Rehabilitating Ramsay: how Theresa May’s predicament redeems a forgotten Prime Minister

23 Jan 2019

 

Having been rejected by a margin of 230 votes, Theresa May’s Brexit deal is dead. To get a deal through parliament Mrs May requires the support of Labour MPs. However, any deal palatable to Labour risks splitting the Prime Minister’s own party. Faced with a national crisis unprecedented in Britain’s peacetime, she has a simple choice: party or country?

 

Yet, Mrs May dithers, “decided only to be undecided, resolute to be irresolute, adamant for drift” (to steal Churchill’s words). Despite knowing each group has irreconcilable demands, only resolvable by a party-splitting customs union, she continues with pointless discussions.

 

Perhaps the only beneficiary of her indecision is the reputation of a long forgotten prime minister, the last prime minister to suffer as crushing a Commons defeat - Ramsay MacDonald. Even then the margin was a paltry 166. If Mrs May wants a way out, she should regard his example.

 

Born in Lossiemouth, Scotland, in 1866 , the illegitimate son of Anne Ramsay and James MacDonald, Ramsay MacDonald was Labour’s first prime minister. In charge of a tumultuous minority government, in 1924 he suffered the ignominy of three Commons defeats by record-breaking margins. The government lasted only nine months and was thrown out by a Conservative landslide of 412 seats.

 

MacDonald was not done yet, however. His “imposing presence… and persuasive oratory” ensured his political survival. Within five years, he returned, leader of another minority government. The difficulties of his first administration would pale in comparison to those of his second. He had hardly taken the helm when the first waves of the Great Depression erupted on Britain’s shores.

 

The US stock market had crashed, causing a collapse in world trade. By the end of the following year, 1930, British industrial production fell by 20% as unemployment rose to 20%, putting two million men out of work. The global economy was in a downward spiral.

 

Locked into the gold standard, MacDonald faced an impossible situation. To maintain the value of the pound against gold, substantial spending cuts were needed. Otherwise, Britain would have to abandon the standard.

 

Economic orthodoxy demanded the gold standard be maintained; for the sake of financial stability and as a defence against inflation. Moreover, it was a symbol of British pride. Before the First World War, the City’s financial dominance rested on it. And, by forcing financial discipline on governments, it suited Britain’s Victorian ethic. Montagu Norman, the governor of the Bank of England, was a vocal supporter.

 

On the other hand, John Maynard Keynes, father of Keynesian economics, argued against the cuts. The pound was clearly overvalued, overpricing British exports and holding back a recovery. Cutting government spending would also reduce people’s incomes, lowering their spending and depressing the economy further. Instead, he proposed, the gold standard needed to be abandoned and the pound devalued.

 

Fearful of financial chaos and mindful of Germany’s post-war hyperinflation, MacDonald listened to orthodoxy. In following his conscience, he went against his party. Without the support of his cabinet, let alone his benches, the only option was to split Labour and form a National Government. Ramsay knew the consequences. Malcolm, his son, recorded “it would be the end, in his own opinion, of J.R.M’s political career”.

 

On the 24th of August 1931, Ramsay MacDonald formed a National Government. On the 26th of September, he was ejected from Labour, the party he helped create. Despite leading the party first into power and then into government, he was scorned, reviled and eventually forgotten by it.

 

Compare this to Theresa May. Where she dithers, MacDonald acted. To pursue his conscience, he wilfully sacrificed his career and legacy. For the sake of his country, he knowingly became an object of revulsion to the party he made.

 

Yet it is not self-sacrifice that sets Ramsay apart, but his adaptability. Much has been made of Theresa May’s sense of duty. To persevere against constant opposition and humiliation is admirable. But Mrs May has done so in sheer stubbornness. She wasted a month on an unpassable deal, insisting it was the only one, and now continues with irresolvable cross-party talks, ignoring the one workable option.

 

Ramsay, on the other hand, adapted. After following the path of orthodoxy, cutting spending to maintain the gold standard, the economy still shrank. Realising the failings of his advisors, MacDonald permitted the Bank of England to “place such restrictions on the supply of gold as the Bank may deem requisite in the national interest”, effectively ending the gold standard. The pound suffered a swift devaluation, exports soon grew, and the economy began to recover.

 

Mrs May is an impressive politician. She was handed Britain’s greatest constitutional mess in modern times and did not baulk at the challenge. But she is undermined by two great vices; she is a party politician and unadaptable. Unless Mrs May is willing to join the ranks of Robert Peel, David Lloyd George and Ramsay MacDonald in putting country before party, she will fail at her task. Mrs May may be a good politician but, unlike Mr MacDonald, she will never be a statesman.

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