The World War had transformed British capitalism from a major international creditor into a major debtor. Overseas assets of £1.2 billion had been sold off and exports were down to a third of their pre-war level. On the basis of the Bretton Woods agreement, American imperialism granted Britain a loan of $3.75 billion, which helped bridge the balance of payments deficit with the United States. While the Labour government had carried through certain radical measures, under pressure from the working class, it also continued to carry through policies, under pressure from big business, congenial to British capitalism.
For instance, the 1947 fuel crisis pushed the Labour government to introduce a number of austerity measures. The sterling crisis that ensued forced the Chancellor Hugh Dalton to abandon the convertibility of sterling. By February 1948, Attlee presented a statement to Parliament on “Personal Incomes, Costs and Prices”, and further pressure was put on organised labour to desist from any form of militancy. The Ministry of Labour had persuaded the TUC, under the prodding of Ernest Bevin, to allow the continued operation of wartime Order 1305, which declared strikes illegal and enforced arbitration. Scandalously, this legislation was to be later used to arrest and try seven unofficial dockworkers’ leaders. The TUC leaders also agreed that the Restoration of Pre-War Practices Act (1942) would not be enforced for the time being. Despite growing industrial action on the buses and on the docks (which resulted in a state of emergency), the TUC General Council went along with the austerity, agreeing to examine “wage restraint” as an option. By 1949, the new Chancellor Stafford Cripps, now a firm supporter of capitalism, decided to devalue the pound and impose a wage freeze.
This caused dismay and uproar in the working class. But even prior to the freeze, there was continual industrial unrest – largely unofficial – throughout the four years of the Attlee government. The docks became a traditional centre of working-class unrest. Unofficial action on the docks occurred regularly each year from 1947 to 1951. These actions took place over various issues, including the victimisation of unofficial leaders by Arthur Deakin. Despite these disputes, and others in the Smithfield food market (1946), road transport (1947), and power stations (1949), the General Council fought desperately to hold the line.
Cripps’s devaluation and the effects of the Korean war rapidly pushed up the cost of living. With a boom in the economy, workers took action to improve their position and get a share of the increased profits. At the 1950 Easter conference of the shopworkers union, USDAW, delegates voted to oppose the wage freeze, while the AEU conference debated taking strike action. In June, 1,500 lorry drivers, members of the TGWU, at Smithfield market again came out on unofficial strike over wages. The government called in troops to clear meat supplies and the strikers were eventually persuaded to return to work. By the autumn, gasworkers struck over wages, but the government, fearing an escalation, decided not to use the army. Eventually, given the dead-lock, the government dispatched troops and used Order 1305 to force the workers back to work. On no less than fourteen separate occasions, between July 1945 and October 1951, the Labour government despatched troops to break strikes under the pretext of keeping “essential” supplies moving.
By this time, powerful pressures were mounting against the government’s wages policy and the trade union leaders were forced at last to give in to the mood. At the September TUC conference, a resolution was carried against the platform declaring there was “no basis for a restraint on wage applications.” Despite their best efforts, they could no longer hold the line. The Labour government, which was returned in the general election of February 1951 with a majority of only six seats, was also forced to accept the position or face a massive wave of unofficial strikes. The election result also showed the growing despondency among traditional Labour supporters, but especially the middle class, which was swinging behind the Tories. Their patience had begun to wear thin and their hopes of a socialist future had been undermined.