Yet there were a number of problems with the policy. The countries that comprised the empire had industries of their own, which they naturally wished to protect. They had also suffered during the recent crash, and could hardly afford English exports. Moreover, after the successes of the Irish and Indian opposition to direct British rule, independence was in the air. In the end, the colonies and dominions agreed to increase tariffs on imports from other countries, but left tariffs on British imports at their former high level. The Tariff Reform scheme – which Tories had promoted over the previous three decades – turned out to have a minimal impact on the economy. With the price of its goods too high, English exports increased only slightly. Critics of protectionism suggested that the Tories were not so much attuned to economic reality as in thrall to ideology.
The damp squib of Tory protectionism did, however, have significant political consequences. It alienated the free-trade Liberals in the government, and MacDonald, who was himself unhappy about the policy, struggled to keep them on side. Desperate to maintain unity, he reminded the Tories that they had promised to participate in a coalition. His appeal was not heeded, and when the chancellor refused to dilute his protectionist policies, the free-trading Liberals left the administration, along with Snowden. MacDonald was now even more painfully aware of his position as leader of a de facto Tory government; he became increasingly anxious, ill and enfeebled. The pro-protectionist ‘National Liberal’ faction, meanwhile, remained in the government and would eventually merge with the Conservative party. The Tories absorbed the right wing of the Liberal party, just as Labour had absorbed the left.
The Conservatives now finally accepted protectionism as a permanent aspect of the modern economy. They proceeded to take London’s public transport into public ownership, and would later nationalize coal royalties. Chamberlain also ‘rationalized’ aspects of the agricultural sector, establishing marketing boards that guaranteed high prices for farmers and supporting them with lavish subsidies. The chancellor’s ‘socialist’ approach to the ‘shires’, which were after all the Tories’ traditional heartland, is less surprising than it first appears. It was as natural for Chamberlain to please the landowners and farmers as it was for him to reduce assistance to those who had lost their jobs – which he now proceeded to do, using the old argument that cuts would restore ‘confidence’ in the pound. There would be no ‘socialist’ planning for the unemployed.
22
The rituals of suburbia
None of the chancellor’s measures had any great impact on the economy; far more influential was the policy that the Tory party had fiercely opposed – that of abandoning the gold standard. The weaker pound meant that English exports were more competitively priced; as global trade slowly picked up, they started to sell again on the international market. The difficulty of devaluation was that, in normal circumstances, the price of imports was bound to increase; but these were not normal times. The collapse of commodity prices after 1929 ensured that England’s international payments became balanced again, while production increased significantly. Unemployment started to fall – slightly at first but then steadily, decreasing to 10 per cent in 1937. Naturally, the Tory chancellor claimed all the credit.
Abandoning the gold standard also meant that the currency no longer needed to be supported by high interest rates. The base rate of interest was reduced to approximately 2 per cent – it had been set at around 5 per cent throughout the Twenties. This made borrowing cheap, while also encouraging investment and spending. Although the Tory-dominated National Government was averse to borrowing and spending on public works, private investors and businesses took up the role. There was a housebuilding boom, which saw 40 per cent more houses built in 1934 than in 1929; well over 2 million houses were constructed by the end of the decade. For the first time in its history, England contained more houses than families. Most of the new dwellings were constructed in the suburbs of towns and cities in the south and the Midlands, or in the ‘rural’ suburbs of existing suburbs. Others were erected along the roads between towns, in a so-called ‘ribbon development’. Around London, Slough, Hayes, Kenton, Uxbridge, Hillingdon, Feltham and Kingsbury were all greatly enlarged; geographers compared the capital to a giant octopus stretching its tentacles into the countryside. Such was the rate of expansion that various movements for the preservation of open space and the countryside were established, while criticism of suburban ‘sprawl’ was widespread. Baldwin – one of the architects of the mess – lamented the destruction of the countryside, yet took no practical steps to stop it.
The housing boom was funded by private investment, since the National Government had terminated the housebuilding programme Labour had tried to revive with its 1930 Housing Act. With building regulations and restrictions minimal, and money cheap, construction companies borrowed to buy up land, which was then quickly covered with houses. Over the interwar period, private firms built over 600,000 houses in London, while local authorities subsidized the construction of only 150,000 of the capital’s new homes.
With interest rates low, lower-middleand upper-working-class people could afford new homes. ‘Cheap’ houses were made available to those on regular wages by building societies such as Halifax and Woolwich that had flourished after the Wall Street Crash. Eager to lend from their overflowing reserves, the building societies reduced the deposit they demanded from prospective buyers to as little as 2 per cent. A new London house that cost £800 could be acquired with a deposit of £25, with the remaining debt paid off at an interest rate of 3 per cent; the government also offered tax relief on interest payments. Since there was little council housing available, the lower middle and upper working classes were compelled to take on debt to purchase houses. By the late Thirties, clerks, shopkeepers, foremen, postal workers, transport workers and teachers owned property, as did a fifth of manual workers. By 1938, 4 million people possessed a house, compared to less than 1 million fifteen years before. Thus the Tories continued to create a vast constituency of indebted suburbanites.
The new homes were filled with furniture and appliances. Goods acquired on ‘hire purchase’ would be delivered by an anonymous van, to spare the blushes of those who did not wish their neighbours to know they had bought them ‘on tick’. Yet many families possessed enough money to buy goods without having to borrow it, despite – or perhaps because of – the economic depression. The great paradox of the crisis, and the chief reason the English economy was able to recover from it, was that it left many people with more money in their pockets. For while wages had been falling since 1929, the purchasing power of those wages increased as a result of plummeting prices. Real wages were 10 per cent higher in the midst of the depression than they had been before it, and the margin of income left over after a family’s basic needs had been met was consequently larger. In 1938 a British family had double the income of a family in 1914, in real terms, and, with the size of families decreasing, income per head was almost 70 per cent higher. Increased family income, at a time when money could be borrowed cheaply, funded a national spending spree on houses, household goods and services.
The sudden emergence of a domestic consumer market in England meant that manufacturing and tertiary industries flourished, and new mass production processes enabled manufacturers to meet the increased demand. The cost of raw materials was now lower, as was the cost of the unskilled labour force required to oversee the machines, which kept prices down. The chemical industry was one of the strongest performers in the period. It produced pharmaceutical goods, fertilizers, artificial fibres for synthetic clothes, and plastics such as Bakelite, which were used for countless household appliances. The car industry also expanded rapidly, with assembly-line mass production turning out over half a million cars annually by 1937. Prices decreased as the decade went on, and by 1939 over 2 million British people owned private cars. In Longbridge and Oxford, Austin and Morris motors provided employment for thousands of people, whose wages could be spent on more goods, thus further stimulating the economy.