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Published online by Cambridge University Press: 21 September 2009
UNEMPLOYMENT, BUDGETARY POLICY AND THE WORLD SLUMP
Government economic policy in the major industrialized nations became increasingly defensive and circumspect during the period 1930–32. In Britain the misgivings expressed earlier in Whitehall over radical pleas for deficit-financed expansion grew stronger and gained wider currency. What would be the effect, Treasury officials nervously opined,
of a sudden reversal of our present policy and the announcement that we were going to embark on a campaign of unrestricted expenditure financed out of loans, with its inevitable concomitants of special powers to coerce labour, landowners, etc., and its attempts to force capital into unremunerative channels or to attract it at the cost of subsequent increases in taxation? The combined effect of all these factors … might well be to create a very serious shock to confidence not only in this country but abroad.
The country had to look towards long-term reconstruction based on laissez-faire and responsible finance. ‘However much we may be criticized’, reported the Unemployment Policy Committee in March 1930, ‘we must not be rushed into shovelling out public money merely for the purpose of taking what must inevitably be a comparatively small number of people off the unemployment register to do work which is no more remunerative and much more expensive even than unemployment’.
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