy of housing reform prosecuted by the Domestic Bureau from 1930 onwards took an equally firm line on the question of ownership. In accordance with the CPGB’s 1929 manifesto, the incendiary “Class Against Class”, the government set about a vigorous assault on landlordism, confiscating all landlord-owned property and leasing homes back to workers at controlled rates. The large houses of the gentry and the old aristocracy were similarly sequestered (without compensation) and turned over either to the Secretariat of Housing or the Secretariat of Healthcare, which began the enormous task of turning over 1,200 of the estates into hospitals, care homes and sanatoria. The remainder – over five hundred – were converted into blocks of rent-controlled flats. This was the fate that awaited Mosley’s own family home, Rolleston Hall, near Burton-upon-Trent on the Staffordshire–Derbyshire border, although the hall had been sold at auction by Mosley’s father in 1923. Perhaps the most striking consequence of this policy of requisition was the conversion of Buckingham Palace into a children’s hospital in 1933.
As Chairman of the Office of Economic Planning, Oswald Mosley lived in a flat in the City of Westminster. His old family home was divided into flats and used to house miners from nearby Swadlincote.
While the CPGB’s own materialist viewpoint had little outward concern for the fate of the people on the receiving end of these policies so long as the overall goal of communisation was advanced, it must be pointed out that the collectivisation programme was not met without resistance by the landowning class. Much of the old aristocracy had already fled to Newfoundland before suffering the indignity of losing their estates, taking with them as many liquid assets as possible. (Although outside of the scope of this piece, the flight from Britain of thousands of works of art owned by the pre-revolutionary upper classes is a fascinating phenomenon in its own right, and one deserving of a fuller examination by a more informed authority.) Of those who remained, much of the old upper class found an outlet for its discontent in the various organisations of the fascist movement. Landlord farmers were less likely to turn to fascism, in some cases placated by the many subsidies extended by the state to prop up production, though collectivisation nevertheless caused a great deal of tension and contributed to the widespread antipathy with which the rural middle classes greeted the arrival of the Commonwealth. Farm labourers on the other hand were far more receptive, on the whole grateful for the distribution of land and glad of the new organisational structure offered by the GAWU. In time, these workers became some of the most dependable supporters of the early Commonwealth project, and in many instances farm labourers provided some of the most effective organisation against fascism in rural areas during the troubles of 1933–34.
With the CPGB-dominated Domestic Bureau getting on with the business of collectivisation and communisation, what Mosley had called the “fundamental principle” of challenging the question of ownership, the PLUA took control of macroeconomic management through the apparatus of the OEP. Mosley’s first financial statement, delivered to the Workers’ Assembly on 1 October 1929, took considerable steps towards alleviating the contemporary crisis. The gold standard was to be abandoned, allowing Sterling to cool off and opening up room for the more creative management of monetary policy by the state in the future. A flagship programme of infrastructural investment and industrial modernisation was also unveiled, with government funds reassigned to finance the construction of new roads, railways and housing developments across the country. The passage of the Special Roads Act (1929) by executive order outlined new powers for the OEP, allowing it to oversee the construction of Britain’s first two motorways, the M1 and the M2, starting in 1930 and 1932, respectively. The M1, stretching over 100 miles from Watford to Birmingham, involved over 400 thousand people in its construction; it was completed in 1933. The M2, travelling 60 miles from Chertsey in Surrey to Southampton, was completed in 1934. Auxiliary projects across the country updating the railways, still the most popular mode of transport in the Commonwealth, were signed off throughout the first half of the 1930s.
Significant advances were made also in the construction of housing. Between 1930–33, the OEP oversaw the completion of half a million homes throughout the Commonwealth. In some cases, these projects were managed directly by the state, although a large number ended up being devolved to regional councils via appropriate extensions of credit. Following the end of the Great War, Lloyd George had promised the construction of an equivalent number of “homes for heroes” in the same time span; only half of the promised units were ever delivered. Mosley was particularly proud of his achievement in fulfilling what the great statesman Lloyd George could not, seeing the homebuilding project as symbolic of the wider commitment of the state to the well-being of the workers of the Commonwealth. With a dip in the period 1933–34 reflecting wider political instability, construction continued at a rate of about 350,000 homes per year until the end of the decade.
High-Point I (1935) was completed by Highgate Council in association with Tecton, an architectural practice coordinated by the Soviet emigre Berthold Lubetkin. Tecton had a large influence on the redevelopment of London after 1931 and were instrumental in the evolution of the style known as "Commonwealth Modernism".
Where friction existed between the desires of the CPGB and the PLUA, it was usually to be found in cases of international economic policy. The Communist Party favoured a state monopoly of foreign trade – as exercised by the OEP’s Bureau of Trade and Import Control – but saw this policy as a means of eliminating the questions of both free trade and tariff reform. Mosley, on the other hand, used a suite of tariffs to insulate the economy of the early Commonwealth from the instability ravaging the market-capitalist world at the time, pivoting towards a closer co-operation with the former African and Indian colonies now exercising self-rule within the Union of Constituent Commonwealth States. While successful insofar as the pursuit of full employment and increased production were not hampered by bad news from the Continent, Mosley’s preference for tariffs was met in kind by trade barriers erected across the developed world. The Communists saw this economic gun-boat diplomacy as interfering with the right of the workers to manage the conduct of foreign trade on their own terms, believing tariffs to be a hangover of capitalist imperialism. Nevertheless, the global trend remained one of insularity in some form or other until the early 1950s. This was without doubt an aggravating factor in the persistence of the Depression in much of the market-capitalist world until the beginning of the 1940s.
One must therefore conclude ultimately that the legacy of the economic restructuring programmes of the early Commonwealth remains open to questioning. While Mosley’s efforts achieved their aim of simultaneously addressing the problem of unemployment and modernising much of Britain’s industry and infrastructure, the contemporaneous campaign against ownership conducted by the CPGB complicated matters and led to the emergence of a mixed economic policy, no longer in hock to discredited orthodoxies but not yet fully divorced from capitalist systems of operation. To the lasting consternation of the CPGB, Mosley’s successes cannot be credited to Marxist praxis, Leninist or otherwise. By the same token, it was the communising efforts of the CPGB that truly worked to create a society that was fundamentally reorganised around the needs and desires of the working class. The PLUA between 1929–34 can take little credit for advancing the lot of the workers beyond putting them back in work.
From the point of view of the capitalist world, the effectiveness of economic planning in combating the worst effects of the slump, as seen in the Commonwealth and the USSR, led to a greater international interest in the restructuring of society along non-capitalist lines. The immediate effects of this loss of faith in capitalist orthodoxies touched almost every developed country in Europe, even making it across the Atlantic with the election of Franklin D. Roosevelt to the presidency of the United States in 1933 on a platform of comprehensive economic planning. Ultimately, an understanding of the turbulent economic situation in Europe and America in the Thirties and Forties is vital to understanding the resulting socio-political upheavals. Thus an accurate picture can begin to be drawn of a world responding to crisis.
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