Unemployment hit the trade union movement hard, with falling numbers of members and a greater proportion of the wages of those in work going to support their unemployed brothers and sisters. However, until 1931 the movement had few alternatives to propose, and generally felt that the Labour government was doing its best — certainly no other party would do better — and that in general economic decisions were beyond its remit. But Keynes’ attack on the Gold Standard, and the suspicion that Treasury economic orthodoxy was likely to result in a call for wage cuts, led Bevin and Citrine to decide that it was important that the TUC General Council should formulate its position. An Economic Committee was set up, and Bevin and Citrine drew on their experience on government-sponsored committees to call for the nationalisation of the Bank of England (still a private corporation independent of the government, despite its responsibility for the nation’s monetary policy), iron and steel, leaving the Gold Standard and increasing government spending to increase purchasing power — very much what Keynes was also saying. If the TUC as a body was slower to develop an alternative economic strategy than its more unorthodox leaders — though by 1932 the Economic Committee had become its most influential policy body, particularly on the public control of industry and trade — defensive in the face of the growing possibility of wage cuts and calling for ‘as full a development as possible of the economic relations between the constituent parts of the British Commonwealth’, the government was equally unresponsive to trade union pressure.
By August 1930 Bevin was in despair. He considered the situation so serious ‘that it warrants a state of emergency. The best brains in the country should be mobilised for the purpose of really tackling the problem instead of “footling about” in the manner we are at the moment.’ In early 1931 he joined with some of these ‘best brains’ as Chairman of the Society for Socialist Inquiry and Propaganda (SSIP — usually referred to as ‘zip’), with the former Fabian G.D.H. Cole as Vice Chairman, one of two bodies set up in an attempt to ‘ginger up’ thinking and activity in the Labour Party and provide it with the nuts and bolts of socialist policy, as Cole was convinced that the government was mired in a ‘stagnant swamp’ and unable to act.
The other body, the New Fabian Research Bureau (NFRB) (since, according to Cole’s wife Margaret, the old one was becoming ‘moribund’), was tasked with considering all areas of long-term socialist policy, while the SSIP’s role was to diffuse its findings and stimulate discussion in the wider labour movement. G.D.H. Cole’s intention was to ‘rally the young men, among whom there is some excellent stuff’, and indeed both were organisations of all the talents (and not all young or male). Apart from the Coles, participants included Stafford Cripps, a lawyer of great intellectual repute — and earning power — who was wished on a Bristol constituency as its MP in January 1931; George Lansbury; Ellen Wilkinson, the MP for Jarrow; Clement Attlee, who fourteen years later would be Prime Minister in the Labour government that would implement much of what these bodies advocated; the erratically brilliant Harold Laski; the economist Evan Durbin; another economist, the apprentice politician Hugh Gaitskell (‘the cleverest and most self-contained of the young men Dalton advanced’); Arthur Pugh, General Secretary of the Iron and Steel Trades Association (who, together with Bevin, represented over half a million workers); and Leonard Woolf, husband of Virginia, who organised the international section.
Never intended as ‘parties within a party’ (as the ILP was charged with being), these two bodies were rather a collection of ‘loyal grousers’, several of whom would metamorphose into ‘patriotic gadflies’ during the Second World War. They were astonishingly industrious, arranging meetings, discussions and ‘kite-flying’ (today’s ‘out of the box’ or ‘blue skies’ thinking) sessions, educational meetings for students and trade unionists, and summer schools, in addition to producing a large number of influential books, booklets, pamphlets and memoranda, full of sound analysis and helpful advice. But for some time the government was politely but firmly dismissive of their efforts, and their penetration of the Labour machine proved to be almost as gradual as any old Fabian might have anticipated.
Hugh Dalton, appalled at how woefully ignorant he felt the Labour Party was about the workings of high finance, set out to meet ‘as many City blokes as possible’ in an attempt to fill in the blanks. One of these was Nicholas Davenport, who had worked with Keynes in the City and wrote the City column in the New Statesman under the byline ‘Toreador’. Although ‘all the claptrap of Clause 4 socialism’ was not for him, Davenport considered himself to be a radical, and he was certainly an iconoclast when it came to the workings — or failures to work — of the City. He would look back on the 1930s as a time when ‘the City’s Establishment was … in effect an old boys’ racket … It was a sort of Mafia in reverse — a gang based on honest dealing instead of blackmail, on good “hard” money (lots of it) instead of easy loot and on simplicity instead of cunning. The only rules were playing safe, resisting change, opposing new ideas, upholding the Establishment and being willing to dress up and go on pompous dinner parade in the City halls … the millions spent each year on guzzling [at these] junketings would amaze the underprivileged and enrage the poor.’
Davenport was alarmed that ‘Because the Labour Party was so ignorant of the workings of the financial system … it was bound to cause havoc if it tried to put it all under government control.’ He discussed this possibility ‘many times over coffee in City dives’ with Vaughan Berry, a City broker who was ‘an ardent undercover Labour member’, and the two decided to form ‘a private dining club where City men could meet the Labour leaders and instruct them in the mysteries of City finance so that they would not make a hash of it when they came into power’. Dalton was encouraging, and Davenport recruited a number of financial journalists, a banker, a stockbroker, an accountant, a statistician, the director of a gold bullion house, and later two economic policy perennials, Evan Durbin and Hugh Gaitskell, plus Douglas Jay, who would be an influential — and profoundly anti-European — advisor to Attlee’s post-war Labour government, but was then a staff writer on the Economist.
The private dining club, named the XYZ, met fortnightly or monthly in a room above a pub ‘over a City alley deserted by night’, in the private rooms of quiet Soho restaurants, a Charing Cross hotel, or in members’ homes, depending on whose memoirs one reads, but always in great secrecy. Dalton, Herbert Morrison, Stafford Cripps and Attlee, all of whom except Cripps were ‘sublimely ignorant of the City and suspicious of its institutions, especially the Stock Exchange which they regarded as a casino where rich men gambled to make money regardless of the state of the economy’, were wined and dined so that what Dalton rather grandly called ‘my experts’ could attempt to ‘enlighten them and exorcise the ghosts of Puritan bigotry and prejudice which haunted them’. Dalton’s experts wrote papers and produced statistics on such matters as nationalising the Bank of England and the reform of the Stock Exchange, and advocated setting up a National Investment Board and an Industrial Finance Corporation.
‘I like to think we did some good,’ Davenport reflected forty years later, and quoted one of their number, Francis Williams, who had been City editor of the Labour-supporting Daily Herald at the time, and later took over as editor, assuming the role of Attlee’s press spokesman after the war, who reckoned that ‘Over the years, the XYZ Club drew up a blueprint for Labour’s financial policy much of which … was adopted by the first postwar Labour government … [which it did] in the most private manner without attracting attention to itself.’ But useful though that surely was, neither the XYZ Club nor any of the other think tanks, committees and ginger groups managed to find any immediate solution to the problem of conquering (or tackling, as the word had less ambitiously become) unemployment.
‘In the chaos of our political life today, there will be many meteors passing through the firmament,’ wrote Beatrice Webb in her diary, with little enthusiasm at the prospect. ‘Have there ever been so many political personages on the loose?’ Mrs Webb was particularly thinking of Sir Oswald Mosley and Winston Churchill, but there were other unaligned souls out there on the loose with notions of how to conquer, tackle, solve the problem of ever-rising unemployment. The Fabian and best-selling novelist H.G. Wells thought there might be some mileage in a scheme to ‘grow vines and produce white wine on the slopes of the hills in the South Wales mining area — as they do in Grasse in