David Butterfield

Trade, Tory splits and electoral defeat - is history about to repeat itself?

Trade, Tory splits and electoral defeat - is history about to repeat itself?
Text settings

Parliament, we are told, is in uncharted territory: the government looks unable to get the Prime Minister’s peculiar brand of Brexit through Parliament, and the House of Commons remains unready to realise the decision of the referendum three years ago. The European Question, that bête noire of Conservative collegiality, has once more split the party. While it is completely unclear what will happen in the near future, the present impasse is not entirely new. The latest episode of The Long View, just broadcast on Radio 4, looks at parallels - including the role played by The Spectator. And there’s quite a story to tell.

​For there was a time, long before the EU came into being, when a Conservative Prime Minister was faced with intense pressure – from within and without his party – about Britain’s economic relationship with the rest of the world. Should the country continue its traditional commitment to free trade, or give preferential treatment to the British Empire by raising tariffs against the rest of the world? That issue divided the Conservatives, broke apart the government’s coalition with a unionist party, forced the Prime Minister to resign, and kept the Tories out of direct power for two decades. What’s more, a proposed referendum – the first of its kind – on whether foreign food imports should indeed be taxed caused immense popular excitement, which gave way to considerable outrage when that promise was reneged.

Just as Brexit blights May’s premiership, so did global trade arrangements ruin Arthur Balfour’s ministry of 1902-5. Like May, he was forced by circumstances to confront an issue that never dominated his personal politics. Joseph Chamberlain, leader of the Liberal Unionist Party, was the great champion of so-called ‘Tariff Reform’ – the forging of a protectionist British Empire trade bloc. Unfortunately for Balfour, he was in coalition with Chamberlain’s party, and had appointed the man as Colonial Secretary. His government was rocked by those wanting to remain at the helm of free trade, and those wanting to leave that world behind.

At the forefront of the campaign for preserving free trade was The Spectator, which had spent every year of the last eight decades in this fight. The paper’s commitment remained unshaken, as its politics evolved from Radicalism, to Liberalism, to Unionism, to Conservatism. When the Corn Law repeal bill, for which it had campaigned assiduously, came before Parliament, The Spectator announced its watershed importance:

‘Let the measure pass, and free trade, with only such imperfections as time will easily remove, is the law of the land; protection a tradition of the past, traced only in ruins doomed to rapid decay.’

In 1846, the bill was passed by Sir Robert Peel, once the paper’s Tory nemesis. For the rest of the nineteenth century, free trade was the accepted principle for an empire reaping its benefits. The commensurate surge in British imports was immense: in the 1830s, 2 per cent of grain was imported, by the 1880s that figure was 45 per cent. Occasionally, pressed by poor harvests or dips in trade, British belief in free trade wavered; to some it looked increasingly out of step with countries such as Germany and America that were advancing rapidly behind their protectionist barriers. Sporadic calls arose for so-called ‘fair trade’, the imposition of reciprocal duties on goods from countries that levied their own tariffs. Despite such pressure, The Spectator’s co-editor (1861-97) Richard Holt Hutton set out coolly and clearly the long-term benefits of a free trade policy, warning of the danger of popular misunderstanding: ‘the first and most plausible way, to the ignorant observer, of “encouraging” commerce is Protection. It requires a good deal of study and of intellectual tenacity to keep clear of the plausibilities of the Protective fallacies.’ Five years later, he repeated that warning:

‘There can be no question that the great mass of the people of England do not understand Free-trade. They were induced to adopt it “through their stomachs,” and not through any intellectual process whatever, and a very slight taste of commercial depression was quite enough to set people talking about “one-sided Free-trade,” and the folly of allowing England to be made a receptacle for the cheap exports of foreign nations.’

The warning was prescient: by the turn of the century the Conservatives, now in coalition with the Liberal Unionist Party, seemed open to adopting protectionist measures. The flashpoint came in 1903, when Joseph Chamberlain told a lively crowd in Birmingham that his suite of tariff reforms would abolish unemployment and improve living standards. Horrified at the prospect of raising the price of the everyman’s everyday commodities, The Spectator at once became the leading campaigner for free trade. As the chief scourge of Chamberlain and his newly-minted lobby group, the Tariff Reform League, the paper flew the flag for the Free Trade Unionists. The editor, John St Loe Strachey (1897-1925), told his readers:

‘It is the duty of all who care for Free trade, who believe in the principle of tariff for revenue, and who do not imagine that a tax can be converted into a money-making machine, or that a country can be rendered richer by increasing the cost of living to its inhabitants, to oppose Mr. Balfour’s Administration, and to force it to resign office and appeal to the country without delay.’

As Balfour’s ministers split over the issue, a Cabinet reshuffle in October 1903 sought to patch over the cracks, dismissing the most ardent supporters at either end of the free-trade spectrum. Although Chamberlain had to resign as Colonial Secretary, Balfour dallied and dithered in declaring a route forward. With the stakes so high, The Spectator could not brook such mealy-mouthed silence on so significant an issue:

'When the proper time comes [Balfour] will tell us what is his real view as to the Chamberlain policy, and whether he is for or against it. Till that time arrives he absolutely refuses to express any opinion whatever on its merits. Mark, he does not say he has not got an opinion, but he refuses to let any one know what it is. But almost every one else in the kingdom not only has an opinion for or against Mr. Chamberlain’s policy, but has expressed it… Mr. Balfour has maintained an absolute silence. Nothing will induce him to open his lips.'

The article went on to suspect Balfour of being a closet supporter of tariff reform:

'In the first place, he takes action in the Cabinet of such a kind that the Free-trade Unionists in that body feel obliged to resign. When they leave in order to safeguard the cause of Free-trade, he does not wish them success in their work. When Mr. Chamberlain goes to safeguard Protection, Mr. Balfour bids him God-speed in his great task. That is a pretty obvious proof of his sympathies.'

What is more, the appointment of Chamberlain’s son, Austen, as the Chancellor of Exchequer in the October reshuffle seemed a highly suspect decision. As Balfour’s ministry muddled along, The Spectator continued to lead the fight for free trade, offering earnest economic tutorials in issue after issue. Take this from July 1905, for instance:

‘The Protectionist finds it easy to forget that trade is an exchange, that foreign trade is a form of mutual co-operation by which each side may profit, that the sale of imports in our free markets is conditioned by the purchase of our exports, and, above all, that market—“the place or system of exchange”—is best when it is allowed to grow and develop according to its own free laws of individual demand and supply… the true policy of international trade must be “to fight foreign tariffs by free imports.”’

The situation grew steadily worse. Balfour’s compromise version of tariff reform – of introducing retaliatory tariffs to match those foreign countries that raised them against Britain – won little support. After farcical scenes in Parliament during March 1905, The Spectator gave an excoriating account of Balfour’s ‘loss of personal dignity’:

'the spectacle of a Ministry which boasts that it has a majority of at least 85 against all comers, which declares that it has not lost the confidence of the country, and, finally, which insists that it has another year and a half of Parliamentary activity and usefulness before it, allowing the House to pass a unanimous vote of censure upon the Prime Minister. The House of Commons, without a dissentient voice, declared on Tuesday [28 March]: “That in view of the declarations made by the Prime Minister, this House thinks it necessary to record its condemnation of his policy of Fiscal Retaliation.” Can it possibly be said that after such action taken by the Assembly from which the Prime Minister derives his power and authority, he has not suffered a loss of personal dignity? To argue that there is no such loss is surely childish. No doubt it might be logically asserted that personal dignity is a thing for which Prime Ministers have no use, and that it is to the interest of the public service that they should not bother their heads about so trifling a matter. Once, however, it is admitted that personal dignity is a thing about which public men should concern themselves, then unquestionably Mr. Balfour has suffered a grievous loss.'

Faced with what proved to be unsustainable pressure, Balfour was forced to resign at the end of the year. As a result, 1906 opened with one of the most remarkable general elections in British history. With Tariff Reform as the leading issue, popularist propaganda proliferated on the issue. The Liberals profited especially from their eye-catching, sensationalist poster campaign. Among the most famous slogans was the simple statement about food on the table: ‘ Free Trade – The Big Loaf; Tariff Reform – The Small Loaf.’Through tactics we would now dub Project Fear, ‘Tariff Reform’ was dismissed as a frightening unknown; the Tariff Reform League, by contrast, warned of the ruinous results of perpetuating ‘unfair competition’. In the end, genuine anxiety about food taxes drove much of the working-class vote from the Unionists to the Liberals. At the same time, Sir Henry Campbell-Bannerman, leader of the Liberals, lured Unionist Free-Trade voters with the promise that their support for free-trade Liberals would not be taken as support for Irish Home Rule.

The Liberal victory remains one of Britain’s great electoral landslides: the Conservatives and Liberal Unionists fell from 402 to 156 MPs, still the worst result for a party on the political right. After this damning outcome for the Tories, The Spectator concluded that the preservation of free trade was of overwhelming importance to the British voter:

‘The elector knew that he had to decide between the maintenance of Free-trade and its abrogation, and that being so, he refused to allow his mind to be deflected by any talk of Home-rule or Socialism or Little Englandism. He kept his eye on the object, and voted according to the guidance of his reason and his instinct.’

On hearing the stunning news from across the Atlantic, Theodore Roosevelt, then President of the United States, wrote to his friend Strachey: ‘As for protection and free trade, I am confident that protection would be most damaging to Great Britain.’ Something of a dallier himself, however, he added: ‘As regards the United States, I think I once told you that I am on this point rather an economic agnostic.’

Despite this striking victory, and the tragic stroke Joseph Chamberlain suffered in 1906, the question of Tariff Reform continued to simmer away in Conservative-Unionist politics. In early 1907, The Spectator alleged that Balfour, still the Tory leader, was ‘in very much the position of Faust when he had parted with his soul’: having committed himself to some form of protectionism, he could no longer win back the free-trade vote. Taking a broader view of the question, a controversial article in 1907 set out how Socialism and Tariff Reform, although portrayed as antithetical outlooks, were in fact two sides of the same coin: both laboured under the ‘assumption that the State can diminish unemployment’:

‘The Socialist proposes to accomplish this ideal by using the power of Parliament to tax the wealthy in order to provide the money wherewith to pay the unemployed for doing work that nobody wants done. The Tariff Reformer proposes to effect the same object by using the power of Parliament to shut out foreign goods that the people of this country wish to buy. Neither Socialist nor Tariff Reformer seems able to realise that these schemes cannot create employment, but can only divert employment from persons now employed to persons now unemployed. Equally in harmony are the Socialists and Tariff Reformers on the still deeper question of the relative importance of the State and the individual. The Free-trader believes that the State exists for the individual, and he bases his belief on the fairly obvious fact that the individual has a separate consciousness of his own, whereas the State has no consciousness other than that of the multitude of individuals who compose it. Therefore to sacrifice the individual to the State is to sacrifice a sentient being to a non-sentient collectivity.’

Throughout their period in opposition to the Liberals, the Conservatives realised that a route forward would be to put the question of tariff reform to the people, to circumnavigate the impasse in Parliament. As it happened, The Spectator – especially through its editor Strachey and its regular contributor A.V. Dicey – had long been a leading proponent of the referendum as an ancillary tool for effective government. Strachey threw his weight behind the referendum in the plausible belief that such a vote would scotch the tariff reform movement for good.

When the formal proposal for a referendum at last came, before the December election of 1910, The Spectator was delighted to see the support that it won:

‘One thing is clear in regard to the general proposal for the Referendum, or as we prefer to call it, the “Poll of the People.” The proposal to add the Poll of the People to our Constitutional machinery is clearly not unpopular, and is gaining ground very rapidly. It may be said, indeed, that no change of such magnitude has ever won its way so fast or taken so firm a hold on men’s minds in so short a time.’

However, such a promise of a referendum came too late to stop a hair’s-breadth Liberal victory – by one seat. When, in the following decade, the question of Irish Home Rule resurfaced, which had split the Liberals in the 1880s, Strachey conceded that some concerns should be more paramount than others. He advised his readers to prioritise saving the union over the economy. Unionist Free-Traders should not let their staunch commitment to free trade, as important as that was, usher in the disaggregation of the United Kingdom. Despite their narrow-minded economic policies, the Conservative and Unionist Party (now merged) should be supported ahead of the iconoclastic Liberals. Notwithstanding this principled battle cry, when Strachey later reflected on his campaign for free trade, he wrote that ‘I felt as strongly about Tariff Reform as I did about the dissolution of the United Kingdom.’ But the Tories – who advanced policies against free trade in both the 1920s and 1930s – did not share that passion.

The Spectator, for its part, has not in the subsequent century changed its stripes. Despite the immense economic challenges of the Great Depression, the Second World War, and the gradual establishment of a European trading bloc, the magazine has fought resolutely for free trade. Policies of ‘Imperial Preference’ and ‘Empire Free-Trade’ were routinely dismissed as smokescreens for insular protectionism. As early as 1957, The Spectator called the new Common Market the ‘European free trade mirage’. When, as The Spectator had repeatedly demanded, the question of British membership of the European Economic Community was finally put to the people in the 1975 referendum, the magazine was alone – save for its occasional ally, the Morning Star – in supporting a proto-Brexit, a decision that reduced its readership to its lowest figure for 140 years. When the issue of Brexit resurfaced in 2016, The Spectator argued independently of most of the press – and indeed of party policy – for Leave. Referring to its reasoning in 1975, it stated:

‘The whole project seemed to be a protectionist scam, an attempt to try to build a wall around the continent rather than embrace world trade. Such European parochialism, we argued, did not suit a globally minded country such as Britain.’

On free trade – as well as several issues of enduring importance – The Spectator has stuck admirably and avowedly to its principles. If the Conservatives are to be yet further split on this issue, either through the (in)action of the House of Commons or through the enactment of a second referendum, The Spectator has already seen too much of the sort to be surprised.