2.What Were the Effects of Post War Prosperity

What were the effects of post-war prosperity?

LO: To describe the impact of financial revival in GB by 1959

A Sixties Social Revolution? British Society, 1959-1975 Lesson 2

Compulsory National service

ends

Production of the Contraceptive Pill

CND is founded

Race riots in Notting Hill,

London

Harold Macmillan replaces Anthony

Eden as Conservative PM

Macmillan’s “Never had it so good

speech”

Suez Crisis reveals Britain’s limited world status

John Osborne’s play Look Back in Anger symbolises attack of “Angry Young Men” on the Establishment

Eden becomes PM. Conservatives win general election

ITV, a second and independent commercial TV

channel is launched

19601958195719561955

Timeline Recap

Key Profile: Harold Macmillan

Born/Died

Education

Image

Nicknames

Key Quotes

For/Against

Harold Macmillan (1894-1986) was an Eton/Oxford-educated intellectual, who had served under Churchill during the war years. In 1920, he married Lady Dorothy – a member of the aristocratic Cavendish family. By 1958, 35 members of the government were related to him by marriage, including seven of the nine members of his cabinet. He deliberately cultivated a distinctive serious-minded and gentlemanly ‘Edwardian’ image. He wore a top hat and white tie, was a member of five clubs and frequently appeared on the grouse moors. He was courteous but astute and his contribution to British affluence led to nicknames like ‘Macwonder’ and ‘Supermac’. When Anthony Eden resigned in 1957, Macmillan became Britain's new prime minister. He successfully won the 1959 General Election and at first the government enjoyed an economic boom and stable prices. In foreign affairs, Macmillan strengthened Anglo-American collaboration and made attempts to join the European Economic Community.

Macmillan's tradition as a social reformer was reflected in his "wind of change" speech at Cape Town in 1960 where he acknowledged the inevitability of African independence. The introduction of the system of life peerages to the House of Lords and the creation of the National Economic Development Council in 1961 were other examples of unlikely Conservative measures. In October, 1963, ill-health forced Macmillan to resign from office.

“Most of our people have

never had it so good”

Activity 1

Imports exceed exports and balance of payments crisis

Government Controls: high interest rates and wage freezes

Demand falls

Output decreases

Controls removed

Increase in demand

Rising imports

Go Stop

The Stop-go economic cycle

Activity 2

Description

A sequence of events that followed from government attempts to control the economy. At first an accelerator would be applied – as had happened in 1958 when hire purchase controls were relaxed – but when this led to inflation and overseas imports grew too much, the brakes were put on – as in the reintroduction of restrictions in 1960-1

Activity 3Background Reading

Although it took some time for Britain to adjust to a peacetime economy after the disastrous war years, the general pattern of the 1950s was one of continued economic improvement. The last ration books were thrown away in July 1954, and British people began to enjoy higher standards of living than ever before.

An increase in overseas trade brought high levels of earnings from exports and investments. There was a huge expansion in electrical and engineering work along with cars and steel. Nearly 5 million people were employed in service industries by 1960, one in five, and roughly the same number as in heavy industry.

Economic growth brought rising wages and, in a state of nearly full employment, most people enjoyed a spectacular rise in income. However, although ”Supermac” could afford to be reasonably self-satisfied, this rosy picture hides some less positive developments. The growth in wages was outstripping the rate of increase in production and this brought inflation. The PM struggled to maintain growth and employment but keep prices steady- “the 64,000-dollar question”.

Government controls were used to curb excessive inflation and taxation remained high, to control excessive spending that would lead to an increase in imports, and to pay for the rising cost of social services.

Although high salaries created a large internal consumer demand, they failed to give manufacturers any stimulus to increase their export trade and reduced workers’ inclination to work overtime, which would have helped bolster the export industries. While incomes were high growth rates were lower than elsewhere.

Macmillan was certainly worried. In a speech in 1957 he said “What is beginning to worry some of us is ‘is it too good to be true?’ Or perhaps should I say ‘is it too good to last’?”

Overall the period was one of optimism . The British enjoyed more jobs, more money, more goods, better housing and the provisions of the new welfare state.. Such were the circumstances that heralded the arrival of the 1960s. Sally Waller 2008

+132+226-941956-60

-19+326-3451951-55

-56+104-1601946-50

Overall trade

balance

Balance of

invisible trade

Balance of

visible trade

Examining the statistics

Activity 4

1. What happened to the UK’s overall trade balance?

2. What would this suggest?

3. Do you think politicians would have been pleased with these trade figures? Explain your answer.

4. What happened to the ownership of consumer goods?

5. Why do you think people disagree in their interpretations of the evidence?

UK Balance of trade in £m

0

10

20

30

40

50

Washing

Machines

Fridges Motor cars

1955 1965

Percentage of households

owning consumer goods

“In line with rest of Europe Britain enjoyed high growth rates in the postwar decade”Historian Sally Waller in 2008

“Britain’s rate of economic growth 1950-1970 was ½ to 3/5ths of that of other industrialised countries”Asa Briggs, 1983

Visible trade provides income through the direct buying and selling of goods, while invisible trade includes shipping,

banking, insurance etc

129123121101UK

133127124111USA

158143134103Netherlands

202177153117Italy

170156131110France

225204179126West Germany

1959195719551952

A comparison of industrial production, 1950 =100

1962195919511950

7743Japan

2019107West Germany

20212627USA

15172225UK

Comparison of shares of world trade, %

0

1

2

3

4

5

6

7

1948-1958 1958 1959 1960

Average annual

wage increase (%)

0

20

40

60

80

100

120

140

160

180

British

worker

German

Worker

French

worker

Productivity

Worker productivity by 1960, 1950 = 100

Activity 5

Using the information in the tables and what you have read, prepare a report on the state of the British economy in 1959, including:

• Outline position, as you see it – with factual support

• Offer your own explanation of this state of affairs

Consider what measures you would recommend.

Independent Study

Please read the Guardian article Harold Macmillan: Unflappable master of the middle way byVernon Bogdanor written just after Macmillan’s death in 1986. Be prepared to respond to this next lesson

Harold Macmillan Unflappable master of the middle way

Vernon Bogdanor The Guardian, Tuesday December 30 1986

Harold Macmillan was prime minister (from 1957 to 1963) in a world very different from our own. It was a world of consensus politics -

now derided as much by Conservatives as by the left. "For me," Mrs Thatcher said in 1981, "consensus seems to be the process for

abandoning all beliefs, principles, values and policies." Yet under Macmillan, employment was neglible and prices stable: government

worked amicably with organised labour, and the living standards of trade unionists increased far more rapidly than they were to do in

the 1970s and 1980s. Affluence and a rising standard of living were taken for granted, and Britain's political and constitutional system

was widely admired as a symbol of stability and ordered progress.

Harold Macmillan dedicated his political career to humanising the Conservative party, and he could say after his election victory in

1959, "The class war is obsolete." By then, the hard-faced Conservatism of the pre-war years, to be resurrected again in the late

1970s, was but a distant memory.

In the 1930s, Macmillan had been one of the few Conservatives to stand out against the narrow orthodoxies of the day in both

domestic and foreign policy. He rebelled against the doctrine that the humiliation and misery of prolonged unemployment were the

product of impersonal forces which governments could do little to alleviate and he allied himself with Churchill in his campaign for

armed resistance to Hitler. Until war came he remained a lone and eccentric backbench rebel. But his fortunes changed when

Churchill became prime minister in 1940. At 46 Macmillan became a junior minister. "You and I owe Hitler something", he told

Churchill. "He made you Prime Minister and me an under-secretary. No power on earth, except Hitler, could have done either." It

needed a world war to bring Macmillan into government, it took Suez (in 1956) to make him prime minister. The crisis itself called

Macmillan's judgment severely into question, for it was he who hysterically insisted that he would pawn every picture in the National

Gallery rather than accept humiliation at the hands of Nasser it was he who pressed for military action without any assurance of

American support: and eventually it was he who, having miscalculated the financial position, threatened to resign if there was not an

immediate cease-fire.

In Harold Wilson's caustic phrase, Macmillan at Suez was "first in, first out." Yet he emerged from the wreckage as a resolute figure.

His rival, RA Butler, always doubtful of the wisdom of armed intervention, only enhanced his reputation as an appeaser.

Entering Downing Street in January 1957, Macmillan succeeded to a grim inheritance, for Suez had left the Conservatives dispirited

and demoralised. He told the Queen that he did not think his administration could last for more than six weeks. Yet recovery was

rapid, and in October 1959 the Conservatives were returned to power. It was the first time in the period of mass suffrage that a

government had actually increased its majority twice in succession.

Macmillan's achievement was partly one of style. A nervous and sensitive man, his public posture of unflappability served to reassure

the electorate that Britain remained strong and secure. Yet, as a radical realist, Macmillan re-orientated British foreign policy,

repairing the "special relationship" with the United States, and, with his "winds of change" speech at Cape Town in 1960, distancing

himself from apartheid. He speeded the process of decolonisation, and was the first British prime minister to appreciate that Britain's

future lay with Europe.

But baulked of his ambition to lead Britain into the EEC by de Gaulle, Macmillan's greatest achievement in foreign policy lay in

hastening the thaw in relations with the Soviet Union in the post-Stalin, post-Dulles world. The nucler test-ban treaty of 1963

represented the culmination of his efforts, eliciting tributes from both Kennedy and Khrushchev to his skill and patience as a

negotiator.

In domestic policy, Macmillan's central concern was to avoid mass unemployment. As MP for Stockton between the wars, he had

learnt "lessons which I have never forgotten. If, in some respects, they may have left too deep an impression on my mind, the gain

was greater than the loss." In the 1930s, he had been an advocate of planning and his book The Middle Way, published in 1938, laid

the foundations for a form of society neither socialist nor classically capitalist, but combining freedom of enterprise with public control

so as to secure the benefits of both.

In 1951 Macmillan had become minister of housing, achieving the target of 300,000 houses a year and so helping to create the

"property-owning democracy" which lay at the heart of Conservative thinking. Yet in economic affairs, the Conservatives seemed the

party of economic liberalism and not planning. Assisted by the fall in world commodity prices and an improvement in the terms of

trade, controls could be removed without inflation resulting. From 1955 onward, however the British economy was bedevilled by a

series of exchange crises which seemed to show that sterling could only be defended in a period of fixed exchange rates through

strict control of the money supply. This was a policy favoured by Macmillan's first chancellor, Peter Thorneycroft, and by his junior

ministers, Nigel Birch and Enoch Powell - the latter providing the doctrinal foundation for polices thought obsolete in the 1950s but

newly-fashionable 20 years later. Macmillan was not impressed. "When I am told... that inflation can be cured or arrested only by

returning to substantial or even massive unemployment, I reject that utterly."

Dismissing the resignation of his entire Treasury term in January 1958 as "little local difficulties", he sought for an alternative which

could ensure both full employment and price stability. That alternative was to be found in the planned pursuit of economic growth,

buttressed by an incomes policy.

In the early 1960s, Macmillan adopted a new approach to the economy. In 1961 Selwyn Lloyd, as chancellor, announced the birth of

Neddy, declaring: "I will deal first with growth in the economy. The controversial matter of planning at once arises. I am frightened of

the word." The move to planning, and the struggle to establish a voluntary incomes policy through the National Incomes Commission,

were an attempt to realise the philosophy of the Middle Way in the very different conditions of the 1960s. Regional planning

machinery was established, "Little Neddies" set up to plan individual industries, and Macmillan's successor, Sir Alec Douglas-Home,

accepted the recommendations of the Robbins Report with its commitment to university expansion.

By the time they left office in 1964, Conservative economic policy had been transformed. In place of the crude attempt to control the

economy through the structure of interest rates, there was a whole complex of economic regulators. In place of the rule-of-thumb

nostrums of the treasury, a planning staff had been established, and economic experts were beginning to be introduced into

Whitehall. In the words of Andrew Shonfield: "It may be said that the intellectual and administrative preconditions for modern

capitalist planning had been created, or were in course of being established". For much of this achievement, Macmillan deserves the

credit.

Until struck down by illness in October 1963, Macmillan seems to have intended to lead the Conservatives into another general

election, one which they might well have won.

During the long years of retirement, Macmillan mostly refrained from public comment on political matters, although he spoke a

number of times in favour of European unity. In 1976 he called, as he had done in the 1930s, for a coalition government to secure

economic recovery. In 1980 he gave a broadcast in which he criticised, in carefully coded language, Mrs Thatcher's policy of deflating

in the middle of a world recession.

He remained a sardonic and good humoured spectator of contemporary affairs, taking pleasure in the various honours which came

his way, especially the chancellorship of the University of Oxford, an office to which he had been elected in 1960 and which gave

ample scope for the display of his characteristic qualities of wit and generosity.

In 1984 Macmillan accepted a hereditary peerage, becoming Earl of Stockton, and his maiden speech in the Lords in November 1984

was a masterly restatement of his Middle Way philosophy while its combination of vision and professionalism delighted the House.

Macmillan's legacy to British politics was complex. The methods of economic management which he advocated were continued bv

the Wilson and Heath administrations, but they did not succeed in stemming Britain's economic decline. Macmillan never confronted

the deeper sources of Britain's economic difficulties, but then neither have his successors.

In foreign affairs, Macmillan was unable to secure a new role for Britain and, although Britain entered the EEC in 1973, it has still not

fully come to terms with Community membership. The hopes which detente aroused remain, on the whole, unfulfilled while

Macmillan's part in returning Russian prisoners of war to Stalin in 1945 will need explanation to his biographer.

Macmillan's failure was in part a result of the ambiguous and indirect methods which he felt bound to pursue. He had to reassure the

Tory right that he was maintaining national prestige while in reality undertaking a policy of colonial withdrawal he had to mouth the

rhetoric of economic liberalism while remaining at heart a dirigiste. Unable or unwilling to confront the electorate directly, he could not

mobilise popular support for his aims and, like Disraeli, the Conservative leader whom he most resembles, he found Britain "a very

difficult country to move," with more disappointment than success attending the attempt.

More imaginative and fair-sighted than most of his generation, Macmillan stood for much that is best in British political life - its

decency and tolerance, its dislike of puritanism and cant. If on occasion he was prone to worldliness and cynicism, he nevertheless

helped to create a society which provided, for the vast majority of British people, a happier and more secure life than they had ever

known. It was an achievement that seemed easier in the 1950s than it does today, at a time when his political successors have

dismantled so much of his legacy.