Ramsay MacDonald

James Ramsay MacDonald, FRS (12 October 1866 – 9 November 1937) was a British statesman who was the first Labour Party Prime Minister, leading Labour governments in 1924, 1929–1931 and, having been expelled from the party he had helped to found, a National Government from 1931 to 1935.
Historians credit MacDonald, along with Keir Hardie and Arthur Henderson, as one of the three principal founders of the Labour Party. His speeches, pamphlets and books made him an important theoretician, but he played an even more important role as Leader of the Labour Party. He entered Parliament in 1906 and was the Chairman of the Labour MPs from 1911 to 1914. He was widely denounced for his opposition to the First World War, and he lost his seat in 1918. The antiwar mood of the 1920s led to his rehabilitation in the 1920s and he returned to Parliament in 1922, as his party replaced the Liberal Party as the second-largest party.
The first Labour government—formed with Liberal support—in 1924 lasted only nine months but demonstrated that the Labour Party was sufficiently competent to run a government. MacDonald was widely applauded for his moderation and his support of the League of Nations, but Labour was defeated at the 1924 General Election, partly as a result of the fallout from the Campbell case.
Labour returned to power—this time as the largest party—in 1929 but was soon overwhelmed by the crisis of the Great Depression, in which the Labour government was split by demands for public spending cuts to preserve the Gold Standard. In 1931, MacDonald formed a National Government in which only two of his Labour colleagues agreed to serve. His majority came from the Conservatives. He abandoned the gold standard and called a general election in 1931 seeking a "doctor's mandate" to do whatever was necessary to fix the economy. MacDonald's National coalition won an overwhelming landslide and the Labour Party was reduced to a rump of around 50 seats in the House of Commons.
Expelled from the Labour Party, MacDonald remained Prime Minister of the National Government from 1931 to 1935; by this time he felt that the internal cohesion of the British Empire, a protective tariff, and an independent British defence programme would be the wisest policy. Nevertheless budget pressures, and a strong popular pacifist sentiment, forced a reduction in the military and naval budgets. His health rapidly deteriorated and he became increasingly ineffective as a leader. He stood down as Prime Minister in 1935, losing his seat at the general election that autumn and returning for a different constituency. He remained in the Cabinet as Lord President of the Council until retiring from the government in 1937 and dying, still an MP, later that year.
Since 1931 MacDonald has been bitterly denounced by Labour supporters as a traitor to their cause, and he has also been seen as one of the prime appeasers of Hitler's Germany. Since the late 1970s historians have defended his reputation, emphasising his earlier role in building up the Labour Party and as a forerunner of the political realignments of the 1990s and 2000s.

Lossiemouth

MacDonald was born at Gregory Place, Lossiemouth, Morayshire, Scotland, the illegitimate son of John MacDonald, a farm labourer, and Anne Ramsay, a housemaid. Although registered at birth as James McDonald (sic) Ramsay, he was known as Jaimie MacDonald. Illegitimacy could be a serious handicap in 19th-century Presbyterian Scotland, but in the north and northeast farming communities, this was less of a problem; in 1868 a report of the Royal Commission on the Employment of Children, Young Persons and Women in Agriculture noted that the illegitimacy rate was around 15%. His mother had worked as a domestic servant at Claydale farm, near Alves, where her future husband was also employed. They were to have been married, but the wedding never took place, either because the couple quarrelled and chose not to marry, or because Anne's mother, Isabella Ramsay, stepped in to prevent her daughter from marrying a man she deemed unsuitable.

Bloody Sunday.

Ramsay MacDonald received an elementary education at the Free Church of Scotland school in Lossiemouth from 1872 to 1875, and then at Drainie parish school. He left school at the end of the summer term in 1881, at the age of 15, and began work on a nearby farm. In December 1881 he was appointed as a pupil teacher at Drainie parish schoolIn 1885 he left to take up a position as an assistant to Mordaunt Crofton, a clergyman in Bristol who was attempting to establish a Boys' and Young Men's Guild at St Stephen's Church. It was in Bristol that Ramsay MacDonald joined the Democratic Federation, a Radical sect. This federation changed its name a few months later to the Social Democratic Federation (SDF). He remained in the group when it left the SDF to become the Bristol Socialist Society. In early 1886 he moved to London.

Young semi-socialist in London

Following a short period of work addressing envelopes at the National Cyclists' Union in Fleet Street, he found himself unemployed and forced to live on the small amount of money he had saved from his time in Bristol. MacDonald eventually found employment as an invoice clerk in the warehouse of Cooper, Box and Co. During this time he was deepening his socialist credentials, and engaged himself energetically in C. L. Fitzgerald's Socialist Union which, unlike the SDF, aimed to progress socialist ideals through the parliamentary system. MacDonald witnessed the Bloody Sunday of 13 November 1887 in Trafalgar Square, and in response, had a pamphlet published by the Pall Mall Gazette, entitled Remember Trafalgar Square: Tory Terrorism in 1887.

MacDonald retained an interest in Scottish politics. Gladstone's first Irish Home Rule Bill inspired the setting-up of a Scottish Home Rule Association in Edinburgh. On 6 March 1888, MacDonald took part in a meeting of London-based Scots, who, upon his motion, formed the London General Committee of Scottish Home Rule Association. For a while he supported home rule for Scotland, but found little support among London's Scots. However, MacDonald never lost his interest in Scottish politics and home rule, in Socialism: critical and constructive, published in 1921, he wrote: "The Anglification of Scotland has been proceeding apace to the damage of its education, its music, its literature, its genius, and the generation that is growing up under this influence is uprooted from its past."

Politics in the 1880s was still of less importance to MacDonald than furthering his education. He took evening classes in science, botany, agriculture, mathematics, and physics at the Birkbeck Literary and Scientific Institution but his health suddenly failed him due to exhaustion one week before his examinations. This put an end to any thought of a scientific career. In 1888, MacDonald took employment as private secretary to Thomas Lough who was a tea merchant and a Radical politician. Lough was elected as the Liberal Member of Parliament (MP) for West Islington, in 1892. Many doors now opened to MacDonald: he had access to the National Liberal Club as well as the editorial offices of Liberal and Radical newspapers; he made himself known to various London Radical clubs among Radical and labour politicians. MacDonald gained valuable experience in the workings of electioneering. At the same time he left Lough's employment to branch out as a freelance journalist. Elsewhere as a member of the Fabian Society for some time, MacDonald toured and lectured on its behalf at the London School of Economics and elsewhere.

The TUC had created the Labour Electoral Association (LEA) and entered into an unsatisfactory alliance with the Liberal Party in 1886. In 1892, MacDonald was in Dover to give support to the candidate for the LEA in the General Election who was well beaten. MacDonald impressed the local press and the Association and was adopted as its candidate, announcing that his candidature would be under a Labour Party banner. He denied the Labour Party was a wing of the Liberal Party but saw merit in a working political relationship. In May 1894, the local Southampton Liberal Association was trying to find a labour-minded candidate for the constituency. Two others joined MacDonald to address the Liberal Council: one was offered but turned down the invitation, while MacDonald failed to secure the nomination despite strong support among Liberals.

In 1893, Keir Hardie had formed the Independent Labour Party (ILP) which had established itself as a mass movement. In May 1894 MacDonald applied for membership, and was accepted. He was officially adopted as the ILP candidate for one of the Southampton seats on 17 July 1894 but was heavily defeated at the election of 1895. MacDonald stood for Parliament again in 1900 for one of the two Leicester seats and although he lost was generously accused of splitting the Liberal vote to allow the Conservative candidate to win. That same year he became Secretary of the Labour Representation Committee (LRC), the forerunner of the Labour Party, while retaining membership of the ILP. While it was not a Marxist organization it was more rigorously socialist than the once and future Labour Party in which the ILP members would operate as a "ginger group" for many years.

As Party Secretary, MacDonald negotiated an agreement with the leading Liberal politician Herbert Gladstone (son of the late Prime Minister William Ewart Gladstone), which allowed Labour to contest a number of working-class seats without Liberal opposition, thus giving Labour its first breakthrough into the House of Commons. He married Margaret Ethel Gladstone, who was unrelated to the Gladstones of the Liberal Party, in 1896. Although not wealthy, Margaret MacDonald was comfortably off, and this allowed them to indulge in foreign travel, visiting Canada and the United States in 1897, South Africa in 1902, Australia and New Zealand in 1906 and India several times.

It was during this period that MacDonald and his wife began a long friendship with the social investigator and reforming civil servant Clara Collet with whom he discussed women's issues. She was an influence on MacDonald and other politicians in their attitudes towards women rights. In 1901, he was elected to the London County Council for Finsbury Central as a joint Labour–Progressive Party candidate, but he was disqualified from the register in 1904 due to his absences abroad.

In 1906, the LRC changed its name to the "Labour Party", amalgamating the ILP. In that same year, MacDonald was elected MP for Leicester along with 28 others, and became one of the leaders of the Parliamentary Labour Party. These Labour MPs undoubtedly owed their election to the 'Progressive Alliance' between the Liberals and Labour, a minor party supporting the Liberal governments of Henry Campbell-Bannerman and H. H. Asquith. MacDonald became the leader of the left wing of the party, arguing that Labour must seek to displace the Liberals as the main party of the left.

Hoist with this own petard.
Mr. Ramsay MacDonald (Champion of Independent Labour). "Of course I'm all for peaceful picketing—on principle. But it must be applied to the proper parties."
Cartoon from Punch 20 June 1917

In 1911 MacDonald became Party Leader (formally "Chairman of the Parliamentary Labour Party"). He was the chief intellectual leader of the party, paying little attention to class warfare and much more to the emergence of a powerful state as it exemplified the Darwinian evolution of an evermore complex society. He was an Orthodox Edwardian progressive, keen on intellectual discussion, and adverse to agitation.

Within a short period his wife became ill with blood poisoning and died. This deeply and permanently affected MacDonald.

MacDonald had always taken a keen interest in foreign affairs and knew from his visit to South Africa, just after the Boer War had ended, what the effects of modern conflict would be. Although the Parliamentary Labour Party generally held an anti-war opinion, when war was declared in August 1914, patriotism came to the fore. The Party supported the government in its request for £100,000,000 of war credits and, as MacDonald could not, he resigned the party Chairmanship. Arthur Henderson became the new leader while MacDonald took the party Treasurer's post. During the early part of the war he was extremely unpopular and was accused of treason and cowardice. Former Liberal Party MP and publisher Horatio Bottomley attacked him through his magazine John Bull in September 1915 by publishing an article carrying details of MacDonald's birth and his so-called deceit in not disclosing his real name. His illegitimacy was no secret and he had not seemed to have suffered by it, but according to the journal he had, by using a false name, gained access to parliament falsely and should suffer heavy penalties and have his election declared void. MacDonald received much internal support, but the way in which the disclosures were made public had affected him. He wrote in his diary:

...I spent hours of terrible mental pain. Letters of sympathy began to pour in upon me.... Never before did I know that I had been registered under the name of Ramsay, and cannot understand it now. From my earliest years my name has been entered in lists, like the school register, etc. as MacDonald.

Despite opposition to the war, MacDonald visited the Western Front in December 1914 with the approval of Lord Kitchener. MacDonald and General Seeley:

set off for the front at Ypres and soon found themselves in the thick of an action in which both behaved with the utmost coolness. Later, MacDonald was received by the Commander-in-Chief at St Omer and made an extensive tour of the front. Returning home, he paid a public tribute to the courage of the French troops, but said nothing then or later of having been under fire himself.

Election poster produced for the 1923 election

As the war dragged on, his reputation recovered but he still lost his seat in the 1918 "Coupon Election", which saw the Liberal David Lloyd George's coalition government win a large majority.

MacDonald stood for Parliament in the 1921 Woolwich East by-election and lost. In 1922, MacDonald was returned to the House as MP for Aberavon in Wales, With a vote of 14,318 against 11,111 and 5328 for his main opponents. His rehabilitation was complete; the Labour New Leader magazine opined that his election was, "enough in itself to transform our position in the House. We have once more a voice which must be heard."

By now, the party was reunited and MacDonald was re-elected as Leader. Historian Kenneth Morgan examines his newfound stature:

as dissolution set in with the Lloyd George coalition in 1921-2, and unemployment mounted, MacDonald stood out as the leader of a new kind of broad-based left. His opposition to the war had given him a new charisma. More than anyone else in public life, he symbolized peace and internationalism, decency and social change.... [He] had become The voice of conscience.

At the 1922 election, Labour replaced the Liberals as the main opposition party to the Conservative government of Stanley Baldwin, making MacDonald Leader of the Opposition. By now, he had moved away from the Labour left and abandoned the socialism of his youth: he strongly opposed the wave of radicalism that swept through the labour movement in the wake of the Russian Revolution of 1917 and became a determined enemy of Communism. Unlike the French Socialist Party and the Social Democratic Party of Germany, the Labour Party did not split and the Communist Party of Great Britain remained small and isolated.

MacDonald became noted for "woolly" rhetoric such as the occasion at the Labour Party Conference of 1930 at Llandudno when he appeared to imply unemployment could be solved by encouraging the jobless to return to the fields "where they till and they grow and they sow and they harvest". Equally, there were times it was unclear what his policies were. There was already some unease in the party about what he would do if Labour was able to form a government.

At the 1923 election, the Conservatives had lost their majority, and when they lost a vote of confidence in the House in January 1924 King George V called on MacDonald to form a minority Labour government, with the tacit support of the Liberals under Asquith from the corner benches. He became the first Labour Prime Minister, the first from a working-class background and one of the very few without a university education.

Ramsay MacDonald by Solomon Joseph Solomon, 1911

He had never held office but demonstrated energy, executive ability, and political astuteness. He consulted widely within his party, making the Liberal Lord Haldane the Lord Chancellor, and Philip Snowden Chancellor of the Exchequer. He took the foreign office himself. Besides himself, ten other cabinet members came from working class origins, a dramatic breakthrough in British history. His first priority was to undo the damage caused by the harsh 1919 Treaty of Versailles, by settling the reparations issue and coming to terms with Germany. The king noted in his diary, "He wishes to do the right thing.... Today 23 years ago dear Grandmama died. I wonder what she would have thought of a Labour Government!"

While there were no major labour strikes during his term, MacDonald acted swiftly to end those that did erupt. When the Labour Party executive criticised the government, he replied that, "public doles, Poplarism [local defiance of the national government], strikes for increased wages, limitation of output, not only are not Socialism, but may mislead the spirit and policy of the Socialist movement". The Government lasted only nine months and did not have a majority in either House of the Parliament, but it was still able to support the unemployed with the extension of benefits and amendments to the Insurance Acts. In a personal triumph for John Wheatley, Minister for Health, a Housing Act was passed, which greatly expanded municipal housing for low paid workers.

Foreign affairs

MacDonald had long been a leading spokesman for internationalism in the Labour movement; at first he verged on pacifism. He founded the Union of Democratic Control in early 1914 to promote international socialist aims, but it was overwhelmed by the war. His 1916 book, National Defence, revealed his own long-term vision for peace. Although disappointed at the harsh terms of the Versailles Treaty, he supported the League of Nations – but by 1930 he felt that the internal cohesion of the British Empire and a strong, independent British defence programme might turn out to be the wisest British government policy.

MacDonald moved in March 1924 to end construction work on the Singapore military base despite strong opposition from the Admiralty. He believed the building of the base would endanger the disarmament conference; the First Sea Lord Lord Beatty considered the absence of such a base as dangerously imperilling British trade and territories east of Aden and could mean the security of the British Empire in the Far East being dependent on the goodwill of Japan.

In June 1924, MacDonald convened a conference in London of the wartime Allies and achieved an agreement on a new plan for settling the reparations issue and French occupation of the Ruhr. German delegates joined the meeting, and the London Settlement was signed. It was followed by an Anglo-German commercial treaty. Another major triumph for MacDonald was the conference held in London in July and August 1924 to deal with the implementation of the Dawes Plan. MacDonald, who accepted the popular view of the economist John Maynard Keynes of German reparations as impossible to pay, pressured French Premier Édouard Herriot until many concessions were made to Germany.

A British onlooker commented, "The London Conference was for the French 'man in the street' one long Calvary ... as he saw M. Herriot abandoning one by one the cherished possessions of French preponderance on the Reparations Commission, the right of sanctions in the event of German default, the economic occupation of the Ruhr, the French-Belgian railroad Régie, and finally, the military occupation of the Ruhr within a year." MacDonald was proud of what had been achieved, which was the pinnacle of his short-lived administration's achievements. In September, he made a speech to the League of Nations Assembly in Geneva, the main thrust of which was for general European disarmament which was received with great acclaim.

Britain had already recognised the Soviet Union and MacDonald informed Parliament in February 1924 that negotiations would begin to negotiate a treaty with the Soviet Union. The treaty was to cover Anglo-Soviet trade and the situation of the British bondholders, who had contracted with the pre-revolutionary Russian government and been rejected by the Bolsheviks. There were in fact two proposed treaties: one would cover commercial matters, and the other would cover a fairly vague future discussion on the problem of the bondholders. If the treaties were signed, the British government would conclude a further treaty and guarantee a loan to the Bolsheviks. The treaties were popular neither with the Conservatives nor with the Liberals, who, in September, criticised the loan so vehemently that negotiation with them seemed impossible. However, the Government's fate was determined by the "Campbell Case", the abrogation of prosecuting the left-wing newspaper the Workers' Weekly for inciting servicemen to mutiny. The Conservatives put down a censure motion, to which the Liberals added an amendment. MacDonald's Cabinet resolved to treat both motions as matters of confidence. The Liberal amendment was carried, and the King granted MacDonald a dissolution of Parliament the following day. The issues that dominated the election campaign were, unsurprisingly, the Campbell case and the Russian treaties which soon combined into the single issue of the Bolshevik threat.

Zinoviev letter

On 25 October 1924, just four days before the election, the Daily Mail reported that a letter had come into its possession which purported to be a letter sent from Grigory Zinoviev, the President of the Communist International, to the British representative on the Comintern Executive. The letter was dated 15 September and so before the dissolution of parliament; it stated that it was imperative for the agreed treaties between Britain and the Bolsheviks to be ratified urgently. The letter said that those Labour members who could apply pressure on the government should do so. It went on to say that a resolution of the relationship between the two countries would "assist in the revolutionising of the international and British proletariat ... make it possible for us to extend and develop the ideas of Leninism in England and the Colonies". The government had received the letter before the publication in the newspapers and had protested to the Bolsheviks' London chargé d'affaires and had already decided to make public the contents of the letter with details of the official protest but had not been swift-footed enough. Historians mostly agree the letter was a forgery, but it closely reflected attitudes current in the Comintern. In any case, it had little impact on the Labour vote, which actually increased. It was the collapse of the Liberal Party that led to the Conservative landslide. However, many Labourites for years blamed their defeat on the Letter by misunderstanding the political forces at work. Despite all that had gone on, the result of the election was not disastrous for Labour. The Conservatives were returned decisively gaining 155 seats for a total of 413 members of parliament. Labour lost 40 seats but held on to 151. The Liberals lost 118 seats (leaving them with only 40) and their vote fell by over a million. The real significance of the election was that the Liberals, whom Labour had displaced as the second largest political party in 1922, were now clearly the third party.

Second Labour government (1929–1931)

The strong majority held by the Conservatives gave Baldwin a full term during which the government had to deal with the 1926 General Strike. Unemployment remained high but relatively stable at just over 10% and, apart from 1926, strikes were at a low level. At the May 1929 election, Labour won 288 seats to the Conservatives' 260, with 59 Liberals under Lloyd George holding the balance of power. MacDonald was increasingly out of touch with his supposedly safe Welsh seat at Aberavon; he largely ignored the district, and had little time or energy to help with its increasingly difficult problems regarding coal disputes, strikes, unemployment, and poverty. The miners expected a wealthy man who would fund party operations, but he had no money. He disagreed with the increasingly radical activism of party leaders in the district, as well as the permanent agent, and the South Wales Mineworkers Federation. He moved to Seaham Harbour in County Durham, a safer seat, in order to avoid a highly embarrassing defeat.

MacDonald at Tomb of Unknown Soldier, 9 October 1929

Baldwin resigned and MacDonald again formed a minority government, at first with Lloyd George's cordial support. This time MacDonald knew he had to concentrate on domestic matters. Arthur Henderson became Foreign Secretary, with Snowden again at the Exchequer. JH Thomas became Lord Privy Seal with a mandate to tackle unemployment, assisted by the young radical Oswald Mosley. MacDonald appointed the first ever woman cabinet minister Margaret Bondfield as Minister of Labour.

MacDonald's second government was in a stronger parliamentary position than his first, and in 1930 he was able to raise unemployment pay, pass an act to improve wages and conditions in the coal industry (i.e. the issues behind the General Strike) and pass a housing act which focused on slum clearances. However, an attempt by the Education Minister Charles Trevelyan to introduce an act to raise the school-leaving age to 15 was defeated by opposition from Roman Catholic Labour MPs, who feared that the costs would lead to increasing local authority control over faith schools.

In international affairs, he also convened a conference in London with the leaders of the Indian National Congress, at which he offered responsible government, but not independence, to India. In April 1930 he negotiated a treaty limiting naval armaments with the United States and Japan.

MacDonald, c. 1929

Great Depression

MacDonald's government had no effective response to the economic crisis which followed the Stock Market Crash of 1929. Philip Snowden was a rigid exponent of orthodox finance and would not permit any deficit spending to stimulate the economy, despite the urgings of Oswald Mosley, David Lloyd George and the economist John Maynard Keynes. Mosley put forward a memorandum in January 1930, calling for the public control of imports and banking as well as an increase in pensions to boost spending power. When this was repeatedly turned down, Mosley resigned from the government in February 1931 and formed the New Party. He later converted to Fascism.

By the end of 1930, unemployment had doubled to over two and a half million. The government struggled to cope with the crisis and found itself attempting to reconcile two contradictory aims: achieving a balanced budget to maintain the pound on the Gold standard, and maintaining assistance to the poor and unemployed, at a time when tax revenues were falling. During 1931 the economic situation deteriorated, and pressure from orthodox economists for sharp cuts in government spending increased. Under pressure from its Liberal allies as well as the Conservative opposition who feared that the budget was unbalanced. Snowden appointed a committee headed by Sir George May to review the state of public finances. The May Report of July 1931 urged large public-sector wage cuts and large cuts in public spending (notably in payments to the unemployed) to avoid a budget deficit. MacDonald, Snowden, and Thomas supported such measures as necessary to maintain a balanced budget and to prevent a run on the pound, but the proposed cuts split the Cabinet down the middle and the trade unions bitterly opposed them.

Keynes, a Liberal, had urged MacDonald to devalue the pound by 25% and abandon the existing economic policy of a balanced budget.

Formation of the National Government

Although there was a narrow majority in the Cabinet for drastic reductions in spending, the minority included senior ministers such as Arthur Henderson who made it clear they would resign rather than acquiesce in the cuts. With this unworkable split, on 24 August 1931 MacDonald submitted his resignation and then agreed, on the urging of King George V to form a National Government with the Conservatives and Liberals. With Henderson taking the lead, MacDonald, Snowden, and Thomas were quickly expelled from the Labour Party. they responded by forming a new National Labour group, which provided a nominal party base for the expelled MPs but received little support in the country or the unions. Great anger in the labour movement greeted MacDonald's move. Riots took place in protest in Glasgow and Manchester. Many in the Labour Party viewed this as a cynical move by MacDonald to rescue his career, and accused him of 'betrayal'. MacDonald, however, argued that the sacrifice was for the common good.

1931 general election

MacDonald did not want an immediate election, but the Conservatives forced him to agree to one in October 1931.

In the 1931 general election, the National Government won 554 seats, comprising 473 Conservatives, 13 National Labour, 68 Liberals (Liberal National and Liberal) and various others, while Labour, now led by Arthur Henderson won only 52 and the Lloyd George Liberals four. Henderson and his deputy J. R. Clynes both lost their seats in Labour's worst-ever rout. Labour's disastrous performance at the 1931 election greatly increased the bitterness felt by MacDonald's former colleagues towards him. MacDonald was genuinely upset to see the Labour Party so badly defeated at the election. He had regarded the National Government as a temporary measure, and had hoped to return to the Labour Party.

Premiership of the National Government (1931–1935)

The National Government's huge majority left MacDonald with the largest mandate ever won by a British Prime Minister at a democratic election, but MacDonald had only a small following of National Labour men in Parliament. He was ageing rapidly, and was increasingly a figurehead. In control of domestic policy were Conservatives Stanley Baldwin as Lord President and Neville Chamberlain the chancellor of the exchequer, together with National Liberal Walter Runciman at the Board of Trade. MacDonald, Chamberlain and Runciman devised a compromise tariff policy, which stopped short of protectionism while ending free trade and, at the 1932 Ottawa Conference, cementing commercial relations within the Commonwealth.

MacDonald involved himself heavily in foreign policy. Assisted by the National Liberal leader and Foreign Secretary John Simon, he continued to lead British delegations to international conferences, including the Geneva Disarmament Conference and the Lausanne Conference in 1932, and the Stresa Conference in 1935. He went to Rome in March 1933 in order to facilitate Nazi Germany's return to the concert of European powers and to continue the policy of appeasement. On 16 August 1932 he 'granted' the Communal Award upon India, partitioning it into separate electorates for Hindus, Muslims, Sikhs and Untouchables. Most important of all, he presided at the world economic conference in London in June 1933. Nearly every nation was represented, but no agreement was possible. The American president torpedoed the conference with a bombshell message that the US would not stabilise the dollar. The failure marked the end of international economic co-operation for another decade.

MacDonald was deeply affected by the anger and bitterness caused by the fall of the Labour government. He continued to regard himself as a true Labour man, but the rupturing of virtually all his old friendships left him an isolated figure. One of the only other leading Labour figures to join the government, Philip Snowden, was a firm believer in free trade and resigned from the government in 1932 following the introduction of tariffs after the Ottawa agreement.

Retirement

In 1933 and 1934 MacDonald's mental and physical health declined further, and he became an increasingly ineffective leader as the international situation grew more threatening. His speeches in Commons became incoherent. One observer noted how "Things ... got to the stage where nobody knew what the Prime Minister was going to say in the House of Commons, and, when he did say it, nobody understood it". His pacifism, which had been widely admired in the 1920s, led Winston Churchill and others to accuse him of failure to stand up to the threat of Adolf Hitler. His government began the negotiations for the Anglo-German Naval Agreement. MacDonald was aware of his fading powers, and in 1935 he agreed a timetable with Baldwin to stand down as Prime Minister after George V's Silver Jubilee celebrations in May 1935. He resigned on 7 June in favour of Baldwin, and remained in the cabinet, taking the largely honorary post of Lord President vacated by Baldwin.

After Hitler's re-militarisation of the Rhineland in 1936, MacDonald declared that he was "pleased" that the Treaty of Versailles was "vanishing", expressing his hope that the French had been taught a "severe lesson".

Last years and death

At the election later in the year MacDonald was defeated at Seaham by Emanuel Shinwell. Shortly after he was elected at a by-election in January 1936 for the Combined Scottish Universities seat, but his physical and mental health collapsed in 1936. A sea voyage was recommended to restore his health, but he died on board the liner Reina del Pacifico at sea on 9 November 1937, aged 71 when with his youngest daughter Sheila. His funeral was in Westminster Abbey on 26 November. After cremation, his ashes were buried alongside his wife Margaret at Spynie in his native Morayshire.

For half a century, MacDonald was demonised by the Labour Party as a turncoat who consorted with the enemy and drove the Labour Party to its nadir. In the last quarter century, however, scholarly opinion has raised his status as an important founder and leader of the Labour Party, and a man who held Britain together during its darkest economic times.

MacDonald's expulsion from Labour along with his National Labour Party's coalition with the Conservatives, combined with the decline in his mental powers after 1931, left him a discredited figure at the time of his death destined to receive years of unsympathetic treatment from generations of Labour-inclined British historians. The events of 1931, with the downfall of the Labour government and his coalition with the Conservatives, led to MacDonald becoming one of the most reviled figures in the history of the Labour Party, with many of his former supporters accusing him of betraying the party he had helped create. Clement Attlee in his autobiography As it Happened (1954) called MacDonald's decision to abandon the Labour government in 1931 "the greatest betrayal in the political history of the country". The coming of war in 1939 led to a search for the politicians who had appeased Hitler and failed to prepare Britain; MacDonald was grouped among the "Guilty Men".

It was not until 1977 that he received a supportive biography, when former Labour MP David Marquand, later a Professor of Politics, wrote Ramsay MacDonald with the stated intention of giving MacDonald his due for his work in founding and building the Labour Party, and in trying to preserve peace in the years between the two world wars. He argued also to place MacDonald's fateful decision in 1931 in the context of the crisis of the times and the limited choices open to him. Marquand praised the prime minister's decision to place national interests before that of party in 1931. He also emphasised MacDonald's lasting intellectual contribution to socialism and his pivotal role in transforming Labour from an outside protest group to an inside party of government.

Similarly, opinion about the economic decisions taken in the inter-war period such as the return to the Gold Standard in 1925, and MacDonald's desperate efforts to defend it in 1931, has changed. Robert Skidelsky, in his classic account of the 1929–31 government, Politicians and the Slump (1967), compared the orthodox policies advocated by leading politicians of both parties unfavourably with the more radical, proto-Keynesian measures proposed by David Lloyd George and Oswald Mosley. But in the preface to the 1994 edition Skidelsky argued that recent experience of currency crises and capital flight made it hard to be critical of politicians who wanted to achieve stability by cutting labour costs and defending the value of the currency. In 2004 Marquand advanced a similar argument:

In the harsher world of the 1980s and 1990s it was no longer obvious that Keynes was right in 1931 and the bankers wrong. Pre-Keynesian orthodoxy had come in from the cold. Politicians and publics had learned anew that confidence crises feed on themselves; that currencies can collapse; that the public credit can be exhausted; that a plummeting currency can be even more painful than deflationary expenditure cuts; and that governments which try to defy the foreign exchange markets are apt to get their—and their countries'—fingers burnt. Against that background MacDonald's response to the 1931 crisis increasingly seemed not just honourable and consistent, but right ... he was the unacknowledged precursor of the Blairs, the Schröders, and the Clintons of the 1990s and 2000s.

In Howard Spring's 1940 novel Fame is the Spur, later made into a 1947 film and a 1982 TV adaptation, the lead character Hamer Shawcross loosely resembles MacDonald; it is the story of a working-class Labour politician seduced by power into betraying his class.

In Gandhi he is portrayed by Terrence Hardiman.

In Graham Greene's 1934 novel It's a Battlefield, Ramsay MacDonald's name repeatedly appears in newspapers and on billboards in reference to a visit to Lossiemouth. He is also mentioned and featured in Noël Coward's film, "This Happy Breed".

In the twenty-fourth episode of Monty Python's Flying Circus, original footage of Ramsay MacDonald entering No. 10 Downing Street is followed by a black and white film of MacDonald (played by Michael Palin) doing a striptease, revealing garter belt, suspender and stockings.

MacDonald c. 1900s

Ramsay MacDonald married Margaret Ethel Gladstone (no relation to 19th-century Prime Minister William Gladstone) in 1896. The marriage was a very happy one, and they had six children, including Malcolm MacDonald (1901–81), who had a distinguished career as a politician, colonial governor and diplomat, and Ishbel MacDonald (1903–82), who was very close to her father. Another son, Alister Gladstone MacDonald (1898–1993) was a conscientious objector in the First World War, serving in the Friends' Ambulance Unit; he became prominent architect who worked on promoting the planning policies of his father's government, and specialised in cinema design. MacDonald was devastated by Margaret's death from blood poisoning in 1911, and had few significant personal relationships after that time, apart from with Ishbel, who cared for him for the rest of his life. Following his wife's death, MacDonald commenced a relationship with Lady Margaret Sackville.

In the 1920s and 1930s he was frequently entertained by the society hostess Lady Londonderry, which was much disapproved of in the Labour Party since her husband was a Conservative cabinet minister.

MacDonald's unpopularity in the country following his stance against Britain's involvement in the First World War spilled over into his private life. In 1916, he was expelled from Moray Golf Club in Lossiemouth for supposedly bringing the club into disrepute because of his pacifist views. The manner of his expulsion was regretted by some members but an attempt to re-instate him by a vote in 1924 failed. However, a Special General Meeting held in 1929 finally voted for his reinstatement. By this time, MacDonald was Prime Minister for the second time. He felt the initial expulsion very deeply and refused to take up the final offer of membership.

First Labour government: January–November 1924

• Ramsay MacDonald: Prime Minister, Foreign Secretary and Leader of the House of Commons
• Lord Haldane: Lord Chancellor and joint Leader of the House of Lords
• Lord Parmoor: Lord President of the Council and joint Leader of the House of Lords
• John Robert Clynes: Lord Privy Seal and Deputy Leader of the House of Commons
• Philip Snowden: Chancellor of the Exchequer
• Arthur Henderson: Home Secretary
• James Henry Thomas: Secretary of State for the Colonies
• Stephen Walsh: Secretary of State for War
• Sir Sydney Olivier: Secretary of State for India
• William Adamson: Secretary for Scotland
• Lord Thomson: Secretary for Air
• Lord Chelmsford: First Lord of the Admiralty
• Josiah Wedgwood: Chancellor of the Duchy of Lancaster
• Sidney Webb: President of the Board of Trade
• Noel Buxton: Minister of Agriculture
• Charles Philips Trevelyan: President of the Board of Education
• Vernon Hartshorn: Postmaster-General
• Frederick William Jowett: First Commissioner of Works
• Thomas Shaw: Minister of Labour
• John Wheatley: Minister of Health

Second Labour government: June 1929 – August 1931

• Ramsay MacDonald: Prime Minister and Leader of the House of Commons
• Lord Sankey: Lord Chancellor
• Lord Parmoor: Lord President of the Council and Leader of the House of Lords
• J. H. Thomas: Lord Privy Seal
• Philip Snowden: Chancellor of the Exchequer
• J. R. Clynes: Home Secretary
• Arthur Henderson: Foreign Secretary
• Lord Passfield: Secretary of State for the Colonies and Secretary of State for Dominion Affairs
• Thomas Shaw- Secretary of State for War
• William Wedgwood Benn: Secretary of State for India
• Lord Thomson: Secretary of State for Air
• William Adamson: Secretary of State for Scotland
• A. V. Alexander: First Lord of the Admiralty
• William Graham: President of the Board of Trade
• Sir Charles Philips Trevelyan: President of the Board of Education
• Noel Buxton: Minister of Agriculture
• Margaret Bondfield: Minister of Labour
• Arthur Greenwood: Minister of Health
• George Lansbury: First Commissioner of Works

Changes

• June 1930: J.H. Thomas succeeds Lord Passfield as Dominions Secretary. Passfield remains Colonial Secretary. Vernon Hartshorn succeeds Thomas as Lord Privy Seal. Christopher Addison succeeds Noel Buxton as Minister of Agriculture
• October 1930: Lord Amulree succeeds Lord Thomson as Secretary of State for Air
• March 1931: H.B. Lees-Smith succeeds Sir C.P. Trevelyan at the Board of Education. Herbert Morrison enters the cabinet as Minister of Transport. Thomas Johnston succeeds Hartshorn as Lord Privy Seal

First national government: August–November 1931

• Ramsay MacDonald: Prime Minister and Leader of the House of Commons
• Lord Sankey: Lord Chancellor*
• Stanley Baldwin: Lord President**
• Philip Snowden: Chancellor of the Exchequer*
• Sir Herbert Samuel: Home Secretary***
• Lord Reading: Foreign Secretary and Leader of the House of Lords***
• Sir Samuel Hoare: Secretary for India**
• J.H. Thomas: Dominions Secretary and Colonial Secretary*
• Sir Philip Cunliffe-Lister: President of the Board of Trade**
• Neville Chamberlain: Minister of Health**

Second national government: November 1931 – May 1935

• Ramsay MacDonald: Prime Minister and Leader of the House of Commons
• Lord Sankey: Lord Chancellor*
• Stanley Baldwin: Lord President**
• Lord Snowden: Lord Privy Seal*
• Neville Chamberlain: Chancellor of the Exchequer**
• Sir Herbert Samuel: Home Secretary***
• Sir John Simon: Foreign Secretary****
• Sir Philip Cunliffe-Lister: Colonial Secretary**
• J.H. Thomas: Dominions Secretary*
• Lord Hailsham: Secretary of State for War and Leader of the House of Lords**
• Sir Samuel Hoare: Secretary of State for India**
• Lord Londonderry: Secretary for Air**
• Sir Archibald Sinclair: Secretary of State for Scotland***
• Sir B. Eyres-Monsell: First Lord of the Admiralty**
• Walter Runciman: President of the Board of Trade****
• Sir John Gilmour: Minister of Agriculture**
• Sir Donald Maclean: President of the Board of Education***
• Sir Henry Betterton: Minister of Labour**
• Sir E. Hilton-Young: Minister of Health**
• William Ormsby-Gore: First Commissioner of Works**

Changes

• June 1932: Lord Irwin** succeeds Sir Donald Maclean (deceased) as President of the Board of Education
• September 1932: Stanley Baldwin succeeds Lord Snowden as Lord Privy Seal, remaining also Lord President. Sir John Gilmour succeeds Sir Herbert Samuel as Home Secretary. Sir Godfrey Collins**** succeeds Sir Archibald Sinclair as Scottish Secretary. Walter Elliot** succeeds Sir John Gilmour as Minister of Agriculture.
• December 1933: Stanley Baldwin ceases to be Lord Privy Seal, and his successor in that office is not in the cabinet. He continues as Lord President. Kingsley Wood** enters the cabinet as Postmaster-General
• June 1934: Oliver Stanley** succeeds Sir H. Betterton as Minister of Labour

Key

• * = Member of National Labour
• ** = Member of the Conservative Party
• *** = Member of the Liberal Party
• **** = Member of the Liberal National Party