• Prime Minister of the United Kingdom James Ramsay MacDonald, 1866
  

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 - 14. His opposition to the First World War made him unpopular, and he was defeated in 1918. The fading of wartime passions made it easier for an antiwar politician to find a platform, and he returned to Parliament in 1922, which was the point at which Labour replaced the Liberal Party as the second-largest party.

His first government — formed with Liberal support — in 1924 lasted nine months, but was defeated at the 1924 General Election when the Conservatives made large gains at the expense of the Liberals and won a majority. Nevertheless his short term demonstrated that the Labour party was sufficiently competent and well organized to run the government. A powerful orator, by the 1920s he had earned great public respect for his pacifism.

He initially put his faith in the League of Nations. However by the early 1930s he felt that the internal cohesion of the British Empire, a protective tariff, and an independent British defense program would be the wisest British policy. Nevertheless budget pressures, and a strong popular pacifist sentiment, forced a reduction in the military and naval budgets.

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, he formed a National Government in which only two of his Labour colleagues agreed to serve and the majority of whose MPs were from the Conservatives. As a result, MacDonald was expelled from the Labour Party, which accused him of betrayal. The Gold Standard soon had to be abandoned after the Invergordon Mutiny and MacDonald's National Government won a huge "doctor's mandate" at the 1931 General Election, at which the Labour Party was reduced to a rump of around 50 seats in the House of Commons.

MacDonald remained Prime Minister of the National Government from 1931 to 1935; during this time his health rapidly deteriorated and he became increasingly ineffective as a leader. He stood down as Prime Minister in 1935 — losing his seat in the General Election that year and returning for a different constituency — but stayed in the Cabinet as Lord President of the Council until retiring from the government in 1937 and dying, still an MP, later that year.

MacDonald was born in Lossiemouth, Morayshire, Scotland, the illegitimate son of John MacDonald, a farm laborer, 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 Lossiemouth, where her future husband was also employed. They were to have been married, but the wedding never took place, either because the couple quarreled 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.

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. He was not to be destined for a working life in agriculture. In December 1881 he was appointed as a pupil teacher at Drainie parish school (the entry in the school register of staff recording him as 'J. MacDonald'). He remained in this post until 1 May 1885, when 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, an extreme 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. MacDonald returned to Lossiemouth before the end of the year for reasons unknown, but in early 1886 once again left for London.

MacDonald had left for London because a friend living there had written to tell him of a post which was vacant, and which might suit him. However, when he arrived he found that it had already been filled. 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 City 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. He continued to support home rule for Scotland, but with little support from London Scots forthcoming, his enthusiasm for the committee waned and from 1890 he took little part in its work. However, MacDonald never lost his interest in Scottish politics and home rule, and in his 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 himself in employment. To this end 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 his having any career in science. 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 also made himself known to various London Radical clubs and with Radical and labor politicians. MacDonald gained valuable experience in the workings of electioneering. In 1892, he left Lough’s employment to become a freelance journalist. 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 and who was well beaten. MacDonald impressed the local press and the Association, however, and was adopted as its candidate. MacDonald, though, announced that his candidature would be under a Labour Party banner. He denied that the Labour Party was a wing of the Liberal Party but saw merit in a working relationship. In May 1894, the local Southampton Liberal Association was trying to find a labor minded candidate for the constituency. MacDonald along with two others were invited to address the Liberal Council. One of three men turned down the invitation and MacDonald failed to secure the candidature despite the strong support he had among Liberals.

In 1893, Keir Hardie had formed the Independent Labour Party (ILP) which had established itself as a mass movement and so in May 1894 MacDonald applied for membership of, and was accepted into, the ILP. 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 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 his membership of the ILP. The ILP, while not a Marxist party, was more rigorously socialist than the 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. Margaret MacDonald was comfortably off, although not wealthy. 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 to 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 influenced MacDonald and other politicians in their attitudes towards women and especially their work. 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", and absorbed 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 which at this time was a minor party supporting the Liberal governments of Henry Campbell - Bannerman and Herbert Henry 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.

In 1911 MacDonald became Party Leader (formally "Chairman of the Parliamentary Labour Party"), but within a short period his wife became ill with blood poisoning and died. This affected MacDonald greatly. 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 have. Although the Parliamentary Labour Party generally held an antiwar opinion, when war was declared in August 1914, patriotism came to the fore. Labour supported the government in its request for £100,000,000 of war credits and, as MacDonald could not support this, he resigned the Chairmanship. Arthur Henderson became the new leader while MacDonald took the party Treasurer post. During the early part of the war he was extremely unpopular and was accused of treason and cowardice. 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 hadn’t 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 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 his opposition to the war, MacDonald visited the war front in December 1914. Lord Elton wrote:

"... he arrived in Belgium with an ambulance unit organized by Dr Hector Munro. The following day he had disappeared and agitated inquiry disclosed that he had been arrested and sent back to Britain. At home he saw Lord Kitchener who expressed his annoyance at the incident and gave instructions for him to be given an 'omnibus' pass to the whole Western Front. He returned to an entirely different reception and was met by General Seeley at Poperinghe who expressed his regrets at the way MacDonald had been treated. They 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."

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

MacDonald stood for Parliament in the 1921 Woolwich East by-election, and lost to war veteran and Victoria Cross winner Robert Gee. In 1922 the Conservatives left the coalition and Bonar Law, who had taken over from Lloyd George, called an election on 26 October. MacDonald was returned to the House as MP for Aberavon in Wales and his rehabilitation was complete; the Labour New Leader wrote 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. 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 this time 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 labor movement in the wake of the Russian Revolution of 1917 — and became a determined enemy of Communism. Unlike the French Socialist Party and the German SPD, 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 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.

MacDonald, although he had never held office, demonstrated energy, executive ability and political astuteness. He consulted widely within his party, making Haldane the Lord Chancellor, and 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 that "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 labor strikes during his term, MacDonald acted swiftly to end those that did erupt. When the Labour Party executive criticized 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, nevertheless 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.

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 defense program 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. MacDonald 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 imperiling British trade and territories east of Aden, and would 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 the French occupation of the Ruhr. German delegates then joined the meeting, and the London Settlement was signed. This was followed by an Anglo-German commercial treaty. Another major triumph for MacDonald was the conference held in London in July–August 1924 to deal with the implementation of the Dawes Plan. MacDonald, who accepted the view of the economist John Maynard Keynes of German reparations as impossible to pay successfully pressured the French Premier Édouard Herriot into a whole series of concessions to Germany.

A British onlooker commented that “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 acclamation.

But before all of this the United Kingdom had recognized 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 which had been rejected by the Bolsheviks. There were in fact to be two treaties. One covering commercial matters and the other to cover a fairly vague future discussion on the problem of the bondholders. If and when the treaties were signed, then 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, criticized the loan so vehemently that negotiation with them seemed impossible.

However, it was the "Campbell Case" — the abrogation of prosecuting the left-wing newspaper the Workers Weekly — that determined its fate. The Conservatives put forth a censure motion, to which the Liberals added an amendment. MacDonald's Cabinet resolved to treat both motions as matters of confidence, which if passed, would necessitate a dissolution of government. The Liberal amendment carried and the King granted MacDonald a dissolution of parliament the following day. The issues which dominated the election campaign were, unsurprisingly, the Campbell case and the Russian treaties which soon combined into the single issue of the Bolshevik threat.

On 25 October 1924, just 4 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 that the agreed treaties between Britain and the Bolsheviks be ratified urgently. To this end, 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 revolutionizing 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 Bolshevik’s London chargé d'affaires and had already decided to make public the contents of the letter together with details of the official protest but had not been swift footed enough. Historians mostly agree the letter was a forgery, although it closely reflected attitudes current in the Comintern. In any case it had little impact on the Labour vote — which held up. 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, thereby misunderstanding the political forces at work." Despite all that had gone on, the result of the election was not disastrous to 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.
The strong majority enjoyed by Baldwin’s party allowed him to preside over a government that would serve a full term during which it would have to deal with the General Strike and miners’ strike of 1926. Unemployment in the UK during this period 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. At this election, MacDonald moved from Aberavon to the seat of Seaham Harbour in County Durham. 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's government had no effective response to the economic crisis which followed the Stock Market Crash of 1929. Phillip 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 in order 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) in order to avoid a budget deficit.

Keynes urged MacDonald to devalue the pound by 25% and abandon the existing economic policy of a balanced budget. 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.
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. MacDonald, Snowden and Thomas were quickly expelled from the Labour Party and subsequently formed a new National Labour group, which received little support in the country or the unions. Great anger in the labor movement greeted MacDonald's move. Mass riots by unemployed people 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.

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.

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 aging rapidly, and was increasingly a figurehead, with Conservatives Stanley Baldwin and Neville Chamberlain in control of domestic policy.

In response MacDonald involved himself heavily in foreign policy. Assisted by the National Liberal leader and Foreign Secretary John Simon, he continued to lead highly visible British delegations, including the Geneva Disarmament Conference and the Lausanne Conference in 1932, and the Stresa Conference in 1935.

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 U.S. would not stabilize the dollar. The failure marked the and of international economic cooperation 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, Phillip Snowden, was a firm believer in free trade and resigned from the government in 1932 following the introduction of tariffs after the Ottawa agreement.

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. 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 favor of Baldwin, and remained in the cabinet, taking the largely honorary post of Lord President vacated by Baldwin.

After Hitler's re-militarization 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".

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. He was buried alongside his wife at Spynie in his native Morayshire.

For half a century, MacDonald was demonized 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 and receiving 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 Professor David Marquand, a former Labour MP, 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 emphasized 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 unfavorably with the more radical, proto - Keynesian measures advocated by David Lloyd George and Oswald Mosley. But in the preface to the 1994 edition Skidelsky argues that recent experience of currency crises and capital flight make it hard to be critical of politicians who wanted to achieve stability by cutting labor 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 honorable and consistent, but right... he was the unacknowledged precursor of the Blairs, the Schröders, and the Clintons of the 1990s and 2000s.

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 prominent 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 prominent architect who worked on promoting the planning policies of his father's government, and specialized 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.