James Ramsay MacDonald, the illegitimate son of Ann Ramsay, a maidservant, was born in Lossiemouth, Morayshire, on 12th October, 1866. He was brought up in his grandmother's cottage and was a student at the local school from 1875 until 1881. An intelligent boy he became a pupil-teacher and at nineteen found work in Bristol as an assistant to a clergyman. While living in the city he joined the Social Democratic Federation (SDF).
In 1886 MacDonald moved to London where he was employed as a clerk for the Cyclists' Touring Club. In his spare-time he studied for a science scholarship but as a result of a near-starvation diet his health declined and was forced to abandon his idea of an academic career.
After he recovered his health, MacDonald was employed as a clerk by Thomas Lough, a member of the House of Commons. MacDonald had a growing interest in politics and joined the Fabian Society where he met socialists such as George Bernard Shaw, Annie Besant, Walter Crane, Sidney Webb and Beatrice Webb.
In September 1918 he wrote to a friend: "Down here about the movement which I am more and more interested in moves on apace. The spirit of Socialism is abroad, not only stirring the lower ranks of labour to discontent, but moving those whose physical wants are all provided for and whose education and intellectual training are such as to preclude every idea of their being led away by any mere sciitinicntal fad or impracticable scheme."
In 1893 a group of socialist including James Keir Hardie, Robert Smillie, Tom Mann, John Bruce Glasier, Ben Tillett, and Philip Snowden formed a new national working class party called the Independent Labour Party. MacDonald joined in 1894 and the following year was selected as the ILP candidate for Southampton. At a meeting in May 1895, Margaret Gladstone attended one of his meetings. She noted that his red tie and curly hair made him look "horribly affected". However, she sent him a £1 contribution to his election fund. A few days later she became one of his campaign workers. At the 1895 General Election, MacDonald, along with the other twenty-seven Independent Labour Party candidates, was defeated and overall, the party won only 44,325 votes.
The following year they began meeting at the Socialist Club in St. Bride Street and at the British Museum, where they both had readers' tickets. In a letter she admitted that before she met him she had been terribly lonely: "But when I think how lonely you have been I want with all my heart to make up to you one tiny little bit for that. I have been lonely too - I have envied the veriest drunken tramps I have seen dragging about the streets if they were man and woman because they had each other... This is truly a love letter: I don't know when I shall show it you: it may be that I never shall. But I shall never forget that I have had the blessing of writing it."
They decided to get married and in a letter she wrote to MacDonald on 15th June, 1896 about her situation: "My financial prospects I am very hazy about, but I know I shall have a comfortable income. At present I get £80 allowance (besides board & lodging, travelling and postage); my married sister has, I think about £500 all together. When my father dies we shall each have our full share, and I suppose mine will be some hundreds a year... My ideal would be to live a simple life among the working people, spending on myself whatever seemed to keep me in best efficiency, and giving the rest to public purposes, especially Socialist propaganda of various kinds."
After they married in 1897, Margaret MacDonald was able to finance her husband's political career from her private income. The couple travelled a great deal in the late 1890s and this gave MacDonald the opportunity to meet socialist leaders in other countries and helped him develop an good understanding of foreign affairs.
Bruce Glasier wrote: "Margaret MacDonald might easily have been taken for the nursemaid in a small middle-class family. Her naivete, simplicity, unselfishness and amazing capacity for organisation and helpful work made her one of the best liked women I have known. There was little in her to attract men, as men, but everything to attract women and men who had enthusiasm for public work." The marriage was a very happy one, and over the next few years they had six children: Alister (1898), Malcolm (1901), Ishbel (1903), David (1904), Joan (1908) and Shelia (1910).
Keir Hardie, the leader of the Independent Labour Party and George Bernard Shaw of the Fabian Society, believed that for socialists to win seats in parliamentary elections, it would be necessary to form a new party made up of various left-wing groups. On 27th February 1900, representatives of all the socialist groups in Britain met with trade union leaders at the Congregational Memorial Hall in Farringdon Street. After a debate the 129 delegates decided to pass Hardie's motion to establish "a distinct Labour group in Parliament, who shall have their own whips, and agree upon their policy, which must embrace a readiness to cooperate with any party which for the time being may be engaged in promoting legislation in the direct interests of labour." To make this possible the Conference established a Labour Representation Committee (LRC). This committee included two members from the Independent Labour Party, two from the Social Democratic Federation, one member of the Fabian Society, and seven trade unionists.
Ramsay MacDonald was chosen as the secretary of the LRC. One reason for this was as he was financed by his wealthy wife, he did not have to be paid a salary. The LRC put up fifteen candidates in the 1900 General Election and between them they won 62,698 votes. Two of the candidates, Keir Hardie and Richard Bell won seats in the House of Commons.
Ramsay MacDonald was totally against the Boer War as he saw it as a consequence of imperialism. He wrote that "further extensions of Empire are only the grabbings of millionaires on the hunt". He joined forces with John Hobson to move a resolution condeming the war at a meeting of the Fabian Society. It was defeated and George Bernard Shaw wrote to MacDonald claiming: "I don't believe that the causes of the war menace our democracy. Quite the contrary. I don't believe that the capitalists have created or could have created the situation they are now exploiting for all its worth." After failing to win the vote, MacDonald, along with thirteen others, resigned from the Fabian Society.
Ramsay MacDonald became the Labour Representation Committee candidate for Leicester. In April 1902 The Leicester Mercury commented: "Mr MacDonald is a tall, strong, vigorous young man, and has evidently got a lot of fight in him. He appears to have a great deal of nervous electric energy as well as abundant muscular force. He stands upright with every inch of his measurement - with conscious power."
The LRC did much better in the 1906 General Election with twenty nine successful candidates winning their seats. MacDonald won his seat and other successes included James Keir Hardie (Merthyr Tydfil), Philip Snowden (Blackburn), Arthur Henderson (Barnard Castle), George Barnes (Glasgow Blackfriars), Will Thorne (West Ham) and Fred Jowett (Bradford). At a meeting on 12th February, 1906, the group of MPs decided to change from the LRC to the Labour Party. Hardie was elected chairman and MacDonald was selected to be the party's secretary.
At first James Keir Hardie was chairman of the party in the House of Commons, but was not very good with dealing with internal rivalries within the party, and in 1908 resigned from the post and Arthur Henderson became leader. McDonald continued to play an important role in developing policy and proposed the introduction of a super-tax on large incomes, special taxes on state-conferred monopolies, increased estate and legacy duties and a taxation on land values."
In 1909 David Lloyd George announced what became known as the People's Budget. This included increases in taxation. Whereas people on lower incomes were to pay 9d. in the pound, those on annual incomes of over £3,000 had to pay 1s. 2d. in the pound. Lloyd George also introduced a new supertax of 6d. in the pound for those earning £5000 a year. Other measures included an increase in death duties on the estates of the rich and heavy taxes on profits gained from the ownership and sale of property. Other innovations in Lloyd George's budget included labour exchanges and a children's allowance on income tax. MacDonald argued that the Labour Party should fully support the budget. "Mr. Lloyd George's Budget, classified property into individual and social, incomes into earned and unearned, and followers more closely the theorical contentions of Socialism and sound economics than any previous Budget has done."
Arthur Henderson did not have the full-support of the party and in 1910 he decided to retire as chairman. Ramsay MacDonald was expected to become the new leader but in February he suffered two shattering emotional blows. On 3rd February his youngest son, David, died of diphtheria. Eight days later his mother also died. It was therefore decided that George Barnes should become chairman instead. A few months later Barnes wrote to MacDonald saying he did not want the chairmanship and was "only holding the fort". He continued, "I should say it is yours anytime".
Henderson also suggested that MacDonald should become chairman. As David Marquand, the author of Ramsay MacDonald (1977) pointed out: "It is unlikely that he did so out of a sudden access of personal affection, or even out of admiration for MacDonald's character and abilities. He wanted MacDonald as chairman, partly because he wanted to be party secretary himself and believed correctly that he would be a good one, partly because he believed - again correctly - that MacDonald was the only potential candidate capable of reconciling the ILP to the moderate line favoured by the unions."
The 1910 General Election saw 40 Labour MPs elected to the House of Commons. Two months later, on 6th February, 1911, George Barnes sent a letter to the Labour Party announcing that he intended to resign as chairman. At the next meeting of MPs, Ramsay MacDonald was elected unopposed to replace Barnes. Arthur Henderson now became secretary. According to Philip Snowden, a bargain had been struck at the party conference the previous month, whereby MacDonald was to resign the secretaryship in Henderson's favour, in return for becoming chairman."
Bruce Glasier was not convinced that MacDonald was a socialist. In June 1911 he wrote in his diary: "I noticed that Ramsay MacDonald in speaking of the appeal we should send out for capital used the word Democratic rather than Labour or Socialist as describing the character of the paper. I rebulked him flatly and said we would have no democratic paper but a Socialist and Labour one - boldly proclaimed. Why does MacDonald always seem to try and shirk the word Socialism except when he is writing critical books about the subject."
On 4th July, 1910, MacDonald wrote: "My little David's birthday... Sometimes I feel like a lone dog in the desert howling from pain of heart. Constantly since he died my little boy has been my companion. He comes and sits with me especially on my railway journey and I feel his little warm hand in mine. That awful morning when I was awakened by the telephone bell, and everything within me shrunk in fear for I knew I was summoned to see him die, comes back often too."
On 20th July 1911, Ramsay MacDonald arranged for Margaret MacDonald to meet William Du Bois in the House of Commons. He later explained: "A little after noon she joined me at the House of Commons with one whom she had desired to meet ever since she had read his book on the negro, Professor Du Bois; that afternoon we went to country for a weekend rest. She complained of being stiff, and jokingly showed me the finger carrying her marriage and engagement rings. It was badly swollen and discoloured, and I expressed concern. She laughed away my fears... On Saturday she was so stiff that she could not do her hair, and she was greatly amused by my attempts to help her. On Sunday she had to admit that she was ill and we returned to town. Then she took to bed."
According to Bruce Glasier she was treated by Dr. Thomas Barlow, who told MacDonald that he could not save her. "When she heard that she was doomed, she was silent, and said with a slight tremble in her voice, I am very sorry to leave you - you and the children - alone. She never wept - never to the end. She asked if the children could be brought to see her. When the boys were brought to her, she spoke to each one separately. To the boys she said, I wish you only to remember one wish of your mother's - never marry except for love."
Margaret MacDonald died on 8th September 1911, at her home, Lincoln's Inn Fields, from blood poisoning due to an internal ulcer. Her body was cremated at Golders Green on 12th September and the ashes were buried in Spynie Churchyard, a few miles from Lossiemouth. His son, Malcolm MacDonald, later recalled: "At the time of my mother's death... my father's grief was absolutely horrifying to see. Her illness and her death had a terrible effect on him of grief; he was distracted; he was in tears a lot of time when he spoke to us... it was almost frightening to a youngster like myself."
Ramsay MacDonald wrote a short memoir of his wife, which was privately printed and circulated to friends. He told Katharine Glasier: "I felt myself hearing her approval of it, so much so that I seemed to see her hand on your shoulder as you wrote - and grew foolishly weakly blind with tears for the pain that was there." Katharine encouraged him to remarry. He rejected the idea and when his son, Malcolm MacDonald, made the same suggestion he replied: "My heart is in the grave." The income from Margaret's trust fund - now around £800 a year - was paid to him. This enabled him to employ a woman to look after the children and the household at Lincoln's Inn Fields.
The government's next major reform was the 1911 National Insurance Act. This gave the British working classes the first contributory system of insurance against illness and unemployment. All wage-earners between sixteen and seventy had to join the health scheme. Each worker paid 4d a week and the employer added 3d. and the state 2d. In return for these payments, free medical attention, including medicine was given. Those workers who contributed were also guaranteed 7s. a week for fifteen weeks in any one year, when they were unemployed.
MacDonald declared in the House of Commons that the premiums were too high and the balance between state, employer and employee was unfair. However, he believed that the Labour Party should try to get the measure modified. Some leading figures in the movement, including James Keir Hardie, Philip Snowden, Will Thorne and George Lansbury, disagreed and called for the bill to be rejected. MacDonald was furious about this rebellious behaviour. He continued to negotiate with David Lloyd George and managed to get important concessions including low-paid workers exempted from contributions.
MacDonald also clashed with some members of the party over votes for women. He had argued for many years that women's suffrage that was a necessary part of a socialist programme. He was therefore able to negotiate an agreement with the National Union of Women's Suffrage Societies for joint action in by-elections. In October, 1912, it was claimed that £800 of suffragist money had been spent on Labour candidatures.
However, some leaders of the Labour Party, including James Keir Hardie and George Lansbury, supported the campaign of the Women's Social and Political Union, MacDonald rejected their use of violence: "I have no objection to revolution, if it is necessary but I have the very strongest objection to childishness masquerading as revolution, and all that one can say of these window-breaking expeditions is that they are simply silly and provocative. I wish the working women of the country who really care for the vote ... would come to London and tell these pettifogging middle-class damsels who are going out with little hammers in their muffs that if they do not go home they will get their heads broken."
MacDonald also pointed out, the WSPU wanted votes for women on the same terms as men, and specifically not votes for all women. He considered this unfair as at this time only a third of men had the vote in parliamentary elections at this time. MacDonald's friend, John Bruce Glasier, recorded in his diary after a meeting with Emmeline Pankhurst and Christabel Pankhurst, that they were guilty of "miserable individualist sexism" and that he was strongly against supporting the organisation.
In 1912 MacDonald formed a friendship with Margaret Sackville. According to his biographer, David Marquand, she was his mistress for fifteen years. In one letter MacDonald wrote: "Dearest beloved, it is such a beautiful morning that you ought to be here and we should be walking in the garden. And if we were walking in the garden, what more should we do where the bushes hid us?"
Under the influence of MacDonald, Sackville became a socialist and a pacifist. The surviving letters, which date from 1913, show that MacDonald proposed at least three times to Sackville. She turned him down each time. Patrick Barkham has pointed out: "It was a passion they could not make public, a love doomed to be declared in scribbled letters or stolen moments when they walked together. Ramsay MacDonald was the ambitious, illegitimate son of a farm labourer who became the first Labour prime minister. Lady Margaret Sackville was the youngest child of the seventh Earl de la Warr, a poet and a society beauty who became his lover. They were separated not only by class but by religion. Born in Lossiemouth, Morayshire, MacDonald was raised in the Presbyterian church and, as an adult, joined the Free Church of Scotland. Born in Mayfair, London, and nearly 15 years his junior, Lady Margaret was Roman Catholic."
MacDonald was totally against Britain's involvement in the First World War. His views were shared by other Labour Party leaders such as James Keir Hardie, Philip Snowden, George Lansbury and Fred Jowett. Others in the party such as Arthur Henderson, George Barnes, Will Thorne and Ben Tillett believed that the movement should give total support to the war effort.
On 5th August, 1914, the parliamentary party voted to support the government's request for war credits of £100,000,000. MacDonald immediately resigned the chairmanship. He wrote in his diary: "I saw it was no use remaining as the Party was divided and nothing but futility could result. The Chairmanship was impossible. The men were not working, were not pulling together, there was enough jealously to spoil good feeling. The Party was no party in reality. It was sad, but glad to get out of harness." Arthur Henderson, once again, became the leader of the party.
Five days later MacDonald had a meeting with Philip Morrel, Norman Angell, E. D. Morel, Charles Trevelyan and Arthur Ponsonby. They decided, in MacDonald's words, "to form a committee to voice our views". A meeting was held and after considering names such as the Peoples' Emancipation Committee and the Peoples' Freedom League, they selected the Union of Democratic Control.
It was agreed that the main reasons for the conflict was the secret diplomacy of people like Britain's foreign secretary, Sir Edward Grey. They decided that the UDC should have three main objectives: (1) that in future to prevent secret diplomacy there should be parliamentary control over foreign policy; (2) there should be negotiations after the war with other democratic European countries in an attempt to form an organisation to help prevent future conflicts; (3) that at the end of the war the peace terms should neither humiliate the defeated nation nor artificially rearrange frontiers as this might provide a cause for future wars.
The founders of the Union of Democratic Control produced a manifesto and invited people to support it. Over the next few weeks several leading figures joined the organisation. This included J. A. Hobson, Charles Buxton, Frederick Pethick-Lawrence, Arnold Rowntree, Morgan Philips Price, George Cadbury, Helena Swanwick, Fred Jowett, Tom Johnston, Philip Snowden, Ethel Snowden, David Kirkwood, William Anderson, Isabella Ford, H. H. Brailsford, Israel Zangwill, Bertrand Russell, Margaret Llewelyn Davies, Konni Zilliacus, Margaret Sackville and Olive Schreiner. The Union of Democratic Control soon emerged at the most important of all the anti-war organizations in Britain and over the next few months obtained 300,000 members.
Ramsay MacDonald came under attack from newspapers because of his opposition to the First World War. On 1st October 1914, The Times published a leading article entitled Helping the Enemy, in which it wrote that "no paid agent of Germany had served her better" that MacDonald had done. The newspaper also included an article by Ignatius Valentine Chirol, who argued: "We may be rightly proud of the tolerance we display towards even the most extreme licence of speech in ordinary times... Mr. MacDonald' s case is a very different one. In time of actual war... Mr. MacDonald has sought to besmirch the reputation of his country by openly charging with disgraceful duplicity the Ministers who are its chosen representatives, and he has helped the enemy State ... Such action oversteps the bounds of even the most excessive toleration, and cannot be properly or safely disregarded by the British Government or the British people."
In May 1915, Arthur Henderson became the first member of the Labour Party to hold a Cabinet post when Herbert Asquith invited him to join his coalition government. Bruce Glasier commented in his diary: "This is the first instance of a member of the Labour Party joining the government. Henderson is a clever, adroit, rather limited-minded man - domineering and a bit quarrelsome - vain and ambitious. He will prove a fairly capable official front-bench man, but will hardly command the support of organised Labour."
MacDonald addressed public meetings all over Britain about the merits of the war. His biographer, David Marquand, has argued: "On rare occasions his meetings were broken up: men still remember how he stood his ground at Independent Labour Party meetings while being stoned by the mob. More often, the press reported disturbances where none had taken place, presumably in order to deter proprietors from letting their halls to him; and this policy of denying him a hearing, MacDonald believed, was actively encouraged by the police." In one speech MacDonald argued: "You can win the war, and in winning it pay such a price that the nation will have lost."
Horatio Bottomley, argued in the John Bull Magazine that Ramsay MacDonald and James Keir Hardie, were the leaders of a "pro-German Campaign". On 19th June 1915 the magazine claimed that MacDonald was a traitor and that: "We demand his trial by Court Martial, his condemnation as an aider and abetter of the King's enemies, and that he be taken to the Tower and shot at dawn."
On 4th September, 1915, the magazine published an article which made an attack on his background. "We have remained silent with regard to certain facts which have been in our possession for a long time. First of all, we knew that this man was living under an adopted name - and that he was registered as James MacDonald Ramsay - and that, therefore, he had obtained admission to the House of Commons in false colours, and was probably liable to heavy penalties to have his election declared void. But to have disclosed this state of things would have imposed upon us a very painful and unsavoury duty. We should have been compelled to produce the man's birth certificate. And that would have revealed what today we are justified in revealing - for the reason we will state in a moment... it would have revealed him as the illegitimate son of a Scotch servant girl!"
In his diary, MacDonald recorded his reaction to the article. "On the day when the paper with the attack was published, I was travelling from Lossiemouth to London in the company as far as Edinburgh with the Dowager Countess De La Warr, Lady Margaret Sackville and their maid... I saw the maid had John Bull in her hand. Sitting in the train, I took it from her and read the disgusting article. From Aberdeen to Edinburgh, I spent hours of the most terrible mental pain.... Never before did I know that I had been registered under the name of Ramsay, and cannot understand it now. From my earliest years my name has been entered upon lists, like the school register, etc. as MacDonald. My mother must have made a simple blunder or the registrar must have made a clerical error."
MacDonald received many letters of support, including this one: "For your villainy and treason you ought to be shot and I would gladly do my country service by shooting you. I hate you and your vile opinions - as much as Bottomley does. But the assault he made on you last week was the meanest, rottenest lowdown dog's dirty action that ever disgraced journalism."
In August 1915, a group of members of the Moray Golf Club, of which he was a member, submitted a motion demanding that MacDonald should be removed from the roll of members because of his opposition to the First World War. The motion was carried by 73 votes to 24. MacDonald wrote to the club secretary: "I am in receipt of your letter informing me that the Moray Golf Club has decided to become a political association with the Golf Course attached, and that it has torn up its rules in order that some of its members may give rein to their political prejudice and spite. Unfortunately, for some years, the visit of any prominent Liberal or Radical to the Moray Golf Club has been resented by a certain section which has not concealed its offensiveness either in the Club House or on the Course. Though I am, therefore, not sorry that the character of a number of members of the Moray Golf Club has been advertised to the world, I cannot help regretting that the Club, of which I was one of the earliest members, should be held up to public ridicule and contempt." MacDonald never played at the club again.
After the overthrow of Tsar Nicholas II in Russia, socialists in Britain, France, Germany, Austria-Hungary, United States and Italy called for a conference in a neutral country to see if the First World War could be brought to an end. MacDonald wrote in his diary: "The great service which the Russian Revolution could render to Europe would be to bring about an understanding between the German Democracy and that of the Allied countries." Eventually, it was announced that the Stockholm Conference would take place in July 1917. Arthur Henderson was sent by David Lloyd-George to speak to Alexander Kerensky, the leader of the Provisional Government in Russia.
At a conference of the Labour Party held in London on 10th August, 1917, Henderson made a statement recommending that the Russian invitation to the Stockholm Conference should be accepted. Delegates voted 1,846,000 to 550,000 in favour of the proposal and it was decided to send Henderson and Ramsay MacDonald to the peace conference. However, under pressure from President Woodrow Wilson, the British government had changed his mind about the wisdom of the conference and refused to allow delegates to travel to Stockholm. As a result of this decision, Henderson resigned from the government.
MacDonald warned repeatedly that if the British government and its allies, continued to insist on a military victory, the moderate socialists would lose control in Russia. He was therefore not suprised when Alexander Kerensky was deposed and replaced by Lenin and the Bolsheviks. He added that it was Britain's fault that "Russia now negotiates alone with Russia".
Ramsay MacDonald was the Labour candidate for Leicester East in the 1918 General Election. The coalitionist candidate, Gordon Hewart, concentrated on MacDonald's opposition to the war. He argued that MacDonald had "put an odious stain and stima upon the fair name of Leicester". He went on to say that this was not "an indelible stain" and "the citizens of Leicester now had the opportunity of wiping it away and of meting out to its author his well-merited reward." MacDonald lost the election by 15,000 votes. Other opponents of the war such as Philip Snowden, George Lansbury and Fred Jowett, also lost their seats.
MacDonald had been forgiven for his opposition to the First World War by the time of the 1922 General Election and was elected to represent Aberavon. The Labour Party won 142 seats, making it the second largest political group in the House of Commons after the Conservative Party (347). David Marquand has pointed out that: "The new parliamentary Labour Party was a very different body from the old one. In 1918, 48 Labour M.P.s had been sponsored by trade unions, and only three by the ILP. Now about 100 members belonged to the ILP, while 32 had actually been sponsored by it, as against 85 who had been sponsored by trade unions.... In Parliament, it could present itself for the first time as the movement of opinion rather than of class."
At a meeting of the Parliamentary Labour Party on 21st November, 1922, Emanuel Shinwell proposed Ramsay MacDonald should become chairman. David Kirkwood, a fellow Labour MP, commented: "Nature had dealt unevenly with them. She had endowed MacDonald with a magnificent presence, a full resonant voice, and a splendid dignity. Clynes was small, unassuming, of uneven features, and voice without colour." After much discussion, John R. Clynes received 56 votes to MacDonald's 61. Clynes, with characteristic generosity, declared that the whole party was determined to support the new leader.
Ramsay MacDonald was the dominant figure in the Labour movement in the early 1920s. Fenner Brockway argued: "Ramsay MacDonald was a born leader, with a commanding personality and a magnificent presence; the most handsome man in public life. He was a great orator who deep, resonant voice and sweeping gestures added to the force of his words." David Kirkwood agreed: "Ramsay MacDonald fascinated me. His head was a thing of beauty. Black hair waved and rolled over a fine brow, one curl almost touching his straight, strong eyebrows, from under which his eyes glowed. His voice was rugged, but soft, and, as he spoke, there came into it a throb. It was the natural instrument of an orator. Standing upright, he was a splendid figure of a man, and his appearance of height and strength was increased by his habit of rising on his toes and throwing back his head. He was the first man of culture I had met." However, Helen Wilkinson said she "loathed him... because... he was like a sultan always surrounded by women and she did not want to be one of the flies in the jam."
In the 1923 General Election, the Labour Party won 191 seats. Although the Conservative Party had 258 seats, Herbert Asquith announced that the Liberal Party would not keep the Tories in office. If a Labour Government were ever to be tried in Britain, he declared, "it could hardly be tried under safer conditions". On 22nd January, 1924 Stanley Baldwin resigned. At midday, MacDonald went to Buckingham Palace to be appointed prime minister. He later recalled how George V complained about the singing of the Red Flag and the La Marseilles, at the Labour Party meeting in the Albert Hall a few days before. MacDonald apologized but claimed that there would have been a riot if he had tried to stop it.
MacDonald agreed to head a minority government, and therefore became the first member of the party to become prime minister. He had the problem of forming a Cabinet with colleagues who had little, or no administrative experience. MacDonald's appointments included Philip Snowden (Chancellor of the Exchequor), Arthur Henderson (Home Secretary), John R. Clynes (Lord Privy Seal), Sidney Webb (Board of Trade) and Arthur Greenwood (Health), Charles Trevelyan (Education), John Wheatley (Housing), Fred Jowett (Commissioner of Works), William Adamson (Secretary for Scotland), Harry Gosling (Paymaster General), Vernon Hartshorn (Postmaster General), Emanuel Shinwell (Mines), Noel Buxton (Agriculture and Fisheries), Stephen Walsh (Secretary of State for War), Frank Hodges (Lord of the Admiralty), Ben Spoor (Chief Whip) and Sydney Olivier (Secretary of State for India).
MacDonald also took the post of foreign secretary but he had the capable Arthur Ponsonby as his deputy in the department. Both men had been strong opponents of the First World War. Ponsonby wrote to MacDonald: "The incredible seems about to happen. We are actually to be allowed by an extraordinary combination of circumstances to have control of the Foreign Office and to begin to carry out some of the things we have been urging and preaching for years."
George Lansbury was not offered a post in his Cabinet. MacDonald had not been fully supportive of the Poplar Councillors in their dispute with Stanley Baldwin and the London County Council since he thought that "public doles, Popularism, strikes for increased wages, limitation of output, not only are not Socialism but may mislead the spirit and policy of the Socialist movement."
John Wheatley, the new Minister of Health, had been a supporter of the Poplar Councillors. Edgar Lansbury wrote in The New Leader that he was sure that Wheatley would "understand and sympathise with them in this horrible problem of poverty, misery and distress which faces them." Lansbury's assessment was correct and as Janine Booth, the author of Guilty and Proud of It! Poplar's Rebel Councillors and Guardians 1919-25 (2009), has pointed out: "Wheatley agreed to rescind the Poplar order. It was a massive victory for Poplar, whose guardians had lived with the threat of legal action for two years and were finally vindicated."
MacDonald received a salary as prime minister of £5,000 a year. He received no entertainment allowance and had to pay out of own pocket for such items of household equipment as linen and china. To save coal, the family ate their meals not in their private quarters but in the official banqueting-rooms which were centrally heated at the Government's expense. He was also told that he had to wear a special uniform of black evening dress and knee breeches when he appeared before the king. The cost of this was £30 from Moss Brothers. He was told that if any of his cabinet ministers refused to wear this uniform they would not be allowed to attend official functions.
Desmond Morton, like other members of establishment, was appalled by the idea of a Prime Minister who was a socialist. As Gill Bennett pointed out: "It was not just the intelligence community, but more precisely the community of an elite - senior officials in government departments, men in "the City", men in politics, men who controlled the Press - which was narrow, interconnected (sometimes intermarried) and mutually supportive. Many of these men... had been to the same schools and universities, and belonged to the same clubs. Feeling themselves part of a special and closed community, they exchanged confidences secure in the knowledge, as they thought, that they were protected by that community from indiscretion."
Two days after forming the first Labour government MacDonald received a note from General Borlass Childs of Special Branch that said "in accordance with custom" a copy was enclosed of his weekly report on revolutionary movements in Britain. MacDonald wrote back that the weekly report would be more useful if it also contained details of the "political activities... of the Fascist movement in this country". Childs wrote back that he had never thought it right to investigate movements which wished to achieve their aims peacefully. In reality, MI5 was already working very closely with the British Fascisti, that had been established in 1923. Maxwell Knight was the organization's Director of Intelligence. In this role he had responsibility for compiling intelligence dossiers on its enemies; for planning counter-espionage and for establishing and supervising fascist cells operating in the trade union movement. This information was then passed onto Vernon Kell, Director of the Home Section of the Secret Service Bureau (MI5). Later In Kell placed in charge of B5b, a unit that conducted the monitoring of political subversion.
As MacDonald had to reply on the support of the Liberal Party, he was unable to get any socialist legislation passed by the House of Commons. The only significant measure was the Wheatley Housing Act which began a building programme of 500,000 homes for rent to working-class families. The legislation involved developing a partnership between political parties, local authorities and specially appointed committees of building employees and employers. The plan was to build 190,000 new council houses at modest rents in 1925, and that this figure would gradually increase until it reached 450,000 in 1934.
As Ian S. Wood has pointed out: "Wheatley's Housing (Financial Provisions) Act was the only major legislative achievement of the 1924 Labour government. Until its subsidy provisions were repealed by the National Government in 1934, a substantial proportion of all rented local authority housing in Britain was built under its terms and sixty years later there were still people in Scotland who spoke of Wheatley houses. The act was a complex one, bringing together trade unions, building firms, and local authorities in a scheme to tackle a housing shortage which was guaranteed central government funding provided that building standards set by the act were adhered to. The act did little for actual slum clearance but it hugely enhanced Wheatley's reputation despite the loss of a companion measure, the Building Materials Bill, which would have given central government a wide range of controls over supplies of building materials to local councils operating the Housing Act."
When MacDonald became prime minister he invited Margaret Sackville to stay the night with him at Chequers, the premier's official residence in Buckinghamshire. He had little time now for romance and their meetings became more infrequent. Later he wrote that she owed him a letter. "Perhaps you are dead; perhaps you are playing chess; perhaps you have fallen in love; but whatever has happened to you, I had better be wary and not intrude without sending in my card."
On 25th July 1924 John Ross Campbell published an "Open Letter to the Fighting Forces" in the Worker's Weekly newspaper that had been written anonymously by Harry Pollitt, the leader of the Communist Party of Great Britain (CPGB). The article called on soldiers to "let it be known that, neither in the class war nor in a military war, will you turn your guns on your fellow workers". Sir Patrick Hastings, the Attorney General, initially advised Ramsay MacDonald, to prosecute Campbell under the Incitement to Mutiny Act 1797. However, Hastings later changed his mind because he was "a man of otherwise excellent character with a fine war record." The opposition parties accused the minority Labour government of being under the influence of the CPGB.
In September 1924 the MI5 intercepted a letter written by Grigory Zinoviev, chairman of the Comintern in the Soviet Union. The Zinoviev Letter urged British communists to promote revolution through acts of sedition. Vernon Kell, head of MI5 and Sir Basil Thomson head of Special Branch, told MacDonald that they were convinced that the letter was genuine.
While this was going on MacDonald faced a motion of no confidence in the House of Commons over the way he had dealt with the John Ross Campbell case. In the debate that took place on 8th October, MacDonald gave an unispiring account of events and when he lost the motion by 304 to 191 votes, he decided to resign and a general election was announced for Wednesday, 29th October, 1924.
It was initially agreed that the Zinoviev Letter should be kept secret. However, just before the election, someone leaked news of the letter to the Times and the Daily Mail. The letter was published in these newspapers four days before the 1924 General Election and contributed to the defeat of MacDonald. The Conservatives won 412 seats and formed the next government. With his 151 Labour MPs, MacDonald became leader of the opposition in the House of Commons.
Following Labour's defeat in the 1924 General Election, Philip Snowden and other leading figures in the movement tried to persuade Arthur Henderson to stand against MacDonald as leader of the party. Henderson refused and once again became chief whip of the party where he tried to unite the party behind MacDonald's leadership. Henderson was also the main person responsible for Labour and the Nation, a pamphlet that attempted to clarify the political aims of the Labour Party.
MacDonald continued with his policy of presenting the Labour Party as a moderate force in politics and refused to support the 1926 General Strike. MacDonald argued that strikes should not be used as a political weapon and that the best way to obtain social reform was through parliamentary elections. He was especially critical of A. J. Cook. He wrote in his diary: "It really looks tonight as though there was to be a General Strike to save Mr. Cook's face... The election of this fool as miners' secretary looks as though it would be the most calamitous thing that ever happened to the T.U. movement."
By 1928 MacDonald was 62 years old. He wrote in his diary: "How tired I am. My brain is fagged, work is difficult, and there is a darkness on the face of the land. I am ashamed of some speeches I have made, but what can I do? I have no time to prepare anything. It looks as though it will be harder to make my necessary income this year. I wonder how this problem of an income for political Labour leaders with no, or small, independent means is to be solved. No one seems to understand it. To be the paid servant of the State is objectionable; to begin making an income on Friday afternoon and going hard at it till Sunday night, taking meetings in the interval, is too wearing for human flesh and blood. On the other hand, to live on £400 a year is impossible. If it killed one in a clean, efficient business-like way why should one object, but it cripples and tortures first by lowering the quality of work done and then by pushing one into long months of slowly ebbing vitality and mental paralysis."
Others felt that MacDonald had lost his radical drive. Beatrice Webb wrote: "MacDonald is not working at his job; he is not thinking about it; he is not associating with those whom he has and would have to guide and from whom he could get enlightenment. His thoughts and his emotions are concentrated on his agreeable relations with the men and women - especially the women of the enemy's camp... he is becoming impatient with the troublesomeness of the working class."
MacDonald's moderate image was popular with the voters and he was expected to lead his party to victory in the 1929 General Election. However, some thought that the party needed to promise more dramatic reform. Richard Tawney sent a letter to the leaders of the party: "If the Labour Election Programme is to be of any use it must have something concrete and definite about unemployment... What is required is a definite statement that (a) Labour Government will initiate productive work on a larger scale, and will raise a loan for the purpose. (b) That it will maintain from national funds all men not absorbed in such work." MacDonald refused to be persuaded by Tawney's ideas and rejected the idea that unemployment could be cured by public works.
During the election campaign, David Lloyd George, the leader of the Liberal Party, published a pamphlet, We Can Conquer Unemployment, where he proposed a government scheme where 350,000 men were to be employed on road-building, 60,000 on housing, 60,000 on telephone development and 62,000 on electrical development. The coast would be £250 million, and the money would be raised by loan. John Maynard Keynes, the country's leading economist, also published a pamphlet supporting Lloyd George's scheme.
In the 1929 General Election the Conservatives won 8,664,000 votes, the Labour Party 8,360,000 and the Liberals 5,300,000. However, the bias of the system worked in Labour's favour, and in the House of Commons the party won 287 seats, the Conservatives 261 and the Liberals 59. MacDonald became Prime Minister again, but as before, he still had to rely on the support of the Liberals to hold onto power. Egon Ranshofen-Wertheimer wrote: "In the slums of the manufacturing towns and in the hovels of the countryside he (MacDonald) has become a legendary being - the personification of all that thousands of downtrodden men and women hope and dream and desire... he is the focus of the mute hopes of a whole class."
MacDonald's appointments included Philip Snowden (Chancellor of the Exchequor), Arthur Henderson (Foreign Secretary), Charles Trevelyan (Education), Jimmy Thomas (Lord Privy Seal), John R. Clynes (Home Secretary), Arthur Greenwood (Health), Sidney Webb (Secretary of State for the Colonies), Noel Buxton (Agriculture and Fisheries), William Adamson (Secretary for Scotland), John Sankey (Lord Chancellor), George Lansbury (First Commissioner of Works), Herbert Morrison (Transport), William Graham (President of the Board of Trade), Tom Shaw (Secretary of State for War), Earl De La Warr (Under-Secretary of State for War), Emanuel Shinwell (Financial Secretary to the War Office), Frederick Pethick-Lawrence (Financial Secretary to the Treasury), Hugh Dalton (Under-Secretary of State for Foreign Affairs), Lord Thompson (Secretary of State for Air), Hastings Lees-Smith (Postmaster General), Arthur Ponsonby (Under-Secretary of State for Dominion Affairs), Susan Lawrence (Parliamentary Secretary to the Ministry of Health), William Wedgwood Benn (Secretary of State for India), Albert Alexander (First Lord of the Admiralty), Margaret Bondfield (Minister of Labour), Frederick Roberts (Minister of Pensions) and Oswald Mosley (Chancellor of the Duchy of Lancaster).
MacDonald refused to ask John Wheatley office to join the government: Philip Snowden later recalled: "During the time we had been in Opposition (1925-29), Wheatley had dissociated himself from his former Cabinet colleagues, and had gone to the back benches into the company of the Clydesiders. In the country, too, he had made speeches attacking his late colleagues. MacDonald was strongly opposed to offering him a post in the new Government. Wheatley had deserted us and insulted us, and MacDonald thought the country would be shocked if he were included in the Cabinet, and it would be taken as evidence of rebel influence." However, Arthur Henderson, disagreed with MacDonald. So did Snowden, who argued: "Arthur Henderson took the view, and I was inclined to agree with him, that it might be better to have him inside than outside. I took this view from my experience of him as a Minister. he was a man who, when free from the responsibility of office, would make extreme speeches; but as a Minister I had always found him to be reasonable and practical."
The election of the Labour Government coincided with an economic depression and MacDonald was faced with the problem of growing unemployment. In January 1929, 1,433,000 people were out of work, a year later it reached 1,533,000. By March 1930, the figure was 1,731,000. In June it reached 1,946,000 and by the end of the year it reached a staggering 2,725,000. That month MacDonald invited a group of economists, including John Maynard Keynes, J. A. Hobson, George Douglas Cole and Walter Layton, to discuss this problem. However, he rejected all those ideas that involved an increase in public spending.
In January 1930 Oswald Mosley proposed a programme that he believed would help deal with the growing problem of unemployment in Britain. According to David Marquand: "It made three main assertions - that the machinery of government should be drastically overhauled, that unemployment could be radically reduced by a public-works programme on the lines advocated by Keynes and the Liberal Party, and that long-term economic reconstruction required a mobilisation of national resources on a larger scale than has yet been contemplated. The existing administrative structure, Mosley argued, was hopelessly inadequate. What was needed was a new department, under the direct control of the prime minister, consisting of an executive committee of ministers and a secretariat of civil servants, assisted by a permanent staff of economists and an advisory council of outside experts."
MacDonald passed the Mosley Memorandum to a committee consisting of Philip Snowden, Tom Shaw, Arthur Greenwood and Margaret Bondfield. The committee reported back on 1st May. Mosley's administrative proposals, the committee claimed "cut at the root of the individual responsibilities of Ministers, the special responsibility of the Chancellor of the Exchequer in the sphere of finance, and the collective responsibility of the Cabinet to Parliament". The Snowden Report went onto argue that state action to reduce unemployment was highly dangerous. To go further than current government policy "would be to plunge the country into ruin".
MacDonald recorded in his diary what happened when Oswald Mosley heard the news about his proposals on 19th May: "Mosley came to see me... had to see me urgently: informed me he was to resign. I reasoned with him and got him to hold his decision over till we had further conversations. Went down to Cabinet Room late for meeting. Soon in difficulties. Mosley would get away from practical work into speculative experiments. Very bad impression. Thomas light, inconsistent but pushful and resourceful; others overwhelmed and Mosley on the verge of being offensively vain in himself."
At a meeting of Labour MPs took place on 21st May where Oswald Mosley outlined his proposals. This included the provision of old-age pensions at sixty, the raising of the school-leaving age and an expansion in the road programme. Arthur Henderson appealed to Mosley to withdraw his motion so that his proposals could be discussed in detail at later meetings. Mosley insisted on putting his motion to the vote and was beaten by 210 to 29.
In a debate in the House of Commons on 28th May 1930, MacDonald argued that the rise in unemployment was caused by factors outside the government's control. The public disagreed and the Labour Party suffered several by-election defeats. MacDonald wrote in his diary that the "party is showing signs of panic". He added that "Mosley is hard at work capturing the party".
David Marquand argues in his book of Ramsay MacDonald (1977) that he faced a serious dilemma: "Should the Government after all embark on a big public-works programme, financed by loan? If not, what should it do instead? Was there a halfway house, somewhere between the Mosley memorandum on the one hand and the Snowden report on the other? How could the Government's existing public-works expenditure be made more effective, and the delays in implementing its decisions be cut down?... He was profoundly sceptical about the public-works solution advocated by Mosley and Lloyd George, not least because of the sweeping claims they made for it, but he was at least sceptical of the dogmatic negatives of his chancellor (Snowden).
MacDonald did give approval for several public-works projects. By June 1930 the projects were valued at £44 million. Vernon Hartshorn, who had been put in charge of these projects, estimated that the total number employed directly and indirectly as a result of this investment, would be about 150,000. The prime minister admitted in his diary on 24th June that this was not enough: "Unemployment is baffling us for the moment. Up 110,000 in a fortnight. Nothing can dam the flow at the moment."
Philip Snowden wrote in his notebook on 14th August that "the trade of the world has come near to collapse and nothing we can do will stop the increase in unemployment." He was growing increasingly concerned about the impact of the increase in public-spending. At a cabinet meeting in January 1931, he estimated that the budget deficit for 1930-31 would be £40 million. Snowden argued that it might be necessary to cut unemployment benefit. Margaret Bondfield looked into this suggestion and claimed that the government could save £6 million a year if they cut benefit rates by 2s. a week and to restrict the benefit rights of married women, seasonal workers and short-time workers.
In March 1931 MacDonald asked Sir George May, to form a committee to look into Britain's economic problems. The committee included two members that had been nominated from the three main political parties. At the same time, John Maynard Keynes, the chairman of the Economic Advisory Council, published his report on the causes and remedies for the depression. This included an increase in public spending and by curtailing British investment overseas.
Philip Snowden rejected these ideas and this was followed by the resignation of Charles Trevelyan, the Minister of Education. "For some time I have realised that I am very much out of sympathy with the general method of Government policy. In the present disastrous condition of trade it seems to me that the crisis requires big Socialist measures. We ought to be demonstrating to the country the alternatives to economy and protection. Our value as a Government today should be to make people realise that Socialism is that alternative."
When the May Committee produced its report in July, 1931, it forecast a huge budget deficit of £120 million and recommended that the government should reduce its expenditure by £97,000,000, including a £67,000,000 cut in unemployment benefits. The two Labour Party nominees on the committee, Arthur Pugh and Charles Latham, refused to endorse the report. As David W. Howell has pointed out: "A committee majority of actuaries, accountants, and bankers produced a report urging drastic economies; Latham and Pugh wrote a minority report that largely reflected the thinking of the TUC and its research department. Although they accepted the majority's contentious estimate of the budget deficit as £120 million and endorsed some economies, they considered the underlying economic difficulties not to be the result of excessive public expenditure, but of post-war deflation, the return to the gold standard, and the fall in world prices. An equitable solution should include taxation of holders of fixed-interest securities who had benefited from the fall in prices."
The cabinet decided to form a committee consisting of MacDonald, Philip Snowden, Arthur Henderson, Jimmy Thomas and William Graham to consider the report. On 5th August, John Maynard Keynes wrote to MacDonald, describing the May Report as "the most foolish document I ever had the misfortune to read." He argued that the committee's recommendations clearly represented "an effort to make the existing deflation effective by bringing incomes down to the level of prices" and if adopted in isolation, they would result in "a most gross perversion of social justice". Keynes suggested that the best way to deal with the crisis was to leave the Gold Standard and devalue sterling. Two days later, Sir Ernest Harvey, the deputy governor of the Bank of England, wrote to Snowden to say that in the last four weeks the Bank had lost more than £60 million in gold and foreign exchange, in defending sterling. He added that there was almost no foreign exchange left.
Philip Snowden presented his recommendations to the MacDonald Committee that included the plan to raise approximately £90 million from increased taxation and to cut expenditure by £99 million. £67 million was to come from unemployment insurance, £12 million from education and the rest from the armed services, roads and a variety of smaller programmes. Arthur Henderson and William Graham rejected the idea of the proposed cut in unemployment benefit and the meeting ended without any decisions being made.
Frederick Pethick-Lawrence and Susan Lawrence both decided to resign from the government if the cuts to the unemployment benefit went ahead: Pethick-Lawrence wrote: "Susan Lawrence came to see me. As Parliamentary Secretary to the Ministry of Health, she was concerned with the proposed cuts in unemployment relief, which she regarded as dreadful. We discussed the whole situation and agreed that, if the Cabinet decided to accept the cuts in their entirety, we would both resign from the Government."
The cabinet met on 19th August but they were unable to agree on Snowden's proposals. He warned that balancing the budget was the only way to restore confidence in sterling. Snowden argued that if his recommendations were not accepted, sterling would collapse. He added "that if sterling went the whole international financial structure would collapse, and there would be no comparison between the present depression and the chaos and ruin that would face us."
The following day MacDonald and Snowden had a private meeting with Neville Chamberlain, Samuel Hoare, Herbert Samuel and Donald MacLean to discuss the plans to cut government expenditure. Chamberlain argued against the increase in taxation and called for further cuts in unemployment benefit. MacDonald also had meetings with trade union leaders, including Walter Citrine and Ernest Bevin. They made it clear they would resist any attempts to put "new burdens on the unemployed".
At another meeting of the Cabinet on 20th August, Arthur Henderson argued that rather do what the bankers wanted, Labour should had over responsibility to the Conservatives and Liberals and leave office as a united party. According to Malcolm MacDonald, the opposition to the cuts in public expenditure was led by Henderson, Albert Alexander and William Graham.
MacDonald went to see George V about the economic crisis on 23rd August. He warned the King that several Cabinet ministers were likely to resign if he tried to cut unemployment benefit. MacDonald wrote in his diary: "King most friendly and expressed thanks and confidence. I then reported situation and at end I told him that after tonight I might be of no further use, and should resign with the whole Cabinet.... He said that he believed I was the only person who could carry the country through."
According to Harold Nicolson, the King decided to consult the leaders of the Conservative and Liberal Parties. Herbert Samuel told the King that he should try and persuade MacDonald to make the necessary economies. Stanley Baldwin agreed and said he was willing to serve under MacDonald in a National Government.
After another Cabinet meeting where no agreement about how to deal with the economic crisis could be achieved, MacDonald went to Buckingham Palace to resign. Sir Clive Wigram, the King's private secretary, later recalled that George V "impressed upon the Prime Minister that he was the only man to lead the country through the crisis and hoped that he would reconsider the situation." At a meeting with Stanley Baldwin, Neville Chamberlain and Herbert Samuel MacDonald told them that if he joined a National Government it "meant his death warrant". According to Chamberlain he said "he would be a ridiculous figure unable to command support and would bring odium on us as well as himself."
On 24th August 1931 MacDonald returned to the palace and told the King that he had the Cabinet's resignation in his pocket. The King replied that he hoped that MacDonald "would help in the formation of a National Government." He added that by "remaining at his post, his position and reputation would be much more enhanced than if he surrendered the Government of the country at such a crisis." Eventually, he agreed to form a National Government.
MacDonald returned to 10 Downing Street and called his final Labour Cabinet. He told them that he had changed his mind about resigning and that he agreed to form a National Government. Sidney Webb recorded in his diary: "He announced this very well, with great feeling, saying that he knew the cost, but could not refuse the King's request, that he would doubtless be denounced and ostracized, but could do no other." When the meeting was over, he asked Philip Snowden, Jimmy Thomas and John Sankey to stay behind and invited them to join the new government. All three agreed and they kept their old jobs. Other appointments included Stanley Baldwin (Lord President of the Council), Neville Chamberlain (Health), Samuel Hoare (Secretary of State for India), Herbert Samuel (Home Office), Philip Cunliffe-Lister (Board of Trade) and Lord Reading (Foreign Office).
Morgan Philips Price commented: " I found Members delighted that Ramsay Macdonald, Philip Snowden and J. H. Thomas had severed themselves from us by their action. We had got rid of the Right Wing without any effort on our part. No one trusted Mr Thomas and Philip Snowden was recognized to be a nineteenth-century Liberal with no longer any place amongst us. State action to remedy the economic crisis was anathema to him. As for Ramsay Macdonald, he was obviously losing his grip on affairs. He had no background of knowledge of economic and financial questions and was hopelessly at sea in a crisis like this. But many, if not most, of the Labour M.P.s thought that at an election we should win hands down."
The Labour Party was appalled by what they considered to be MacDonald's act of treachery. Arthur Henderson commented that MacDonald had never looked into the faces of those who had made it possible for him to be Prime Minister. His close friend, Mary Hamilton, wrote on 28th August: "But greatly as I admire your courage, and ready as I am to believe your gesture may have saved us all, I could not, as I thought the whole situation out on my long journey home, find it possible to support this Government or believe in its policy. It is a very hard decision to make; and this afternoon's party meeting does not make it agreeable to act on - but, there it is. I felt I must write this line to express the deep regret I feel about this, temporary severance between you and the party."
MacDonald replied: "Whether you believe it or not, I have saved you, whatever the cost may be to me, but you are all quietly going on drafting manifestoes, talking about opposing cuts in unemployment pay and so on, because I faced the facts a week ago and damned the consequences... If I had agreed to stay in, defied the bankers and a perfect torrent of credit that had been leaving the country day by day, you would all have been overwhelmed and the day you met Parliament you would have been swept out of existence... Still I have always said that the rank and file have not always the same duty as the leaders, and I am willing to apply that now. I dare say you know, however, that for some time I have been very disturbed by the drift in the mind of the Party. I am afraid I am not a machine-made politician, and never will be, and it is far better for me to drop out before it will be impossible for me to make a decent living whilst out of public life."
On 8th September 1931, the National Government's programme of £70 million economy programme was debated in the House of Commons. This included a £13 million cut in unemployment benefit. Tom Johnson, who wound up the debate for the Labour Party, declared that these policies were "not of a National Government but of a Wall Street Government". In the end the Government won by 309 votes to 249, but only 12 Labour M.P.s voted for the measures.
The cuts in public expenditure did not satisfy the markets. The withdrawals of gold and foreign exchange continued. On September 16th, the Bank of England lost £5 million; on the 17th, £10 million; and on the 18th, nearly £18 million. On the 20th September, the Cabinet agreed to leave the Gold Standard, something that John Maynard Keynes had advised the government to do on 5th August.
On 26th September, the Labour Party National Executive decided to expel all members of the National Government including MacDonald, Philip Snowden, Jimmy Thomas and John Sankey. As David Marquand has pointed out: "In the circumstances, its decision was understandable, perhaps inevitable. The Labour movement had been built on the trade-union ethic of loyalty to majority decisions. MacDonald had defied that ethic; to many Labour activists, he was now a kind of political blackleg, who deserved to be treated accordingly."
The 1931 General Election was held on 27th October, 1931. MacDonald led an anti-Labour alliance made up of Conservatives and National Liberals. It was a disaster for the Labour Party with only 46 members winning their seats. Several leading Labour figures, including Arthur Henderson, John R. Clynes, Arthur Greenwood, Hastings Lees-Smith, Herbert Morrison, William Graham, Tom Shaw, Emanuel Shinwell, Frederick Pethick-Lawrence, Hugh Dalton, Susan Lawrence, William Wedgwood Benn, Albert Alexander, Margaret Bondfield and Frederick Roberts, lost their seats.
The Government parties polled 14,500,000 votes to Labour's 6,600,000. In the new House of Commons, the Labour Party had only 46 members, the Independent Labour Party 6 and the Lloyd George Liberals 4. George Lansbury, William Adamson, Clement Attlee and Stafford Cripps were the only leading Labour figures to win their seats. Lansbury was elected as the new leader and Attlee became his deputy.
MacDonald, now had 556 pro-National Government MPs and had no difficulty pursuing the policies suggested by Sir George May. The new Chancellor of the Exchequer was Neville Chamberlain. MacDonald was constantly attacked by the Labour movement. On 30th December 1912, MacDonald wrote to a friend: "In spite of their excommunications I am a member of the Labour movement, and would defy them and all their caucuses to turn me out of it. But what I should do would be to try to get the movement back to its proper position, and rescue it from being a glorified board of guardians."
MacDonald was now a prisoner of the Conservative Party. He opposed the administration of the Means Test to the unemployed but was powerless to object. He wrote in his diary that "deserted by Labour and Liberal parties, the National Government inevitably tends to fundamental Toryism." He wrote to Jimmy Thomas that "I am not at all happy about it, but a way out is hard to find".
MacDonald was now 67 years old and he now began to feel his age. He wrote in his diary in April 1933: "Trying to get something clear into my head for the House of Commons tomorrow. Cannot be done. Like man flying in mist: can fly all right but cannot see the course. Tomorrow there will be a vague speech impossible to follow." The following day he recorded: "Thoroughly bad speech. Could not get my way at all. The Creator might have devised more humane means for punishing me for over-drive and reckless use of body." One of his colleagues in the House of Commons remarked that we have "got to the stage where nobody knew what the Prime Minister was going to say in the House of Commons, and, when he did say it, nobody understood it".
Stanley Baldwin forced MacDonald to give Tory donors honours. He was especially upset by the case of Julian Cahn. He wrote in his diary: "Baldwin involves me in a scandal of honour by forcing me to give an honour because a man has paid £30,000 to get Tory headquarters and some Tories living and dead out of a mess."
On 7th June 1935, MacDonald went to see George V to tell him he was resigning as head of the National Government. The King said: "I wonder how you have stood it - especially the loss of your friends and their beastly behaviour. You have been the Prime Minister I have liked best; you have so many qualities, you have kept up the dignity of the office without using it to give you dignity."
Henry Channon commented in his diary: "I am glad Ramsay (MacDonald) has gone: I have always disliked his shifty face, and his inability to give a direct answer. What a career, a life-long Socialist, then for 4 years a Conservative Prime Minister, and now the defender of Londonderry House. An incredible volte-face. He ends up distrusted by Conservatives and hated by Socialists."
In the 1935 General Election MacDonald was challenged in Seaham by Emanuel Shinwell, a popular figure in the Labour Party. Shinwell won easily with 38,380 votes to MacDonald's 17,882. The following year he was elected at a by-election to represent the Scottish Universities and joined Stanley Baldwin's Conservative Cabinet as Lord President.
James Ramsay MacDonald died of heart-failure on a cruise in the Atlantic on 5th November, 1937.