The spectre of 1932: How a loss of faith in politicians and democracy could make 2012 the most frightening year in living memory

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By Dominic Sandbrook

The dawn of a new year is usually a time of hope and ambition, of dreams for the future and thoughts of a better life. But it is a long time since many of us looked forward to the new year with such anxiety, even dread.

Here in Britain, many economists believe that by the end of 2012 we could well have slipped into a second devastating recession. The Coalition remains delicately poised; it would take only one or two resignations to provoke a wider schism and a general election.

But the real dangers lie overseas. In the Middle East, the excitement of the Arab Spring has long since curdled into sectarian tension and fears of Islamic fundamentalism. And with so many of the world’s oil supplies concentrated in the Persian Gulf, British families will be keeping an anxious eye on events in the Arab world.
The Battle of Cable Street: Mosley's fascists tried to march through the Jewish East End, a scene that could be repeated

The Battle of Cable Street: Mosley's fascists tried to march through the Jewish East End, a scene that could be repeated
Wall Street Crash 1929: Scenes outside the New York Stock Exchange on the day the stock market crashed may once again become a reality

Wall Street Crash 1929: Scenes outside the New York Stock Exchange on the day the stock market crashed may once again become a reality

Meanwhile, as the eurozone slides towards disaster, the prospects for Europe have rarely been bleaker. Already the European elite have installed compliant technocratic governments in Greece and Italy, and with the markets now putting pressure on France, few observers can be optimistic that the Continent can avoid a total meltdown.

As commentators often remark, the world picture has not been grimmer since the dark days of the mid-Seventies, when the OPEC oil shock, the rise of stagflation and the surge of nationalist terrorism cast a heavy shadow over the Western world.

For the most chilling parallel, though, we should look back exactly 80 years, to the cold wintry days when 1931 gave way to 1932.
The ultimate warning from history: If our political leaders fail to provide adequate direction the results, as demonstrated 80 years ago, could be catastrophic

The ultimate warning from history: If our political leaders fail to provide adequate direction the results, as demonstrated 80 years ago, could be catastrophic

Then as now, few people saw much to mourn in the passing of the old year. It was in 1931 that the Great Depression really took hold in Europe, bringing governments to their knees and plunging tens of millions of people out of work.

Then as now, the crisis had taken years to gather momentum. After the Wall Street Crash in 1929 — just as after the banking crisis of 2008 — some observers even thought that the worst was over.

But in the summer of 1931, a wave of banking panics swept across central Europe. As the German and Austrian financial houses tottered, Britain’s Labour government came under fierce market pressure to slash spending and cut benefits.

Bitterly divided, the Labour leader Ramsay MacDonald decided to resign from office — only to return immediately as the leader of an all-party Coalition known as the National Government, dominated by Stanley Baldwin’s Conservatives.

Like today’s Coalition, the National Government was an uneasy marriage. Sunk in self-pity and spending much of his time flirting with aristocratic hostesses, MacDonald cut a miserable and semi-detached figure. By comparison, even Nick Clegg looks a model of strong, decisive leadership.

As for the Tory leader Stanley Baldwin, he had more in common with David Cameron than we might think. A laid-back Old Harrovian, tolerant, liberal-minded and ostentatiously relaxed, Baldwin spent as much time as possible on holiday in the South of France, preferring to enjoy the Mediterranean sunshine rather than get his hands dirty with the nuts and bolts of policy.

Meanwhile, far from offering a strong and coherent Opposition, the rump Labour Party seemed doomed to irrelevance. At least its leader, the pacifist Arthur Henderson, could claim to be a man of the people, having hauled himself up by his bootstraps from his early days as a Newcastle metal worker.

Not even his greatest admirers could possibly say the same of today’s adenoidal, stammering Opposition leader, the toothless Ed Miliband.
The end of Democracy: The dire situation in 1932 led to many threats to the democratic system we so value, including the assassination of the French President Paul Doumer

The end of Democracy: The dire situation in 1932 led to many threats to the democratic system we so value, including the assassination of the French President Paul Doumer

With the politicians apparently impotent in the face of the economic blizzard, many people were losing faith in parliamentary democracy. Their despair was hardly surprising: in some industrial towns of the North, Wales and Scotland, unemployment in 1932 reached a staggering 70 per cent.

With thousands more being plunged out of work every week, even the National Government estimated that one in four people were making do on a mere subsistence diet. Scurvy, rickets and tuberculosis were rife; in the slag heaps of Wigan, George Orwell saw ‘several hundred women’ scrabbling ‘in the mud for hours’, searching for tiny chips of coal so they could heat their homes.

Feeling betrayed by mainstream politicians, many sought more extreme alternatives. Then as now, Britain was rocked by marches and demonstrations. In October 1932, a National Hunger March in Hyde Park saw bloody clashes between protesters and mounted policemen, with 75 people being badly injured.
Toothless: Ed Miliband can hardly claim to be a man of the people like the pacifist Arthur Henderson

Toothless: Ed Miliband can hardly claim to be a man of the people like the pacifist Arthur Henderson

And while Left-wing intellectuals were drawn to the supposedly utopian promise of the Soviet leader Josef Stalin — who turned out to be a brutal tyrant — thousands of ordinary people flocked to the banners of the British Union of Fascists, founded in the autumn of 1932 by the former Labour maverick Sir Oswald Mosley.

Never before or since has the far Right commanded greater British support — a worrying reminder of the potential for economic frustration to turn into demagogic resentment.

But the most compelling parallels between 1932 and 2012 lie overseas, where the economic and political situation was, if anything, even darker.

Eighty years ago, the world was struggling to come to terms with an entirely new financial landscape. In August 1931, the system by which currencies were pegged to the value of gold had fallen apart, with market pressure forcing Britain to pull the pound off the gold standard.

Almost overnight, the system that was supposed to ensure global economic stability was gone. And as international efforts to coordinate a response collapsed, so nations across the world fell back on self-interested economic protectionism.

In August 1932, the British colonies and dominions met in the Canadian capital, Ottawa, and agreed a policy of Imperial Preference, putting high tariffs on goods from outside the Empire. International free trade was now a thing of the past; in this frightening new world, it was every man for himself
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