Labour Battles in the US, Economic Pain in Western Europe

The US had entered a phase of industrial agitation, almost on a par with the near war conditions twenty years before, when the overtly socialist IWW conducted an almost revolutionary campaign. In 1937 the motivation was far more obviously economic, but the personal ambition of John L. Lewis to establish his Congress of Industrial Organizations into the dominant force in national industrial negotiations also played a major part. Together with its affiliated union the UAW, the CIO was maintaining the pressure against General Motors. The flashpoint was the town of Anderson in Indiana, home to two GM plants, employing more than a quarter of the town’s population. Violence between unionised and non-unionised labour reached a scale, where martial law was declared by the State Governor and 1,000 National Guardsmen were deployed. Lewis publicly stated that next on his list were the Chrysler and, so far resolutely anti-union, Ford Corporation.

The new British White Paper on defence spending made quite plain that the efforts required to rearm Britain went far beyond simple budgetary adjustment. The City had been somewhat unnerved by the announcement of  a new loan of up to £400m for rearmament, but the figures in the White Paper went far further. Most striking of all, was the assertion that it would be “imprudent” to spend less than £1.5bn over the next five years. There was no attempt to spell out in detail the destination of this spending, but air defence was a high priority. Perhaps more telling, was the acceptance that Britain needed to rearm in depth: building reserves of material and expanding industrial capacity. It was painful evidence of the extent to which the mentality that created and maintained the “ten year rule” (that the country would not face a major war for ten years) had weakened Britain as a military power.

The Front Populaire in France was yet again confronted by the dire consequences of its economic policies, which were set to undo the boost to manufacturing profits from the slump in the franc. Inflation had surged to 15% though the deflation caused by the great slump had still to be undone. Predictably Blum’s first instinct was to reach for the tool of price control (yet again), which married so harmoniously with socialist rhetoric. Equally futilely, the government was now striving to control its own expenditure. It was an open question as to whether the word of economic reason – that inflation was driven by shortage of capacity as well as the effect of higher costs such as the 40 hour week - would be heeded. Tariffs on imports were equally destructive.