Archive for the History Category

A Splutter of Musketry – Britain and America’s Destruction of Iranian Democracy (Part Two)

In the second part of his essay on the role of MI6 and the CIA in the Iranian coup of 1953, No Less Than Mystic author John Medhurst covers the coup itself and its aftermath.

The response of the AIOC to the Iranian parliament’s agreement to Mossadegh’s nationalisation proposal of February 1951 was to suspend the production and export of oil from Iran. The British government, with the agreement of the powerful “Seven Sisters” oil cartel that controlled the world’s oil market, began to impose an oil embargo on the country. When the City of London also imposed a banking boycott on Iranian credit institutions, the Iranian Treasury was squeezed hard.

Shapoor Reporter, the Shah’s close friend and MI6 asset, was one of Iran’s key business leaders. MI6 money, channelled through the notoriously corrupt Rashidian brothers, bought the allegiance of key figures in Iran’s National Bank, including its Governor Dr Mohammed Nassirir. Using the excuse of attending International Monetary Fund meetings abroad, Dr Nassirir regularly stopped off in London to advise the FCO on the state of Iran’s finances, specifically how long the government could continue to pay its civil service without AIOC revenue (Dorril).

Britain’s anti-Mossadegh operation was multi-stranded and well rooted, but Mossadegh’s counterattack – the closing of the British Embassy in Tehran – dealt the plan a severe blow. Luckily for Churchill the main obstacle to American involvement in regime change in Iran, President Truman, was about to leave office, to be replaced by the Republican Dwight D. Eisenhower. As the last of Roosevelt’s New Dealers left the Washington stage, a newer breed of right-wing imperialists took power whose overriding political priority was to protect the wealth and power of American corporations.

The Dulles Brothers

No one exemplified this breed better than Eisenhower’s Secretary of State John Foster Dulles and his brother, Director of the CIA Allen Dulles. Born in to the East Coast WASP elite – their uncle and grandfather had both each served a term as Secretary of State – the Dulles Brothers exhibited all of its arrogance with little of its wit and intelligence. Prior to their appointments by Eisenhower, both brothers had been senior partners at the prestigious Wall Street law firm Sullivan and Cromwell. Sullivan and Cromwell was the legal representative of the AIOC in the US and did handsomely from its business.

When the head of MI6 Sir John Sinclair visited Washington on 18^th February  1953, he was cordially received by Allen Dulles. Dulles told Sinclair that the qualms of the previous administration about intervention in Iran no longer applied, and the American government was now fully supportive of plans to remove Mossadegh from office. Given that the British could no longer take the leading role, Dulles proposed that the field operation be led by CIA Head of Near East Operations, Kermit Roosevelt.

Kermit “Kim” Roosevelt was cut from the same cloth as the Dulles brothers. Educated at Groton and Harvard, his grandfather had been President Theodore Roosevelt and he was a distant cousin to FDR, whose liberal politics he loathed. He joined the OSS (the precursor to the CIA) during the war, and cultivated many powerful and influential contacts in the Middle East. Roosevelt made a very favourable impression on the British when, after Mossadegh closed down the British Embassy, he flew to Tehran and picked up many of MI6’s contacts and informers and put them on the CIA payroll.

General Faziollah Zahedhi

Roosevelt now had discretion to act as he saw fit. The British had suggested that the ideal puppet Prime Minister, after a coup, would be General Faziollah Zahedhi. The British knew him well, having arrested him during the war as a Nazi sympathiser. An ex-Chief of Police in Tehran, Zahedhi was a brutal anti-Communist who regarded not only the Tudeh but Mossadegh himself as Soviet puppets. Roosevelt brought him in.

The coup now acquired an official name – Operation Ajax (the more prosaic British had labelled their own covert anti-Mossadegh plan Operation Boot). The American Ambassador in Iran, Loy Henderson, had been sceptical of Boot but was enthusiastic about Ajax. He made contact with General Zahedhi and found him ready to help, although Zahedhi warned Henderson that the Iranians could not remove Mossadegh “through their own efforts”, mainly because most of them did not wish to do so.

That calculus could be changed, and the Rashidians were instrumental in doing so. Firstly they unleashed a street mob on to Mossadegh’s home. They then assassinated several of Mossadegh’s allies, including the loyal Chief of Police General Afshartous, who had uncovered and thwarted the AIOC’s own covert plans. As well as Afshartous, Mossadegh lost other key members of the National Front coalition, most importantly the senior Muslim cleric Ayatollah Kashani, who was persuaded that the best way to serve Islam was to start taking the Rashidians’ money.

These set-backs could have been weathered if the Iranian left had given Mossadegh solid support. But the Tudeh failed to appreciate how crucial the battle over the AIOC was to the future of Iran. At the end of 1950 the Tudeh viewed the nationalist movement as

the product of internal contradictions within the ruling classes… they were simply unable to recognise that there could be any other organised popular movement capable of challenging the basic structure of Iran’s power relations (Sepehr Zabih, The Mossadegh Era).

The “radical” wing of the Tudeh, under Abdol Kambakhsh, Ahmed Qasemi and Nur al-Din Kianuri, hewed firmly to the belief that any oppositional movement not led by the Iranian working class could not be serious about challenging neo-colonialism.  The more “moderate” wing, led by Morteza Yazdi, Iraj Eskandari, and Ali Olovvi – originally part of the independent leftist “The Fifty-Three” and thus more flexible in their thinking than their hard-line Stalinist colleagues – began to shift towards support for Mossadegh as the crisis intensified. Unfortunately for Mossadegh, the Stalinists retained control of the party until it was too late.

What had begun as a premiership devoted to “one issue” had escalated to become a wide-ranging geo-political struggle between progressive democrats and an aristocratic-military elite (with fundamentalist Muslim support) whose self-interest overlapped the strategic priorities of the US and British governments. Mossadegh himself was also broadening his political outlook. The reaction of the AIOC and the British government to the nationalisation decree, and his conversations with India’s Prime Minister Jawaharlal Nehru, had led Mossadegh to see the struggle over Iran’s oil as the product of the West’s economic colonialism, requiring a more radical response than he had supposed in his youth.

CIA confirmation for the execution of Operation Ajax

The CIA and MI6 now had all elements in place for a coup. They had authorisation from Eisenhower and Churchill. They had established contacts with powerful circles inside Iran who had a vested interest in the existing distribution of profits from the AIOC (General Zahedi had now formed a “Committee to Save the Fatherland”, composed of pro-British senior army officers, run out of the Officer’s Club in Tehran. The Committee was funded by the Rashidians, and established warm relations with Ayatollah Kashani). Thanks to Kim Roosevelt – now operating inside Iran under an alias – they had a steady stream of funds to bribe the bazaar merchants and their army of thugs. With his Chief of Police removed, Mossadegh was unprepared for the coming attack.

On 4^th April  $1 million was sent from Washington to the CIA station in Tehran.  The money was to be used to fund the Committee to Save the Fatherland and to print inflammatory leaflets and posters to be disseminated around Tehran by Rashidian boot boys. The leaflets accused Mossadegh of corruption, of being anti-Islam, and of working with the Tudeh to hand Iran over to the Soviet Union. They helped to whip up an atmosphere of crisis, during which Zahedhi’s forces plotted to seize key points in the city such as the telephone exchange, Radio Tehran, the Central Bank, and Mossadegh’s home. It was planned that after Mossadegh was arrested, the Majlis – heavily lubricated by CIA money – would proclaim Zahedhi the legitimate Prime Minister. The Shah would then immediately endorse the new Prime Minister, as would Iran’s chief Imam.

Kermit “Kim” Roosevelt

On 15^th June 1953 Kim Roosevelt flew to London to meet MI6 and explain the plan. The meeting in Whitehall was chaired by senior FCO mandarin Patrick Dean, Chair of the Joint Intelligence Committee which oversaw all covert operations. Foreign Secretary Anthony Eden was in attendance. All approved the plan. On 25^th June the plan was put to a high-level meeting in the State Department in Washington chaired by Secretary of State John Foster Dulles and attended by his brother Allen, Director of the CIA.  Once again Operation Ajax was given the green light.

The signal to the coup leaders inside Iran was helpfully provided by the BBC, whose senior news managers had acceded to a request from the Foreign Office that they broadcast a coded message that the coup was good to go. Hence on 8^th August the BBC’s Persian language news broadcast began not with the usual “It is now midnight in London”, but with “It is now exactly midnight”. This was the coup’s starting gun.

As a first move, the US Military Assistance Advisory Group cut off liaison with those army officers loyal to Mossadegh, whilst assistance to Zahedi’s anti-government officers increased. Despite this, the Shah was nervous. It took Kim Roosevelt’s personal intervention to get him to sign a special firman that dismissed Mossadegh as Prime Minister and replaced him with General Zahedi. Meanwhile the Rashidian brothers organised mobs to pose as Tudeh militants to attack Mosques and Imams. The attacks, combined with propaganda presenting Mossadegh as a Communist sympathiser, turned many Muslim clerics against the government.

Troops outside Mossadegh’s home

Mossadegh fought back. He surrounded his house with loyal troops and when the Shah’s emissary, Colonel Nassiri of the Imperial Guard, arrived to arrest him he was faced by a row of tanks led by the reliable Army Chief of Staff General Riyah. Much to Nassiri’s surprise, Riyah took one look at the arrest warrant from the Shah, declined to recognise it and arrested him instead. Zahedi went into hiding in a CIA safehouse.

Mossadegh temporarily closed down the Majlis, preventing Zahedi’s political cronies from presenting the Shah’s decree removing him from office. The Tudeh, finally waking up to the danger to Mossadegh and to themselves, began to mobilise their trade union supporters on to the streets. In the crucial period between the first attempt at a coup and the second – from 16^th to 19^th August – Tudeh activists were out on the streets distributing leaflets, attacking statues of the Shah and agitating for the establishment of a democratic republic.

Roosevelt sensed that further delay might give Mossadegh the opportunity to link up with the Tudeh and the unions. Whilst he worked furiously behind the scenes, Mossadegh called Loy Henderson to his residence on 19^th August to demand the US government cease efforts to remove him from power. Mossadegh asserted that the Shah, by fleeing the country and deserting his people, had lost his authority. Henderson denied any US involvement in a coup. The meeting descended into a shouting match.

Mossadegh, who had reacted skilfully to the first stages of the coup, now started to make mistakes. Flustered by Henderson’s claims that US nationals were being attacked in the streets by Tudeh thugs, he called for a ban on all political demonstrations on the streets of the capital. Many of his supporters, including some in the Tudeh, heeded his call. But anti-Mossadegh forces did not. To add to the escalation, he placed General Daftary, one of Zahedi’s supporters, in charge of the armed security forces set up to put down the riots. Daftary promptly ordered the security forces to support anti-Mossadegh rioters. At the same time, the CIA delivered $10,000 directly to Ayatollah Kashani, and in return he called on all Muslims to support the rioters.

The unions awaited a signal from the leaders of the Tudeh, whose Executive met in emergency session. Ali Olovvi insisted the party call for a general strike to oppose the coup.  Nur al-Din Kianuri – who some within the party suspected of being a KGB agent – opposed the call, fearful of making any move not sanctioned by Moscow. Unfortunately there was no time to seek and receive instructions from Moscow, which a few months after Stalin’s death was locked in political paralysis. Unable to decide, the Tudeh did nothing.

The Iranian military, meanwhile, began to sense which way the wind was blowing, and hitherto loyal officers started to shift allegiance. General Zahedi finally emerged from hiding and broadcast from Radio Tehran that in line with the Shah’s decree he was taking over as Prime Minister. At the same time military forces led by General Daftary converged on Mossadegh’s house to implement the Shah’s firman.

Elsewhere in the capital the anti-Mossadegh forces were winning. A mixture of disloyal army units and paid thugs attacked government buildings and the offices of newspapers that supported the National Front. Gunfire was exchanged, but the buildings fell quickly to the attackers. At Mossadegh’s house, resistance was more serious. Mossadegh remained in the house for most of the day, but when Zahedi’s tanks arrived his aides persuaded him he should leave. Helped by a small core of loyal soldiers he fled out the back amidst gunfire.

Mossadegh’s military support had collapsed. With Mossadegh’s government now effectively overthrown, Kim Roosevelt accepted the thanks of cheering officers at the Tehran Officer’s Club. A few days later Mossadegh gave himself up to Zahedi, and was temporarily imprisoned in the Officer’s Club. Zahedi himself was inclined to be generous to his defeated opponent, but the Shah was not. Arriving back in Iran after his supporters had done the fighting, he called Mossadegh “an evil man” and called for him to be moved to the city prison.

There was still sporadic resistance from Mossadegh’s supporters, especially from trade union militants at Abadan. But they had no organisation or access to arms. Most of the Tudeh’s Stalinist leaders decided discretion was the better part of valour, and fled to the Soviet Union. Ordinary Tudeh members put up a better performance, but they were outnumbered, outgunned and without leadership. They were quickly suppressed.

It was the close of a great moment in Iranian politics, the deliberate extermination of a pluralist liberal democracy by those who loudly claimed to defend such systems. Though the direct cause was outside intervention, the success of the coup had been eased by the inability of Iranian democrats, socialists and trade unionists to form a popular front to defend their interests. Those who regarded themselves as the political leaders of the Iranian working class were unable to focus on the main threat facing them. For this, the 1950s have been rightly called “the decade of great defeat for Iranian Marxists”, with the sad but accurate observation that

A generation of young, largely well educated activists saw their ideals crushed by a preventable coup which succeeded with minimum effort (Behrooz)

Mossadegh in court

Mossadegh was tried for treason by a military tribunal that was only going to deliver one verdict. Nevertheless the old man still had some fire in him. He bluntly told the tribunal:

My only crime is that I nationalised the Iranian oil industry, and removed from this land the network of colonialism and the political and economic influence of the greatest empire on Earth.

He was found guilty and sentenced to three years in prison followed by a life sentence of house arrest.

On 26^th August, four days after the coup, Kim Roosevelt flew directly to London where he was taken to see Winston Churchill at 10 Downing St. He reported the complete success of Operation Ajax. After this he flew to Washington to a hero’s welcome at the CIA. President Eisenhower awarded him the National Security Medal for his work in Iran. The British government gifted him £500,000 in shares in the AIOC and the company made him an Executive Director. In 1958 Roosevelt left the CIA to become Vice-President of Gulf Oil, which had secured major contracts to develop Iranian oil after the coup.

Shapoor Reporter, the Shah’s friend and inside source for MI6, was knighted by the British government. Sir Shapor became one of the most powerful arms brokers in the Middle East and remained a close confidante of the Shah until 1979. Always a step ahead, he left Iran shortly before the revolution that deposed the Shah.

The head of MI6, Sir John Sinclair, became Director of the Royal Institute for International Affairs, one of the UK’s leading academic research bodies. In that role he ensured the historical record of the 1953 coup conformed to official spin, as laid out in a June 1951 cable from the FCO’s Eastern Department to the Washington Embassy:

It is essential… that Britain not be seen as a capitalist power attacking a nationalist Persia

For a time the official version – that Mossadegh was an unstable semi-Communist removed by the Shah and the Iranian military alone – was widely accepted. Latterly, popular histories by New York Times journalist Stephen Kinzer and the great demythologiser of British foreign policy Mark Curtis (who revealed the FCO cables and other hitherto secret material) have gone some way to put the record straight.

Reflecting the shift in economic power from Britain to the US, it was American oil firms that gained the most from the new regime. Iran’s oil reserves were divided up by a series of new leases and contracts overseen by New York law firm Sullivan and Cromwell, on whose Board sat the CIA Director and the Secretary of State who had orchestrated Operation Ajax. The Iranian concessions were parcelled out to a massive international consortium dominated by American oil companies. The AIOC had only 40% of the consortium. Renaming and rebranding itself, the AIOC became British Petroleum (BP) and began to explore new commercial opportunities in Kuwait, Nigeria and the Gulf of Mexico. By the 1980s it was the fifth largest company in the world.

Within Iran the Shah introduced a ferocious regime of repression, led by his new intelligence agency SAVAK.  The Tudeh bore the brunt.  After the coup four thousand of its members were arrested, including teachers, civil servants, students and industrial workers. Forty were executed, but many more were tortured and imprisoned. Trained in torture techniques by the CIA and MI6, SAVAK kept a stern boot on political opponents. At the time of the 1979 revolution that ousted the Shah one of SAVAK’s biggest concentration camp, at Irafshan, held fifty thousand political prisoners.

The 1979 revolution replaced one authoritarian structure with another. Arguably, that structure, after nearly four decades, is finally beginning to exhibit signs of internal reform and modernisation, although the extent to which this may occur without continuous pressure from the populace and support from the international left is in doubt.

One thing remains clear. However and if the process of democratisation develops, Iran still lives with the legacy of 1953 left it by Britain and America.

A Splutter of Musketry – Britain and America’s Destruction of Iranian Democracy (Part One)

How did the CIA and MI6 orchestrate a coup d’etat in Iran in 1953? In this new, two-part essay, No Less Than Mystic author John Medhurst looks at how Britain and the USA destroyed democracy in Iran to protect their own economic and political interests, and how the legacy of this is still being felt today.

Part One coverst the pre-coup history of British and US involvement in Iran, and how this led to the events that would change the political make-up of the region forever.

Since 1979, British and American governments, when confronted with a political crisis within Iran, have invariably spoken of their desire to see more democracy in that country. To say these noises are hypocritical would be an understatement. The last time Iran experienced a multi-party, constitutional democracy was in 1953, when Britain and America planned, funded and implemented a military coup in the country, a coup whose sole aim was the protection of their oil interests. That democracy, however imperfect it may have been, has not returned since.

In 1908 oil was discovered in what was then Persia, one year after an agreement between Britain and Tsarist Russia to partition the country in to two spheres of control, the British holding the south and the Russians the north. The British were quick to appreciate the future use of the oil and organised a group of investors to form the Anglo-Persian Oil Company (APOC, renamed the AIOC in 1936). In 1914, to protect its interest in perpetuity, the British government purchased a 51% controlling share of the company.

In 1919, after a world war that had severely taxed Britain’s economic and military strength, the Anglo-Persian Agreement gave Britain control over Persia’s army, communications, transport and treasury. The British Foreign Secretary Lord Curzon insisted that if Britain was to assume “the mandate for Mesopotamia” it could not allow “a hotbed of misrule” to exist in this strategically vital area. In Curzon’s view the oil reserves of southwest Persia were “great assets” to be “worked for the British Navy”, and thus had to be controlled and protected.

No matter what political and dynastic changes occurred within Iran (as the country was renamed in 1935) over the next thirty years, Britain stuck to this goal.

For much of the period this meant accommodation to the rule of the man who started life as Reza Khan but ended it as Reza Shah. In 1921 Reza led a coup against the corrupt and enfeebled Qajar dynasty. With the British promising him military and financial resources, Reza quickly took Tehran, arrested the Shah’s Cabinet, and sent the Shah himself on a long European holiday. Reza then became Prime Minister. His original ambition was to follow the example of Turkey’s Kemal Ataturk and secularise his country, but after opposition from Iran’s powerful Imams these plans were swiftly dropped.

Reza Khan, later Reza Shah

For a while Reza’s rule was uncertain, but the attempted return of the old Shah in 1926 united both the Imams and the Majlis, the Iranian parliament, behind him. In April 1926 they declared the formal end of the Qajar dynasty and the ascension of Reza as Shah. The Pahlavi dynasty thus began its stormy history.

Reza’s immediate clampdown on the press and trade unions, his jailing and killing of political opponents, did not disturb British policy makers, for whom the only consideration was his subservience to British oil interests, in particular the AIOC and the 1919 Anglo-Persian Agreement. The most radical alternative to Reza, the Iranian Communist Party (ICP), was outlawed in 1930 and most of its leaders imprisoned.

Reza’s fitful attempts to modernise Iranian society were not insignificant, especially in education, but they were driven forward by autocratic fiat and suffered badly from lack of a political base. As a sincere nationalist he made efforts to terminate the AIOC concession negotiated as part of the Anglo-Persian Agreement, and in the late 1920s he tried to re-negotiate the concession on better terms for Iran. The British were adamant that the concessions should remain unaltered. Frustrated at every turn, in November 1932 Reza declared that he was cancelling the concession.

Alarmed, the AIOC’s Chairman Sir John Cadman flew to Tehran to personally negotiate with the Shah. This produced the 1933 Anglo-Iranian Agreement, which in return for relatively minor concessions on the AIOC’s part – increased financial returns to Iran, and a promise that the appalling working conditions at the company’s notorious Abadan plant on the Shatt-al-Arab waterway would be improved – extended the concession for a further thirty-two years. The weakness of the Agreement led to discontent with Reza’s rule across all social classes.

Notwithstanding his unpopularity, with domestic opposition crushed Reza’s rule might have extended for decades if not for the outbreak of the Second World War. During the 1930s Reza had tilted towards open support for Hitler and Mussolini. When war was declared between Germany and Britain he announced Iranian neutrality. This allowed Nazi agents free rein within the country. After the German invasion of Soviet Russia in June 1941 the new allies (Britain and the USSR) feared that Germany might use Iran to launch a further attack on Soviet Russia from the south.

To prevent this possibility British and Soviet troops invaded Iran in August 1941 to secure the border and the country’s oil. The Iranian army, few of whom were willing to fight for Reza, quickly disintegrated. In September 1941 Reza was forced to abdicate and was replaced by his twenty-one-year-old son Mohammed Reza Pahlavi, a weak and pampered playboy whom the British believed they could easily control. Yet a much greater threat to the AIOC now emerged, in the form of the nationalist politician Mohammed Mossadegh.

Mohammed Mossadegh

Mossadegh came from Iran’s social and political elite. His grandfather had played a prominent part in the Constitutional Revolution of 1906, which had forced the old Shah to create an Iranian parliament, the Majlis, for the first time. Elected to the first Majlis in 1906 at the age of twenty-four, Mossadegh left the country in 1919 in protest against the Anglo-Persian Agreement. But Iranian politics were in his blood and he returned a year later to take up the post of the Shah’s Finance Minister, and later Foreign Minister. His granite integrity made him few political friends. The definitive work on his eventual downfall concluded “many rich and influential Iranians considered him a class traitor because of his insistence on judging them by the letter of the law” (Stephen Kinzer, All the Shah’s Men).

1943 saw the first relatively free elections in Iran. Mossadegh, having spent nearly twenty years in retreat at his country estate, stood for a seat in the Majlis. He returned to parliament as one of the most respected politicians in the country, known for long and principled opposition not only to Reza Shah but also to the AIOC.

The real spark of revolt against the AIOC was lit in 1946 when the workforce at Abadan went on strike. Over a quarter of century earlier, in 1919, what has been called “The first major strike of a colonised working class in the Middle East” (Frederic Clairmont, “BP: The Unfinished Crimes and Plunders of Anglo-American Imperialism”) led to the deaths of over thirty refinery workers when the army and AIOC police gunned down striking workers. This led to the formation of the Iranian Communist Party. Within a few years a national campaign led by the trade unions and the ICP for an eight-hour working day forced the government to concede the demand in the Labour Law of 1923. In 1925 trade unions led May Day celebrations across Iran.

The 1946 strike at Abadan

This working-class spirit was suppressed by Reza Shah, but not destroyed. The 1946 strike demanded not only better working conditions but enforcement of the terms of the 1933 Agreement that had promised Abadan’s workers the same social infrastructure (e.g. schools, hospitals, roads, running water, etc.) that the AIOC’s British staff and their families enjoyed in their gated and well-guarded section of the city.

The newly elected British Labour government sent two warships to Abadan in support of the AIOC, but although their presence was significant they were ordered not to fire on the strikers. Instead the strike was put down by paid strike breakers from ethnic Arab tribes long at odds with the urbanised work force.

But the political climate in post-war Iran was far more sympathetic to the strikers than in 1919. Central to this was the resurrection of the Iranian Communists, now grouped together in a party known as the Tudeh (“Masses”). Although some of its older militants had been members of the ICP, the Tudeh was not simply a recreation of that party. It was initially “a united front for anti-fascist activities and constitutional rule” (Mazia Behrooz, Rebels With a Cause: The Failure of the Left in Iran) that emerged from the work of “The Fifty-Three”, a collection of left academics, writers and politicians imprisoned together under Reza Shah when war broke out.

By 1945 key positions within the Iranian trade unions were usually held by Tudeh militants. After the war the party moved on to the national scene. It even had three ministers in the 1946 coalition government, driving forward legislation that for the first time gave Iran a minimum wage and maternity leave. Had the Tudeh focused on these reforming initiatives, it might have become the major social democratic grouping in Iran and the bearer of the country’s post-war aspirations for national renewal.

But the pro-Soviet faction in the party saw Iranian developments through the prism of Soviet foreign policy, and following an ill-advised flirtation with revolutionary violence in Iran’s Azerbaijan province in late 1946, the party was once again banned, losing its foothold in government and increasing its isolation from the nationalists. Because of this the Tudeh underestimated the extent to which popular energies were now focused on the fight for control of the nation’s oil reserves.

Others moved to fill the gap. In 1949 Mossadegh and like-minded colleagues created the National Front, a reformist political party whose main aim was to establish a functioning democracy in Iran and gain control of Iranian oil resources by nationalising the AIOC’s operations in the country. Even the British Ambassador, unflinchingly supportive of the AIOC and dismissive of Iranian politicians, admitted that the National Front was “comparatively free from the taint of having amassed wealth and influence through the improper use of official positions”. The impetus for the formation of the National Front arose from a re-negotiation of the 1933 Agreement, which Majlis deputies had threatened to revoke.

Mossadegh led the Front in the 16th Majlis. But the AIOC’s creatures – the Shah and his new Prime Minister General Ali Razmara – ensured that Mossadegh was kept away from the executive. Razmara restored some of the Shah’s authority, not least by spreading huge amounts of bribe money around the Majlis to support the AIOC’s continued hold on Iranian oil. The cash was supplied by Ian Milne, the MI6 Head of Station in Tehran, who ran agents within the Majlis itself.

In February 1951 Mossadegh formally proposed the complete nationalisation of the AIOC. In March Razmara was assassinated. Without Razmara’s bribes the Majlis looked to other interests. Under great external pressure from an aroused populace, it voted to accept Mossadegh’s resolution and to nationalise the AIOC. After this the Shah had little option but to make Mossadegh Prime Minister in April 1951.

Mass support for Mossadegh was evident from the moment he took office. On 1st May a demonstration of 50,000 workers, peasants and members of the armed forces gathered outside the Majlis to support the nationalisation of the AIOC. Mossadegh sensed the national mood and reflected it.

Mossadegh greeted by protesters on 1st May 1951

Shortly after the decree was ratified, he declared:

We are nationalising the AIOC because it has systematically over several decades refused to engage in a constructive dialogue with us… Working hand in glove with the British government it has trampled on our national rights. Their conduct was one of unspeakable arrogance. Our battle for the end of the company’s domination has finally arrived and we shall triumph.

This was the beginning of an open confrontation between Iranian democratic nationalists and one of the last great remaining colonialist merchant ventures, the British equivalent of the American United Fruit Company in power, wealth, and ruthless determination to protect its profit margins. The previous year, 1950, the AIOC had made £170 million in profit from Iran, with only 12% going to the Iranian government. It had much to protect, and it was not shy in calling on its friends in the British government for assistance.

Although a hard-line anti-Communist, Britain’s Foreign Secretary Ernest Bevin was sympathetic to Iran’s desire to control its own oil resources. Unlike his more hysterical advisors he did not consider Mossadegh a Communist or a fellow traveller. However, Bevin’s health was failing and in early 1951 he was replaced by the dull political fixer Herbert Morrison. For Morrison, Iran was still “Persia”, an exotic oriental land which needed a firm guiding hand to ward off anarchy. He immediately created a “Persia Working Group” comprised of officials from MI6, the Treasury, the Foreign Office and the Bank of England, to address the problem.

The Persia Working Group drew up a plan for direct British military intervention, codenamed Operation Buccaneer, to secure the Abadan facility. But plans for invasion could not proceed once US President Harry Truman made it clear that the British did not have American support. Truman, sceptical of the ability of the newly formed Central Intelligence Agency (CIA) to make intelligent distinctions between Communism and radical nationalism, held Bevin’s view that Mossadegh was primarily a nationalist. It was clear to him, as the most revealing account of MI6 published to date concedes, that

despite British propaganda, the Mossadegh government was generally democratic, moderate, and seemed likely to succeed in establishing a middle-class hold over the state. (Stephen Dorril, MI6: Fifty Years of Special Operations).

Operation Buccaneer was shelved. For the Persia Working Group this meant that anti-Mossadegh operations had to go underground. This process was driven forward not just by Morrison and MI6 but by an alliance of right-wing “Orientalist” academics and FCO mandarins long accustomed to treating Iran like an imperial satrapy. Prominent amongst these were Professor Ann Lambton, Reader in Persian Studies at the School of Oriental and African Studies in London, previously Press Attaché at the Tehran Embassy during the war. Lambton and FCO Assistant Under-Secretary of State for Economic Affairs Eric Berthoud, who had worked for the AIOC for eight years before moving to Whitehall, agreed that the only way to remove the threat posed by Mossadegh was through “covert means”.

Shapoor Reporter

For years the MI6 station in Tehran had cultivated Iranians at all levels within the military and big business. The most useful of these “assets” were Shapoor Reporter, a British-Iranian businessman and close friend of the Shah who fed MI6 gossip from inside the Shah’s palace, and the infamous Rashidian brothers. The Rashidians were plugged into the highest levels of Iranian politics, business and the court. They were violently pro-British, sending their children to English public schools and keeping a permanent suite at the Grosvenor Hotel in London. MI6 paid them £10,000 a month. For this the Rashidians spread disinformation and smears about Mossadegh amongst the bazaar merchants of Tehran, whose leaders had the power to summon violent mobs on to the streets.

The Rashidians worked to the FCO’s Eastern Department and its Permanent Secretary Geoffrey Furlong. The Eastern Department now advanced the coup plan on several fronts – the academics of the Persia Working Group provided the BBC with news stories implying that Iranians were incapable of running the oil industry. The BBC worked closely with the AIOC’s information department, the Central Information Bureau, to disseminate their message within Iran and to suggest that those elements in Iranian society who had profited from the AIOC were about to lose their wealth and power. All strands of the anti-nationalisation operation ran through the AIOC’s Chief Executive in Tehran, Richard Seddon.

In July 1951 Iranian state security raided Seddon’s house and uncovered plans for the destabilisation of Mossadegh and lists of Iranians who were recipients of AIOC and MI6 bribe money. This led to all AIOC executives leaving the country in October 1951. Despite this, Mossadegh still sought a negotiated settlement with the British. But after the Conservatives came to power in October 1951, such a settlement became less and less likely. Faced with mounting evidence of the AIOC’s criminal conspiracy and of official British government collusion in plans for regime change, in October 1952 Mossadegh closed the British Embassy in Tehran.

An informal war against Iran was now declared. The new British Prime Minister, Winston Churchill, had overseen the creation of the AIOC in 1908 and had profited personally from his own shares in the company. His instincts were strongly imperialist. When the Labour government, in its dying days, failed to land British troops at Abadan to disperse striking workers, Churchill had been aghast. In November 1951 he wrote in disgust to the Foreign Secretary, Anthony Eden, that Labour had “scuttled and run from Abadan when a splutter of musketry would have ended the matter”.

Next time, Churchill would not hold back on the musketry.

Might the “worlds saddest right-wing protest” have a point about Lenin, asks John Medhurst?

If Confederate statues are coming down across the US, should statues of figures like Lenin come down too, as demanded by a small group of Trump supporters this week in Seattle, dubbed the “worlds saddest right-wing protest”? No, says John Medhurst….

Always the Ramsay MacDonalds: Lessons from 1931 for Labour today

On September 13^th 2015 at a packed TUC fringe event at the Brighton Corn Exchange, ex-Greek Finance Minister Yanis Varoufakis delivered a stirring speech on how the Syriza government had been undermined by the EU’s financial institutions and what this portended for a future Labour government led by Jeremy Corbyn. At its close he finished with one last warning to the British left, born from his own experience in office, – “The enemy is always within. The enemy is always the Ramsay MacDonalds”.

Following the election of Jeremy Corbyn no-one would claim Labour is now led by a second Ramsay MacDonald (a role already perfectly filled by Neil Kinnock, who managed to betray his class and his party without even getting elected first). But although Corbyn’s mandate for a real socialist alternative is undeniable and impressive the Labour Party machine and most of its MPs remain unreformed. Too many local Labour parties – like my own in Brighton – are led by midget-Blairs whose response to the election of Corbyn and the subsequent inrush of enthusiastic new members is fear and distrust. Their strategy for the next four years will be to ignore, suppress and defuse their own members who wish to turn the party into a radical anti-austerity opposition. Nor are the unions Corbyn’s automatic allies. One need only see the grotesque Sir Paul Kenny, General Secretary of the GMB, who after accepting his “honour” from the Tories for selling out public sector pensions condemned Corbyn’s stance on Trident as a threat to the “defence of the realm”.

Most Labour MPs are still stunned by the size of Corbyn’s victory, but internal resistance and sabotage of Corbyn’s agenda will inevitably increase the longer he remains leader. The future MacDonalds are plain to see – the likes of Umunna, Hunt, Cooper, Bradshaw, Cruddas, and fair few of his own Shadow Cabinet. These people have no political base inthe sense of mass support, but they do not need one. They have a platform and high profile cheerleaders in the form of Andrew Rawnsley, Jonathan Freedland, Suzanne Moore and the entire Guardian–Observer nexus of corporate liberals. Much of the naivety on the Labour left about this still-powerful strand inside Labour, and the latitude they continue to receive inside the wider party, derives from ignorance about Labour history and the lessons it contains. What, then, are the lessons of 1931, and why are “the Ramsay MacDonalds” still the main enemy?

In 1928 the voting age for women had been reduced from 30 to 21, bringing it in to line with men (a move strongly opposed by Winston Churchill and a host of reactionary Tories). This made the Labour Government elected in May 1929 the first in British history to be elected under equal universal suffrage, and the most legitimate government ever put into power by the British people. This was significant, given that power within British society continued to reside where it always had. A.J.P Taylor, in English History 1914-1945, neatly summarised the social forces aligned against Labour and the organised working class –

Universities, Chambers of Commerce, the civil service, the armed forces, nominally non-party organisations such as the Women’s Institute, and to a great extent the Church of England, were pillars of conservatism in thin disguise. Other things being equal, those who rule go on ruling, and those who are ruled acquiesce.

Once again, as in 1923 when the first minority Labour government was elected, Labour’s pre-election rhetoric outstripped its intentions in government. Its programme, “Labour and the Nation”, written by R.H Tawney, had declared that Labour’s aim was to “use the weapons forged in the victorious struggle for political democracy to end the capitalist dictatorship in which democracy finds everywhere its most insidious and relentless foe”. The biggest challenge facing the new government was the ever rising tide of mass unemployment, created by the great post-war depression of 1921-22. The problem of “the intractable million”, as it came to be known in the 1920s, carved great wounds in British society as unemployment reached and seldom dipped below 10% of the population. In 1922 the total of jobless had been 1.54 million. In 1929 it was still 1.2 million, about to jump up to nearly 2 million in 1930 and then exceed 2.5 million in 1931, as the effects of the Great Crash and a second, still worse economic depression hit Great Britain. In regions dependent on traditional staple industries unemployment rates was far higher than the national average, and poverty endemic.

After the 1929 General Election Labour did not have an absolute parliamentary majority. This would have been a severe impediment to pursuing radical policies, had that been the intention. However, the only genuine radical success of the 1924 government, John Wheatley, was carefully excluded from the new Cabinet. The reasons for this were made clear at the first meeting of the Parliamentary Labour Party (PLP) after the election, when Wheatley opposed forming a minority government, which he feared would inevitably pursue capitalist policies and end up cutting unemployment benefits to assuage the City. MacDonald ignored him, and said that the greatest danger the government faced was “sniping from within”. The vast majority of Labour MPs applauded him.

The former radical firebrand George Lansbury, Leader of Poplar Council in the 1920s, had been invited into the Cabinet as First Commissioner of Works, but by 1929 he had lost some of his former zeal. With Lansbury muted the government, as in 1924, posed no objective threat to the British ruling class and its interests, no concrete programme to socialise the means of production, no attack of wealth and privilege, and no deviation from a pro-Empire foreign policy. The Fabian intellectual Sidney Webb, now Lord Passfield and the new Colonial and Dominions Secretary, said of the challenge of leading the country towards the socialist commonwealth, “All I know is that I don’t know how to do it”. Faced with this kind of “socialist”, the UK’s powerful vested interests had no need to resort to underhand or unconstitutional methods to subvert the Labour government. The capitalist economy itself, aided by servile newspaper empires run by rich plutocrats, served just as well.

The Federation of British Industries (the FBI, the pre-cursor to today’s CBI) drove the point home. It informed MacDonald that it had strong objections to an interventionist economic policy, and that it expected “a holiday from social legislation”. The FBI offered the government and the trade unions a deal – that in return for “greater flexibility in labour practice” it would deliver “a truce in wage rate reductions for the next eighteen months”. Robert Skidelsky’s comprehensive analysis of the economic policies of the 1929-1931 Labour government describes the City’s deep economic orthodoxy, and its fear that

Any tendency to toy with unsound expedients such as raising a huge loan for development purposes would seriously undermine international confidence. This was especially true, it was held, if the offending government were a Labour one (“Politicians and the Slump: The Labour Government of 1929-1931”, p.77).

 

The City worried unnecessarily. Labour’s Chancellor, Philip Snowden, could not have been more attentive to their needs had he got down and polished their shoes. He faithfully echoed the Treasury and the Bank of England’s commitment to the Gold Standard and Free Trade. Snowden’s unwillingness to take Sterling off the Gold Standard (to which the previous Tory Chancellor Churchill had returned the UK in 1925, thus stifling the flow of credit and hampering industrial expansion) had crippled from the start proposals to alleviate unemployment through government spending. In complete agreement with Treasury/City doctrine that deficit spending was calamitous and unemployment benefits were excessive, Snowden ensured the Labour manifesto’s “unqualified pledge” to deal “immediately and practically” with mass unemployment was never actioned, although by July 1930 unemployment had topped 2 million, and 2 ½ million by the end of the year.

When not restrained by Snowden’s financial strait-jacket Labour made a few jabs at some of the British economy’s worst injustices. It passed the Coal Mines Act 1930, which revoked the 8 hour day imposed on the miners in 1926 after the General Strike (it legislated for 7 ½ hours) and sought to control coal prices. The new Minister for Health, Arthur Greenwood, also made clear he would continue John Wheatley’s house building subsidies introduced in 1924, which had been under threat from the Tories, and legislated for a programme of slum clearance in the Housing Act 1930. These were resisted by the Conservative opposition under Stanley Baldwin but nevertheless had some residual impact, particularly later in the 1930s when Greenwood’s act led to a massive attack on Victorian slum housing.

These were fleeting moments of radical challenge, overshadowed and virtually extinguished by the economic crisis inaugurated by the Great Crash of October 1929

These were fleeting moments of radical challenge, overshadowed and virtually extinguished by the economic crisis inaugurated by the Great Crash of October 1929, whose ripple effect hit Britain in 1930 and 1931 and accelerated already high unemployment. As the devastating effect of the Great Crash sent shockwaves around the world and impacted on European economies, MacDonald gave voice to Labour’s deep yet incoherent belief that the capitalist system was fundamentally unsound, and it was beyond human ken to address it – “We are not on trial. It is the system under which we live. It has broken down everywhere, as it was bound to break down”. Unfortunately he had no schemes or policies to redress this breakdown, and he was not open to those who had.

The government’s doctrinal incoherence left it vulnerable to whoever talked loudest and wielded financial and institutional power. Sadly, this was not its own activists, or those calling for radical departures in economic policy. On the contrary

the decline in business profits produced a predictable clamour in favour of retrenchment in public expenditure, which was focused in a attack on the “dole”, and its alleged “abuses”, but over which already loomed the spectre of an unbalanced Budget and all its attendant evils. (Skidelsky, p.203).

With some exceptions, Ministers internalised and reflected these voices. Ostensibly socialist politicians elected by a primarily working class electoral base to restructure British capitalism and address the burning issue of unemployment began to see the unemployed themselves as the problem. Hugh Dalton, then a junior member of the government, recorded in his diary that

In niggling discussions about abuses and anomalies in the payment, in a small number of cases, of unemployment benefit, most Ministers and their officials quite lost sight of the major “abuse” and “anomaly” of mass unemployment itself.

There were ideas to tackle the blight of mass unemployment and the threat to social peace it represented, but they were advanced by an odd consortia of Independent Labour Party (ILP)/left Labour MPs, progressive Liberals and economists like J.M Keynes, and championed inside the Labour Government by Minister of Works George Lansbury and Chancellor of the Duchy of Lancaster Sir Oswald Mosley. Although these alternative policies were far and away the most creative and energetic proposals put forward at the time, and would eventually find effective expression in the USA as part of Roosevelt’s New Deal, they suffered in Britain by association with Mosley. Brilliant but erratic, he eventually left Labour to form the New Party, and all his potential was wasted as he declined into fascism.

In January 1930 Mosley put all his proposals for dealing with unemployment into a document subsequently known as the “Mosley Memorandum” and sent it to the Prime Minister. Amongst other things it called for greater public ownership, control of banking and credit operations to ensure stimulus to the economy, increased pensions and social security payments, and protectionism. It also recommended the creation of a Development Bank that would co-ordinate government credit, rationalisation and regulation of the banks, and planned industrial development. The Memorandum was explicitly critical of the inability of British banks to focus on the long term national interest, considering them “…unfitted by tradition and present practice to play any such part”. Mosley had discussed an earlier draft of the memorandum with Lansbury, and also with J.M Keynes, who considered it “a very able document”.

MacDonald set up a Cabinet sub-committee consisting of himself, J.H Thomas (who had responsibility for tackling unemployment, and whose inactivity had driven Mosley into independent action), Arthur Greenwood, Tom Shaw and Margaret Bondfield. Only Bondfield, Minister of Labour and a former member of the TUC General Council, had any sympathy for the proposals. The Memorandum was also sent to the Treasury for views. After cursory consideration the Cabinet sub-committee rejected the memorandum, partly prompted by a negative assessment from the Treasury, partly by the savaging of Mosley’s proposals from a press that with minor exceptions was extremely conservative. The Daily Mail editorialised (May 22 1930) that

No reasonable person would refuse the Government in general and Mr J.H Thomas in particular commendation for the firm stand they have taken against the crazy proposals put forward by irresponsible members of their party, and against the wild-cat schemes of Sir Oswald Mosley”.

Instead the Mail strongly recommended “…the most drastic economy in expenditure, accompanied by large remissions in taxation.”

The leading members of the government feared and followed the wishes of the press and shaped policy around the headlines of the Mail. In frustration, Mosley resigned his government position and tied to bring the fight for alternative policies to the Parliamentary Party. At a packed and dramatic meeting of Labour MPs Mosley laid out his proposals in what those present reported as a brilliant and passionate speech. Nonetheless he was soundly defeated by 202 votes to 29 after MacDonald demanded loyalty to the leadership, and only a small minority of left-wing MPs (amongst whom was the young Aneurin Bevan, elected in 1929) were prepared to defy the Prime Minister. After this Mosley self-destructed, producing a manifesto supported by only 17 Labour MPs and in early 1931 leaving the Labour Party.

Although Mosley’s proposals were rejected by the Cabinet sub-committee and by most Labour MPs, his stinging criticisms of the lack of focus within Whitehall on the problem of unemployment had enough effect that MacDonald felt compelled to create a new Ministerial “panel” to bring greater coherence to government attempts to tackle the problem. To assist the panel a new Secretariat of senior civil servants was created headed by Sir John Anderson, Permanent Secretary of the Home Office. Yet the force and logic of the Mosley Memorandum had clearly left an imprint on MacDonald, even if one he wished to discard. In July 1930 he sent the memorandum on to Sir John Anderson to “examine the proposals made here and see what is in them”. Whilst Sir John did not specifically reply to the Mosley Memorandum, he did respond on 31^st July with a detailed summary of the findings of the Secretariat during its seven weeks of existence. Sir John wrote to MacDonald that the Secretariat considered the scale of the unemployment problem had been exaggerated as “a large number of people really abused the insurance scheme”. Rejecting the possibility of “radical measures” such as government funded schemes to promote employment in the depressed regions, he added that “we are now reaching the limit of works which will conform to any reasonable standard of economic utility or development” and the government must dispense with “illusions that a substantial reduction of unemployment figures is to be sought in the artificial provision of employment”.

In its short existence Anderson’s Secretariat had not examined the provision of the “dole”. More reliable data from the Ministry of Labour disproved Anderson’s assertion that there was wide-spread abuse. In the later opinion of a resolutely non-Marxist commentator, the explanation for Anderson’s complacency lay in the class solidarity of the British ruling elite –

It is perhaps not unfair to speculate that, far from having thoroughly investigated all possibilities, Anderson had met a number of captains of industry and the City, over luncheon or dinner at Brook’s or the Athenaeum, who had warned him that any “radical measures” would undoubtedly so damage confidence as to produce economic collapse (Skidelsky, p.219).

There was in any case virtually no chance that Mosley’s policy prescriptions would get past MacDonald and Snowden. After the fall of the government Mosley’s successor as Chancellor of the Duchy of Lancaster, future Labour leader Clement Attlee, confirmed to Hugh Dalton that “Snowden had been blocking every positive proposal for two years”. Now Snowden moved beyond inertia into outright Tory policy. With the threat posed by Mosley eliminated and unemployment now topping 3 million Snowden confirmed in February 1931 that, in line with Treasury orthodoxy, he envisaged a massive attack on social spending.

To provide him with the political cover he needed to force through measures he knew would be unpopular with his own party, Snowden took advantage of a Liberal motion (supported, with astonishing naivety, by most Labour MPs) for an independent committee of “experts” to examine the public accounts and make recommendations for cuts in public expenditure. To chair the committee he appointed the industrialist Sir George May, recently President of the Prudential Assurance Company and a man with no background or expertise in government finance. Four of the committee were likewise leading industrialists, balanced by two senior trade unionists. Snowden was prepared to wait upon their recommendations, and so his April 1931 Budget was comparatively mild. He was planning a much more severe “austerity” Budget in the autumn.

On August 1^st the May Committee reported as expected, “a report compounded of prejudice, ignorance and panic” (Taylor, p. 288). It exaggerated the total deficit and strongly recommended that it be dealt with immediately by a £96 million programme of “economies”, most of which would be achieved by a 20% cut in unemployment benefits allied to an increase in contributions. In addition, conditions for receiving benefit would be tightened and receipt would be limited to 26 weeks in any one year. Teachers salaries would be cut by 20% and police officers by 12.5%. Public works programmes would be cut back. Keynes considered the report “”The most foolish document I have ever had the misfortune to read”. The two trade unionists on the committee dissented from its conclusions, suggesting there be fewer economies and increased taxation instead. Snowden ignored their dissent. MacDonald created another Cabinet sub-committee to consider the report, to meet later in August after the summer break.

On August 11^th the Deputy Governor of the Bank of England, Sir Ernest Harvey, laid out for MacDonald and Snowden his view of the seriousness of the economic crisis, now compounded by a run on the pound and contracting government finances. Sir Ernest then met the Conservative and Liberal Treasury spokesmen, and was more forthcoming than to the Prime Minister. According to Shadow Chancellor Neville Chamberlain, Sir Ernest made clear that “The cause of the trouble was not financial but political, and lay in the complete want of confidence in Her Majesty’s Government existing among foreigners”. The Bank of England’s concern was for the views of the big New York banking houses, whom the British government was asking for a short-term loan to tide over its deficit. New York did not believe a Labour Government, allied to the trade unions and the wider labour movement, would institute massive cuts to social spending. It needed reassurance and proof of compliance.

One of Chamberlain’s advisers, J.C.C Davidson, telephoned Tory leader Stanley Baldwin, on holiday in France, and told him to return home immediately. He sensed that the government “was already breaking up”. He may have been assisted in this by secret communications from MacDonald’s Parliamentary Private Secretary, who broke Civil Service rules to pass information to the Opposition Front Bench. Davidson’s diaries record “MacDonald’s Private Secretary, Usher, kept me closely informed of the situation”. Apparently Usher doubted that Labour would survive much longer, as “…only Snowden and Thomas could be relied on to see the situation through, particularly if the correct solution to the crisis was a cut in unemployment insurance.”

Finally the TUC woke up to the scale of the crisis that was upon them. On the TUC General Council Ernest Bevin was the leading voice against the cuts programme. On August 17^th he told the TGWU National Executive “The crisis has not arisen as result of anything the Labour Government has done, or of its social policy, or the cost of unemployment. It has arisen as result of the manipulation of finance by the City…”, and he was firm that “The City should not be saved at the expense of the working class and the poorest of our people”. Inside Parliament Arthur Henderson, hitherto a MacDonald loyalist but also linked to the trade unions, started to voice discontent with the May Report. Under immense pressure the Economy sub-committee reported back early to the full Cabinet on 19^th August with proposals to implement much of the May Report, though trimming some of its severer recommendations. The Cabinet agreed to authorise a lesser programme of £56 million of economies, though there was vocal disagreement as to whether this would include cuts to unemployment benefits. The Opposition parties insisted that the full programme of cuts, including the 20% cut in unemployment benefit, must be made to ensure New York retained confidence in the UK economy.

Impelled by Bevin, the General Council sent a special deputation to meet the Economy sub-committee to convey its “complete opposition” to the proposed cuts. Asked for alternatives to Snowden’s cuts programme, the TUC General Secretary Walter Citrine questioned whether the “crisis” of sterling was really as catastrophic as the City maintained, and he outlined a programme of tariff reform and increased taxation for higher earners (especially those on “fixed yield” interest, i.e. rentiers) that could start to address it. The meeting became rancorous, with Snowden firm on the need for financial discipline as disaster would follow if sterling went off the Gold Standard. When he asked sarcastically why, if the TUC supported increased taxation on rentiers it did not support taxing teachers and policemen as well, Bevin answered that the latter were useful to society whilst the former were not!

A subsequent letter from the General Council to the Cabinet made it clear to those who supported the cuts, and to those who did not, where the organised labour movement stood. Whilst this gave strength to those, like Henderson, who were now disengaging themselves from MacDonald, it infuriated those in the Cabinet (still a majority) who supported him. Snowden, happy to accept direction from Treasury mandarins, snapped that interference by the TUC was an affront to democracy. Sidney Webb, having spent a lifetime lecturing the working class on what they should do and not do, was infuriated that their representatives should disagree with him. “The General Council are pigs” he raged to his wife Beatrice, although he did not exhibit similar hatred for the Opposition parties, the Bank of England, Sir George May or the New York banks.

But the crucial decisions were not to be made by the General Council, or by Labour MPs, or even the Labour Cabinet. MacDonald was subject to a tidal wave of extra-Parliamentary pressures. On August 20^th MacDonald and Snowden met Neville Chamberlain and other Tory and Liberal leaders to discuss a common approach to the economic crisis. Chamberlain insisted that nothing less than the full May Report was acceptable to the Opposition. Snowden agreed this was required but was worried he could not carry his colleagues with him, whereupon Chamberlain urged MacDonald to consider the formation of a “national government” to carry forward the full cuts programme. This would be done “in the national interest”.

Many others were making this suggestion, including George V. When MacDonald saw the King on the morning of August 23^rd he told him the government could not reach agreement on the cuts and might have to resign. After MacDonald left the Palace the King saw Sir Herbert Samuel, the Liberal leader, and told him what the Prime Minister had said. Samuel was concerned, and told the King that “In view of the fact that the necessary economies would prove most unpalatable to the working classes, it would be in the general interest if they could be imposed by a Labour government”. He explained that if Labour did not stay in power the next best outcome would be a national government composed of representatives of all three parties, with MacDonald as Prime Minister to give the impression of continuity.

Later the same morning, the Editor of the Times, Geoffrey Dawson, fully informed of Whitehall and Palace discussions, called the King’s Private Secretary, Sir Clive Wigram, and suggested that the King needed to impress on MacDonald that it was his responsibility to “get the country out of the mess” and to do so “with any flattery he liked”. By this stage MacDonald did not need flattery to see himself as the national saviour rising above petty party concerns. The King, his Private Secretary, the editor of the Times, the Treasury, the leaders of the Conservative and Liberal Parties, and increasingly the Labour Prime Minister himself, were all converging on the belief that democratic party politics should be suspended in favour of a “national” government that would respond swiftly to the dictates of the City and Wall St.

The King, his Private Secretary, the editor of the Times, the Treasury, the leaders of the Conservative and Liberal Parties, and increasingly the Labour Prime Minister himself, were all converging on the belief that democratic party politics should be suspended in favour of a “national” government that would respond swiftly to the dictates of the City and Wall St.

That evening MacDonald received a telegram from the American banking plutocrat J.P Morgan, in the name of the New York banking houses from whom the government was seeking credits. He read it out to the Cabinet, emphasising Morgan’s blunt enquiry whether the programme of cuts under consideration “…had the sincere support and approval of the Bank of England and the City generally” since it was necessary that there be “internal confidence” in the government. It was clear that if it did not, and unless the programme included at least a 10% cut in unemployment benefits, the American loan would not be forthcoming. At this the Cabinet broke up in loud shouting. Eight Ministers (including Henderson and Lansbury) were adamant that they would not be dictated to by New York and would not accept the cuts in benefits.

MacDonald had no choice but to go back to the King and offer his resignation, which he did at 10.20 pm on August 23^rd. Sir Clive Wigram recorded that the Prime Minister looked “scared and unbalanced”. The King reassured him that he was still needed, and that he if he could not carry his Cabinet he should from a national government. Relieved, MacDonald agreed to meet Baldwin and Samuel to discuss this, which he did in the presence of the King at 10.00 the next morning, August 24^th. With the King’s promptings (already discussed and agreed with Baldwin and Samuel in separate meetings) MacDonald agreed to form a national government with himself as Prime Minister. At this point no member of the Cabinet had resigned and none, except Snowden, were even aware of MacDonald’s meetings with Baldwin and Samuel.

The last Labour Cabinet of that government was held that afternoon. In a tense atmosphere MacDonald informed his colleagues that at the request of the King he was to lead a national coalition government to institute “emergency measures”. He asked Snowden and Thomas to join him and they agreed. No other Ministers were even asked. That afternoon the Palace formally announced that MacDonald had resigned. The communiqué went on “The King then invited him to form a national administration. Mr MacDonald accepted the offer, and kissed hands on his appointment as the new Prime Minister”. At the same time it was announced that the new National Government would implement cuts of £70 million which would include a cut of 10% in unemployment benefits. New York was pleased. The loan was assured.

MacDonald, Snowden and Thomas ended their careers as mere figureheads for a “national” government that was essentially a Tory-Liberal coalition. They provided political cover to impose savage spending cuts and immense suffering on Labour’s heartlands, where unemployment was severest. The reasons for Labour’s collapse in 1931, for its inability to resist the austerity that the “national” government would inflict on the country throughout the 1930s, were many and varied, but fundamentally it was an intellectual failure. Macdonald and his closest supporters held to a narrow, anaemic conception of politics, a naive reformism with no understanding of how utterly ruthless the UK’s ruling class are and how far they will go to protect their power and privilege. Whilst the Labour Government was subject to unprecedented political and economic pressures during 1929-31 these could and should have been predicted. Even after the first effects of the Great Crash had reverberated across Europe and hit the British economy, the government could have survived, and protected those who had elected it, through a combination of greater flexibility in economic thinking, a firmer alliance with Labour’s core constituency and the trade unions, and political backbone. Instead, it allowed itself to become the willing victim of “a ministerial revolution engineered in the City, Downing St and Buckingham Palace” (Michael Foot, Aneurin Bevan, vol 1, p.118).

Labour’s servility to the institutions it ostensibly set out to control was nowhere better illustrated than by the issue of the Gold Standard. A few days after the formation of the National Government MacDonald was asked why, before he collapsed the Labour government, he had not first summoned Parliament and candidly explained the situation to them. “There was no time” MacDonald replied. “Prompt action had to be taken to prevent the disaster of going off Gold”. A month later, on 21^st September 1931, after advice from Treasury officials that despite the £80 million New York loan Britain’s gold reserves were still dangerously low, the National Government took Britain off the Gold Standard. The Treasury mandarins and newspaper editors who had insisted that the only way to prevent this national disaster was to slash unemployment benefits, made no complaint. Sidney Webb, when informed that Britain had, after all, left the Gold Standard, was incredulous, and his reaction summed up the first generation of Labour Ministers and the government of 1929-1931. “Nobody told us we could do that” he said.

If a transformed Corbyn-led Labour Party is elected – and it is a huge if – there will be many inside the Labour and Trade Union movement, and in the “liberal” media, lining up to tell it what it can and, more importantly, what it cannot do. Whether directly or indirectly these people are the compliant, instinctive servants of the 1%. They speak the language of an Oxbridge-BBC-Guardian elite, well schooled in visionless pragmatism and unquestioning acceptance of capitalist realism. Their every action will be devoted to undermining a Corbyn-led opposition and a socialist government. They should be recognised for what they are – our future Ramsay MacDonalds.