<html> <head><style type ="text/css">body { font-family: "Bloomberg Prop Unicode I", Verdana, sans-serif; font-size:125%; letter-spacing: -0.3pt; color: #FF9F0F; background-color: #000000; text-align: left; } p {line-height: 1.25em; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" );} h1, h2, h3 { text-align: left; font-weight: normal; color: #FFFFFF; } h1 { font-size: 130%; } h2 { font-size: 115%; } h3 { font-size: 100%; } #bb-style { font-size: 90%; max-width:900px; width:expression(document.body.clientWidth > 900? "900px": "auto" ); } b, strong { font-weight: bold; } i, em { color: #FEC54A; } pre { font-family: "Andale Mono", "Monaco", "Lucida Console"; letter-spacing: -0.3pt; line-height: 1.25em; } table { border: 0; font-size: 90%; width: 100%; margin-left: auto; margin-right: auto; } td, tr { text-align: left; } td.numeric { text-align: right; } a:link { color:#53B2F5; text-decoration: none; } a:visited {color:#53B2F5} a:active {color:#53B2F5} a:hover {color:#53B2F5} </style> </head> <body> <p>By Philip Scranton</p> <p>In 1931, Britain’s parliamentarians had created a coalition "National Government," partly to address deep divisions the Great Depression had opened among members of the Labour Party, whose plurality in the 1929 elections brought Ramsay MacDonald to No. 10 Downing Street.</p> <p>Economic stress paralyzed the cabinet, however, as key leaders refused to accept a budget-cutting austerity program while others rejected deficit spending or revenue increases through tariffs. (Britain had long been the champion of free trade -- no taxes on imported goods.)</p> <p>The impasse led the prime minister to forge an alliance with Conservatives in early fall and to push for new elections, thus taking "the temperature of the nation."</p> <p>Responding to this unprecedented move, the Labour Party expelled MacDonald, deepening its divisions. Returns from the Oct. 27 poll devastated Labour, handing Conservatives 476 of the parliament’s 615 seats and earning them a clear majority (55 percent) of all votes cast for the only time in the 20th century.</p> <p>Although foreign-policy issues remained significant (with “Winston Churchill preaching the gospel of Kipling” and empire, as the New York Times put it), British interests at the time were centrally economic. And they depended, as the International Herald Tribune wrote, "on a policy of peace.” Unquestionably, British decisions would deeply affect the economic prospects of the U.S. -- and the world.</p> <p>Government instabilities increasingly mirrored market volatility as the Depression deepened. In Spain, rioting accompanied the transition from a military dictatorship to a republic. Germany struggled through a series of elections, as support for the National Socialists ebbed and flowed. In France, elections brought stalemate, yielding ineffective coalition governments divided between inflationary and stand-pat policies; in two years, the turbulent Third Republic had five premiers.</p> <p>And in the U.S., as we shall see, 1932 brought an epic confrontation between Herbert Hoover, with engineering and managerial expertise, and Franklin D. Roosevelt, a smiling but tough-minded "aristocrat" with a long political pedigree. All in all, the year ahead would be full of surprises. We'll be documenting it here throughout 2012.</p> <p>(Philip Scranton is a Board of Governors Professor of the History of Industry and Technology at the University of Rutgers at Camden and the editor-in-chief of Enterprise and Society. He writes "This Week in the Great Depression" for the Echoes blog. The opinions expressed are his own.)</p> <p>To contact the author of this blog post: Philip Scranton at scranton@camden.rutgers.edu.</p> <p>To contact the editor responsible for this blog post: Timothy Lavin at tlavin1@bloomberg.net.</p> <p><br class="spacer_"></p> </body> </html>