Xander West: Tariff Reform (part 1) – Lessons from history. Balfour’s tariff battles and the landslide defeat of 1906 | Conservative Home

Xander West is an independent writer and author of the Grumbling Times substack. 

In this short series Xander is exploring the background and context of tariffs and tariff reform.

Within the history of the Conservative Party, particularly their splits over trade, there is perhaps no episode more frustrating than the melodrama over tariff reform during the government of Arthur Balfour.

This euphemism, also known as imperial preference, for imposing tariffs on all goods produced beyond Britain’s then extensive colonial reach, was inspired by the delusions of one demagogic politician who saw protectionism as the first step in creating a permanent union between Britain and its colonies.

From the ensuing campaign and open political warfare between protectionist and free trade factions, the Conservatives and their Liberal Unionist partners were brought from a landslide victory to, until 2024, a record defeat.

Balfour himself, despite his attempts to pursue moderation in policy and prevent the total collapse of party unity, lost his own seat. Although the twentieth century is regarded today as one in which Conservatives were pre-eminent in government, the obsession with tariff reform almost singularly undermined them both in and out of office for a generation.

It must be acknowledged that the eruption of the tariff reform debate was not the only strategic error made by Balfour’s Unionist government from July 1902.

Whilst he was a dedicated public servant and esteemed parliamentarian, his aptitude as Prime Minister was mixed and he quite clearly lacked a grasp of party politics. His ministry inherited the fallout from the Second Boer War, namely the public outrage caused by the use of concentration camps, scorched earth tactics and other atrocities, as well as Britain’s poor military performance against minor nations that shattered notions of imperial invulnerability.

Soon after the war’s end, Balfour was blamed for the mass use of Chinese indentured labour, whose living conditions and effective enslavement again appalled the public, to restart gold mining in the conquered Transvaal. Domestically, the Unionists alienated Protestant Nonconformists so much that they mobilised for essentially the last time as a major Liberal voting bloc.

First, the Education Act 1902, although vital in improving the educational standards of the time, forced Nonconformists to subsidise thousands of Anglican and Catholic church schools through local taxes. Second, the Licensing Act 1904 angered the Nonconformists adhering to temperance by proposing to compensate brewers for the cancellation of licences to pubs closed by the new regulations, albeit through a fund paid by the brewers themselves.

Then there was Joseph Chamberlain’s tariff reform.

Chamberlain, the Liberal Unionist Colonial Secretary from 1895 to 1903, was the radical populist of his day and one of its most detestable figures. Nevertheless, he excelled at building effective political machines for whichever parties or causes furthered his obsessions.

To describe him as a zealous imperialist is almost an understatement, his relentless pursuit of a so-called Imperial Federation between the United Kingdom and its colonies singularly defining his career within the Liberal Unionists. The idea was always doomed to fail from its inherent impracticality, the separate national identities and self-interests already evolving in the dominions that were supposed to justify federation, and because its proponents were never willing to concede self-government or any other rights to India, despite it containing a majority of the empire’s population.

More than anything, however, it betrayed the deep anxieties many politicians held about the permanence of empire around the turn of the twentieth century. This was only intensified by Britain’s failure to secure a quick victory in the Boer War, which Chamberlain was majorly responsible for causing and overseeing, as well as rising economic competition from Germany and the United States.

It was this perceived threat of competition that led him to urgently pursue commercial union through imperial preference, even whilst in Cabinet. By forcing deeper economic integration between the dominions and Britain through shutting out rival markets with tariffs, he believed he had found the only means of later political federation and of the empire’s salvation, all of which might have finally satisfied his ego had it borne much connection to an actionable reality.

Until 1903, Chamberlain struggled to further tariff reform within government, not least because the aforementioned economic self-interests of the dominions left him unsuccessful in most negotiations. Balfour’s predecessor and uncle, Robert Gascoyne-Cecil, 3rd Marquess of Salisbury, was also antipathetic towards the idea and sought to restrain Chamberlain’s frequent interruptions to his foreign policy.

Only when Chancellor Charles Thomson Ritchie received Cabinet approval to lift a small duty on corn imports in April 1903, levied the year prior to help finance the Boer War, did Chamberlain start to openly rebel against his fellow Unionists instead of admit defeat.

A Tariff Reform League pressure group was created in July and he resigned from the Cabinet in September, whereafter he began relentlessly campaigning and capturing Unionist institutions for tariff reform. Balfour, seeking to retain governmental unity through balance in the Cabinet, sacked three free trade ministers: his Chancellor Ritchie, in favour of Chamberlain’s son Austen, Scottish Secretary Alexander Bruce, 6th Lord Balfour of Burleigh, and India Secretary Lord George Hamilton. The Liberal Unionist leader and Leader of the Lords Spencer Cavendish, 8th Duke of Devonshire, also resigned shortly thereafter to take up the presidency of a rival Unionist Free Food League, which boasted impressive support within Westminster but nowhere near the grassroots organisational abilities of Chamberlain. In May 1904, he proved this by deposing Devonshire as head of the Liberal Unionist Association and making himself its president instead.

This event epitomised the internecine strife of the last two years of the Unionist government.

Balfour was neither unaware nor idle as the backbenches went to war with themselves, although his calls for restraint went unheeded.

He attempted to establish an official policy of retaliatory tariffs against those imposed on British goods, in order to encourage greater global free trade. This was enough to keep most Unionists loyal to Balfour, but not to placate them or prevent the two factions polarising against each other.

Having concluded the Unionists would lose the next election around the same time he subjugated the Liberal Unionists for tariff reform, Chamberlain turned to driving all those who opposed him from the Conservatives to make his agenda the sole option for determining future policies. His League formed hundreds of constituency branches specifically to oust sitting free trade Unionists with candidates loyal to him and tariff reform. One such casualty was Winston Churchill, who chose to defect to the opposition Liberals rather than be replaced by one of Chamberlain’s acolytes.

For the free traders, opposing tariff reform had morphed into a greater fight to save the Conservative Party and conservatism itself from Chamberlain’s ruthless onslaught, which brought with it calls for unprecedented social reforms, state expenditure and overthrow of the traditional party hierarchy.

By November 1905, Chamberlain had occupied a majority of the National Union of Conservative and Constitutional Associations, the Conservatives’ local branch organisation, for tariff reform.

In early December, partly influenced by this humiliation of his authority, Balfour resigned the premiership and the incoming Liberals called a general election. This did nothing to allay the bitter factiousness of his party. The Unionist leadership was unpopular, exhausted after a decade in power, at war with itself and without a settled policy on the key question they had effectively asked the electorate. Unionist free traders spoke on Liberal platforms against tariff reformers, whilst Chamberlain’s League sent candidates to intentionally split the vote so their Unionist purge could continue by giving seats to Liberals.

It is little wonder, alongside the other controversies of Balfour’s government, that the Liberals rallied around free trade and won so decisively. They campaigned compellingly, in line with the free trade orthodoxy that Chamberlain had attempted to overturn, that tariffs on agricultural produce would constitute a tax on food.

Although the schism over tariff reform continued after the 1906 election, the years from Chamberlain’s resignation to the landslide defeat were its most acrimonious.

The connection certain late-Victorian politicians had drawn between imperialism and conservatism, once an unfortunate expedient at elections, had been comprehensively exploited by Chamberlain’s zealotry to all but destroy the Conservatives over his dogmatic obsessions.

This had, to some extent, become his desired outcome.

Through this episode, the roots he never renounced as an equally demagogic politician of the Liberal Party’s Radical faction were clear, as much as their incompatibility with the actual principled conservatism defended at great cost by the Unionist free traders. Whilst Balfour and the leadership of Conservative Central Office saved themselves, just about, from being the final casualties of Chamberlain’s crusade to mould the party in his image, they utterly failed to contain him or his protectionism.

Partly as a result of their crippling splits over trade, the Conservatives would not rule alone again until 1922 and only the coalition formed during the First World War brought them from the political wilderness sooner.