The spectre of 1932: How a loss of faith in politicians and democracy could make 2012 the most frightening year in living memory

The dawn of a new year is usually a time of hope and ambition, of dreams for the future and thoughts of a better life. But it is a long time since many of us looked forward to the new year with such anxiety, even dread.



Here in Britain, many economists believe that by the end of 2012 we could well have slipped into a second devastating recession. The Coalition remains delicately poised; it would take only one or two resignations to provoke a wider schism and a general election.

But the real dangers lie overseas. In the Middle East, the excitement of the Arab Spring has long since curdled into sectarian tension and fears of Islamic fundamentalism. And with so many of the world’s oil supplies concentrated in the Persian Gulf, British families will be keeping an anxious eye on events in the Arab world.



The Battle of Cable Street: Mosley's fascists tried to march through the Jewish East End, a scene that could be repeated Wall Street Crash 1929: Scenes outside the New York Stock Exchange on the day the stock market crashed may once again become a reality

Meanwhile, as the eurozone slides towards disaster, the prospects for Europe have rarely been bleaker. Already the European elite have installed compliant technocratic governments in Greece and Italy, and with the markets now putting pressure on France, few observers can be optimistic that the Continent can avoid a total meltdown.



As commentators often remark, the world picture has not been grimmer since the dark days of the mid-Seventies, when the OPEC oil shock, the rise of stagflation and the surge of nationalist terrorism cast a heavy shadow over the Western world.

For the most chilling parallel, though, we should look back exactly 80 years, to the cold wintry days when 1931 gave way to 1932.



The ultimate warning from history: If our political leaders fail to provide adequate direction the results, as demonstrated 80 years ago, could be catastrophic

Then as now, few people saw much to mourn in the passing of the old year. It was in 1931 that the Great Depression really took hold in Europe, bringing governments to their knees and plunging tens of millions of people out of work.



Then as now, the crisis had taken years to gather momentum. After the Wall Street Crash in 1929 — just as after the banking crisis of 2008 — some observers even thought that the worst was over.



But in the summer of 1931, a wave of banking panics swept across central Europe. As the German and Austrian financial houses tottered, Britain’s Labour government came under fierce market pressure to slash spending and cut benefits.



Bitterly divided, the Labour leader Ramsay MacDonald decided to resign from office — only to return immediately as the leader of an all-party Coalition known as the National Government, dominated by Stanley Baldwin’s Conservatives.



Like today’s Coalition, the National Government was an uneasy marriage. Sunk in self-pity and spending much of his time flirting with aristocratic hostesses, MacDonald cut a miserable and semi-detached figure. By comparison, even Nick Clegg looks a model of strong, decisive leadership.



As for the Tory leader Stanley Baldwin, he had more in common with David Cameron than we might think. A laid-back Old Harrovian, tolerant, liberal-minded and ostentatiously relaxed, Baldwin spent as much time as possible on holiday in the South of France, preferring to enjoy the Mediterranean sunshine rather than get his hands dirty with the nuts and bolts of policy.

Meanwhile, far from offering a strong and coherent Opposition, the rump Labour Party seemed doomed to irrelevance. At least its leader, the pacifist Arthur Henderson, could claim to be a man of the people, having hauled himself up by his bootstraps from his early days as a Newcastle metal worker.



Not even his greatest admirers could possibly say the same of today’s adenoidal, stammering Opposition leader, the toothless Ed Miliband.

The end of Democracy: The dire situation in 1932 led to many threats to the democratic system we so value, including the assassination of the French President Paul Doumer

With the politicians apparently impotent in the face of the economic blizzard, many people were losing faith in parliamentary democracy. Their despair was hardly surprising: in some industrial towns of the North, Wales and Scotland, unemployment in 1932 reached a staggering 70 per cent.



With thousands more being plunged out of work every week, even the National Government estimated that one in four people were making do on a mere subsistence diet. Scurvy, rickets and tuberculosis were rife; in the slag heaps of Wigan, George Orwell saw ‘several hundred women’ scrabbling ‘in the mud for hours’, searching for tiny chips of coal so they could heat their homes.



Feeling betrayed by mainstream politicians, many sought more extreme alternatives. Then as now, Britain was rocked by marches and demonstrations. In October 1932, a National Hunger March in Hyde Park saw bloody clashes between protesters and mounted policemen, with 75 people being badly injured.



Toothless: Ed Miliband can hardly claim to be a man of the people like the pacifist Arthur Henderson

And while Left-wing intellectuals were drawn to the supposedly utopian promise of the Soviet leader Josef Stalin — who turned out to be a brutal tyrant — thousands of ordinary people flocked to the banners of the British Union of Fascists, founded in the autumn of 1932 by the former Labour maverick Sir Oswald Mosley.



Never before or since has the far Right commanded greater British support — a worrying reminder of the potential for economic frustration to turn into demagogic resentment.



But the most compelling parallels between 1932 and 2012 lie overseas, where the economic and political situation was, if anything, even darker.



Eighty years ago, the world was struggling to come to terms with an entirely new financial landscape. In August 1931, the system by which currencies were pegged to the value of gold had fallen apart, with market pressure forcing Britain to pull the pound off the gold standard.



Almost overnight, the system that was supposed to ensure global economic stability was gone. And as international efforts to coordinate a response collapsed, so nations across the world fell back on self-interested economic protectionism.



In August 1932, the British colonies and dominions met in the Canadian capital, Ottawa, and agreed a policy of Imperial Preference, putting high tariffs on goods from outside the Empire. International free trade was now a thing of the past; in this frightening new world, it was every man for himself.



Today’s situation, of course, is even more frightening. Our equivalent of the gold standard — the misguided folly of the euro — is poised on the brink of disaster, yet the European elite refuse to let poorer Mediterranean nations like Greece and Portugal leave the eurozone, devalue their new currencies and start again.



Should the eurozone collapse, as seems perfectly likely given Greece’s soaring debts, Spain’s record unemployment, Italy’s non-existent growth and the growing market pressure on France’s ailing economy, then the consequences would be much worse than when Britain left the gold standard.



The shockwaves across Europe — which could come as early as next spring — would see banks tottering, businesses crashing and millions thrown out of work. For British firms that trade with Europe, as well as holiday companies, airports, travel firms and the City of London itself, the meltdown of the eurozone would be a catastrophe.



If the eurozone crisis intensifies, then it is no idle fantasy to imagine that Angela Merkel, Nicolas Sarkozy and their Brussels allies will demand an even greater centralisation of powers





Vladimir Putin looks almost cuddly in comparison to the rule of dictatorial Stalin in 1932

And as the experience of 80 years ago suggests, the political and social ramifications would be too terrible to contemplate. For in many ways, the 12 months between the end of 1931 and the beginning of 1933 were the tipping point between democracy and tyranny, the moment when the world plunged from an uneasy peace towards hatred and bloodshed.



In the East, new powers were already on the rise. At the end of 1931, Imperial Japan had already launched a staggeringly brutal invasion of China, the Japanese armies pouring into the disputed province of Manchuria in search of raw materials.



Today the boot is on the other foot, with China ploughing billions into its defence programme and establishing de facto economic colonies across Africa, bringing copper, cobalt and zinc back to the mother country.

Indeed, future historians may well look back and see the first years of the 2010s as the moment when the Chinese Empire began to strengthen its global grip.



In the Soviet Union in 1932, meanwhile, Stalin’s reign of terror was intensifying. With dissent crushed by the all-powerful Communist Party, his state-sponsored collectivisation of the Ukrainian farms saw a staggering 6 million die in one of the worst famines in history.



By these standards, the autocratic Vladimir Putin looks almost cuddly.

Barack Obama cuts a similarly impotent, indecisive and isolationist figure. The difference is that in 1932, one of the greatest statesmen of the century, the Democratic politician Franklin D. Roosevelt, was waiting in the wings

And yet we should not forget that Putin himself described the fall of the Soviet empire as one of the greatest catastrophes of the century — and that half of all Russian teenagers recently told a survey that Stalin was a wise and strong leader.



By comparison, Europe’s democratic leaders look woolly and vacillating, just as they did back in 1932. Indeed, for the democratic West, this was a truly terrible year.

Democracy itself seemed to be under siege. In France, President Paul Doumer was murdered by an assassin. In Portugal, the authoritarian, ultra-Catholic dictator Antonio Salazar launched a reign of terror that would last into the Seventies. And in Italy, the Fascist leader Benito Mussolini strengthened his grip, consolidating Italian power in the looted colonies of Albania and Libya.



Eighty years on, we have no room for complacency. Although the far Right remains no more than a thuggish and eccentric minority, the elected prime ministers of Greece and Italy have already been booted out to make way for EU-approved technocrats for whom nobody has ever voted.



In the new Europe, the will of the people seems to play second fiddle to the demands of Paris and Berlin. And if the eurozone crisis intensifies, then it is no idle fantasy to imagine that Angela Merkel, Nicolas Sarkozy and their Brussels allies will demand an even greater centralisation of powers, provoking nationalist outrage on the streets of Europe’s capitals.



Sadly, there seems little point in looking across the Atlantic for inspiration. In 1932, President Herbert Hoover, beleaguered by rising unemployment and tumbling ratings, flailed and floundered towards election defeat.



Today, Barack Obama cuts a similarly impotent, indecisive and isolationist figure. The difference is that in 1932, one of the greatest statesmen of the century, the Democratic politician Franklin D. Roosevelt, was waiting in the wings.



Today, American voters looking for alternatives are confronted only with a bizarre gaggle of has-beens, inadequates and weirdos, otherwise known as the Republican presidential field. And to anybody who cares about the future of the Western world, the prospect of President Ron Paul or President Newt Gingrich is frankly spine-chilling.



In Italy, the Fascist leader Benito Mussolini, pictured with Hitler, strengthened his grip, consolidating Italian power in the looted colonies of Albania and Libya

Above all, though, the eyes of the world back in 1932 were fixed on Germany. As the Weimar Republic staggered towards oblivion, an obscure Austrian painter was setting his sights on supreme power.



With rising unemployment eating away at the bonds of democratic civility, the National Socialist Party was within touching distance of government.

And in the last days of 1932, after the technocrats and generals had failed to restore order, President Paul von Hindenburg began to contemplate the unthinkable — the prospect of Adolf Hitler as Chancellor of Germany.



We all know what happened next. Indeed, by the end of 1932 the world was about to slide towards a new dark age, an age of barbarism and bloodshed on a scale that history had never known.



Eighty years on, it would be easy to sit back and reassure ourselves that the worst could never happen again. But that, of course, was what people told each other in 1932, too.



The lesson of history is that tough times often reward the desperate and dangerous, from angry demagogues to anarchists and nationalists, from seething mobs to expansionist empires.

Our world is poised on the edge of perhaps the most important 12 months for more than half a century. If our leaders provide the right leadership, then we may, perhaps, muddle through towards slow growth and gradual recovery.

But if the European elite continue to inflict needless hardship on their people; if the markets continue to erode faith in the euro; and if Western politicians waste their time in petty bickering, then we could easily slip further towards discontent and disaster.



The experience of 1932 provides a desperately valuable lesson. As a result of the decisions taken in those 12 short months, millions of people later lost their lives.

