Her trade advanced by leaps and bounds, and internal prosperity ripened. France and her system of alliances also seemed secure in Europe. The disarmament clauses of the Treaty of Versailles were not openly violated. The German Navy was non-existent. The German air force was prohibited and still unborn. There were many influences in Germany strongly opposed, if only on grounds of prudence, to the idea of war, and the German High Command could not believe that the Allies would allow them to rearm. On the other hand, there lay before us what I later called the “economic blizzard.” Knowledge of this was confined to rare financial circles, and these were cowed into silence by what they foresaw.

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The general election of May, 1929, showed that the “swing of the pendulum” and the normal desire for change were powerful factors with the British electorate. The Socialists had a small majority over the Conservatives in the new House of Commons. The Liberals, with about sixty seats, held the balance, and it was plain that under Mr. Lloyd George’s leadership they would, at the outset at least, be hostile to the Conservatives. Mr. Baldwin and I were in full agreement that we should not seek to hold office in a minority or on precarious Liberal support. Accordingly, although there were some differences of opinion in the Cabinet and the party about the course to be taken, Mr. Baldwin tendered his resignation to the King. We all went down to Windsor in a special train to give up our seals and offices; and on June 7, Mr. Ramsay MacDonald became for the second time Prime Minister at the head of a minority Government depending upon Liberal votes.

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The Socialist Prime Minister wished his new Labour Government to distinguish itself by large concessions to Egypt, by a far-reaching constitutional change in India, and by a renewed effort for world, or at any rate British, disarmament. These were aims in which he could count upon Liberal aid, and for which he therefore commanded a parliamentary majority. Here began my differences with Mr. Baldwin, and thereafter the relationship in which we had worked since he chose me for Chancellor of the Exchequer five years before became sensibly altered. We still, of course, remained in easy personal contact, but we knew we did not mean the same thing. My idea was that the Conservative Opposition should strongly confront the Labour Government on all great imperial and national issues, should identify itself with the majesty of Britain as under Lord Beaconsfield and Lord Salisbury, and should not hesitate to face controversy, even though that might not immediately evoke a response from the nation. So far as I could see, Mr. Baldwin felt that the times were too far gone for any robust assertion of British imperial greatness, and that the hope of the Conservative Party lay in accommodation with Liberal and Labour forces, and in adroit, well-timed manoeuvres to detach powerful moods of public opinion and large blocks of voters from them. He certainly was very successful. He was the greatest party manager the Conservatives had ever had. He fought, as their leader, five general elections, of which he won three. History alone can judge these general issues.

It was on India that our definite breach occurred. The Prime Minister, strongly supported and even spurred by the Conservative Viceroy, Lord Irwin, afterwards Lord Halifax, pressed forward with his plan of Indian self-government. A portentous conference was held in London, of which Mr. Gandhi, lately released from commodious internment, was the central figure.