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Labour versus Conservatives to 1925

Britain's strategy for economic recovery was frugality in spending by the government and by the public. Britain's military was held at minimum strength – nearly 3.7 million men having been demobilized after the war. Britain continued its social programs for the sick, elderly and children – introduced by the Liberal Party before the war. These programs helped the truly needy as the country struggled to rebuild its economy.

David Lloyd George (Lloyd George his surname) had been prime minister since 1916, and after the war his coalition government broke up thousands of estates, large and small. Young men from estate-owning families had been decimated during the war, and Britain's estate-owning families were losing their influence.

In foreign affairs, Lloyd George's government tried to make it easier for Germany to make its reparation payments. And his government agreed that Russia should be brought back into the European community of nations. But regarding Turkey's defeat in the Great War, the British government supported an enlarged Greece – Greece having been Britain's ally in the World War. The Greeks were fighting the Turks again. Lloyd George supported independence for the Greeks in western Asia Minor. But the Turkish leader Kemal Ataturk advanced against the Greek forces in Turkey, and he destroyed the Greek army.

Support for Lloyd George's government weakened following his failed policy concerning the Greeks and an economic downturn and wave of strikes in 1921. There were complaints from conservatives that he had been selling knighthoods and peerages. There were also conservatives who had been angered by his having granted independence to the Irish Free State. Some in Britain had become uncomfortable with Lloyd George's personality and character. Conservatives abandoned their coalition with the Liberal Party and in October 1922 Lloyd George resigned.

A general election held toward the end of October resulted in the election of 347 conservatives to Parliament. Labour won 142 seats – up from 59 in 1918 – and Britain's Communists demonstrated their weakness by winning only two seats. A conservative government was formed.

Over a year later, at the end of 1923, new elections were held. Conservative seats in parliament dropped to 258 and seats for the Labour Party rose to 191. Labour was invited by the king to form a minority government, one that lacked a majority in Parliament and would be reliant on support from various members of the Liberal Party. Labor was led by Ramsay MacDonald a former anti-war activist, the illegitimate son of a Scottish farm laborer and a housemaid. The fading of wartime passions had helped MacDonald. But there were conservatives who feared that the new MacDonald government would be influenced by Moscow. A few investors panicked and sold their investments, and some investors in the US sold their British stocks.

MacDonald was a socialist, a democratic socialist, the kind of socialism that Lenin had opposed – the split in the socialist movement that many did not notice. By 1922 MacDonald had moved away from the wave of radicalism that had swept through the labor movement in the wake of the Russian Revolution. He disliked the Bolsheviks.

MacDonald was Britain's first Labour prime minister, first socialist prime minister, the first from a working-class background and one of the few who did not have a university education. In his diary, King George V wrote, "Today 23 years ago dear Grandmama [Queen Victoria] died. I wonder what she would have thought of a Labour Government!" King George still wanted to be known as king of the common people. When inviting MacDonald to form a government, MacDonald worried about being proper in dress and manner and being able to work with the king. King George has been described as receiving MacDonald with tact and understanding and allaying the suspicions of Labour Party supporters.

The radical legislation that some had expected with a MacDonald government did not happen. MacDonald's big interest was to undo the damage done by Treaty of Versailles. He wanted to settle the reparations issue and come to terms with Germany. He brought together wartime allies for a conference in London in June 1924, where an agreement was concluded for a new plan on the reparations issue and France's occupation of Germany's Ruhr region. German delegates then joined the meeting, and the "London Settlement" was signed. This was followed by a commercial treaty between Britain and Germany, and in July and August another conference was held to implement the Dawes Plan that further addressed the reparations issue.

Regarding Britain's economy, the MacDonald government increased spending on building public housing – housing with controlled rents. His government worked at improving unemployment benefits. Government spending rose to 12 percent of the nation's income, compared to five percent before the war. There were no major labour strikes, and MacDonald acted swiftly to end strikes that did arise. He argued that public doles, strikes for increased wages, and limitations in output were not Socialism and "may mislead the spirit and policy of the Socialist movement." note23

MacDonald's trade agreement with Lenin's government came under attack, and his government lasted only nine months as conservatives were claiming of a new Communist threat. The conservatives used a letter purported to have been from the Communist Internationale in Moscow and addressed to British Communists. The letter described the recent trade agreement between Britain and the Soviet Union as advancing the prospects for revolution in Britain. The letter is believed to have been a forgery. Whether the letter had a significant impact on voters remains debatable. At any rate, Labour lost the elections because of a middle-class swing to conservative candidates. The Conservative Party won 415 seats, and a new government was formed by Stanley Baldwin, a conservative from a wealthy industrialist family. Baldwin had campaigned on the "impracticability" of socialism and in reference to the Comintern letter had complained that it was time somebody said to Russia "Hands of England."

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