Balfour, who in 1902 had succeeded Salisbury as Prime Minister, was not an enthusiast for free trade. As a young man, he had attacked Richard Cobden’s self-righteous view that protectionists sacrificed the general good in order to guarantee their own prosperity. ‘It is absurd to ascribe corrupt motives to large bodies of men, merely because the economic theories they adopt are in accordance with their own interests.’3 Holding that view it was his duty as Prime Minister to override Ritchie and accept his resignation from the Cabinet, but that was not Balfour’s way. ‘In his early years he seemed rather cynical and intolerant of stupidity, but in later life he put up with almost anything and anybody …’4 He did, however, work in devious ways. Ritchie’s threat to resign before the budget, made in a private conversation with Balfour, was reported to Austen Chamberlain who, as the Prime Minister expected, arranged for his father to receive news of the ultimatum before he arrived back from South Africa. The letter, warning him that his scheme for ‘imperial preference’ might well be rejected, reached him when his ship docked in Madeira. He had several days to plan how he would react before he arrived to a tumultuous welcome in London.
At the three successive Cabinet meetings held during the last two weeks in March 1903, Chamberlain argued for a retention of the corn tariff with ‘preference’ for Canada. A majority of the Cabinet supported him. But they also supported Balfour’s insistence that the government could not afford to lose the Chancellor of the Exchequer on the eve of the budget, and Ritchie was adamant that he and import duties were incompatible. Ottawa had claimed that there were special reasons for Britain to discriminate in favour of Canadian exports. Pretoria, through the intervention of Lord Milner, claimed identical help for South Africa. That confirmed the Chancellor of the Exchequer in his belief that there should be no preference for anyone. If the Cabinet believed otherwise, he would go. The Prime Minister would not risk losing him.
Chamberlain – who believed, but did not say, that an extension of ‘colonial preference’ to South Africa was Britain’s imperial duty – fought back against his free trade colleagues by mounting guerrilla warfare against their policies. He demanded that 30,000 troops be stationed in South Africa rather than the 15,000 that the War Office proposed, and encouraged the anti-German press (the Spectator, the Morning Post and The Times) to campaign so strongly against British investment in the extension of the Baghdad Railway to the Persian Gulf that Lord Lansdowne, the Foreign Secretary, abandoned the idea. Unabashed, Ritchie presented his budget statement on 23 April. It proposed a total abolition of corn duty.
The protectionists struck back. Two of their leaders, the Duke of Rutland and Henry Chaplin (President of the Local Government Board in Lord Salisbury’s last government), demanded to see the Prime Minister. A meeting was arranged for 15 May. Balfour had thought it wise to prepare for the meeting by discussing the whole tariff question with his Cabinet. He reported to the King that there had been agreement on ‘the possibility of reviving the tax if it were associated with some great change in our fiscal system’. This hypothesis was too general to bear much meaning, but the Prime Minister’s letter suggested two ‘eventualities’ which might justify the change: ‘the necessity of retaliation on foreign countries or the expediency of a closer union with our colonies’.5 All this had been agreed unanimously by the Cabinet, including Ritchie, and the unanimity had allowed Chamberlain to give notice of his intention to make a speech in Birmingham three days later. He explained that ‘he proposed to say … much the same thing as [the Prime Minister] proposed to say to the deputation, only in a less definite manner’.6
Chamberlain kept just within the boundaries of collective responsibility. He undoubtedly made out his case for ‘imperial preference’. But his concluded with the qualification that is always the refuge of ministers who want to hover on the brink of rebellion without rebelling. His only wish was to begin a serious debate on a matter of undoubted public importance. ‘I leave the matter in your hands. I desire that a discussion on this subject should now be opened. The time has not yet come to settle it…’
No one in the hall accepted the speech as merely a contribution to the study of a yet undecided question of fiscal policy. The fervour with which the questions were asked left little doubt about what the answers should be. Chamberlain’s peroration removed what doubt remained: ‘Do you think it better to cultivate trade with your own people or to let that go in order that you may keep the trade of those who are your competitors? … I believe in a British Empire … and I do not believe in a Little England which shall be separated from all those to whom it would, in the natural course, look for support and affection.’
Leo Amery – perhaps a little carried away by his devotion to Chamberlain – described it as ‘a challenge to free trade as direct and provocative as that which Luther nailed to the church door in Wittenburg.’ The Annual Register for 1903 judged that ‘No political event in recent years has provided so startling an effect as the pronouncement on fiscal policy made by Mr Chamberlain.’7
According to the Duke of Devonshire, ‘Chamberlain had not given the least sustained thought to the consequences of his theories.’8 However, the expression of his inadequately examined ideas marked a turning point in British history. The force of the speech lay in the tone of its delivery, rather than the language in which it was composed. But the rhetorical passion would not have set Britain alight had it not reflected an equal passion in a substantial proportion of the British people. Manufacture was in decline. The Industrial Revolution had, in reality, ended more than half a century earlier. The consequences of failure to innovate and invest were just working their way through into the economy. Declining industries longed to be protected by a tariff. The hysterical support which Chamberlain’s Birmingham speech attracted was not an expression of enthusiasm for an import duty on corn, qualified by an exception for Canada. It was the assertion that protection was right in itself and that in the twentieth century the British Empire must stand together against the world.
True to his nature, Arthur Balfour faced the uproar with an insouciance which bewildered his friends and infuriated his enemies. His strength and his weakness was the contempt he always felt for both extremes of any argument. He wanted a measure of protection to moderate absolute free trade. It was in that spirit that he opened the debate in the House of Commons on 28 May. ‘I always regret the manner in which political economy is treated in this House or on public platforms. It is not treated as a science or as a subject which people approach impartially with a view to discovering what is the truth. They find some formula in a book of authority and throw it at their opponent’s head.’9
Balfour went on to demonstrate his determination to consider the real economic issues. He first paid tribute to Chamberlain’s examination of the particular dilemma created by German discrimination against Canadian exports. Then he discussed the propriety and necessity of retaliatory tariffs – as if Canada had needed to retaliate against Germany rather than that Germany had thought it necessary to retaliate against Canada. He was not sure if the British people would accept a tax on food or if the Colonies would be prepared to modify their network of import duties, and he echoed Chamberlain’s call for an enquiry. ‘Remember – this question is not a question that this House will have to decide this session or next session or the session after. It is not a question that this House will have to decide at all.’
The clear implication was that the decision between free trade and protection would be taken after the next general election. That guaranteed that the debate on the subject would be the central issue of the campaign. Chamberlain agreed, but he could not resist immediately going on to argue the tariff case. An increase in food prices would be unavoidable and the working classes would pay at least three-quarters of what amounted to a tax on food. But the ‘very large revenue’ could and should be used for policies like the introduction of a universal old-age pension. The tariff was no longer a necessary expedient for financing already incurred debt
s, nor even a form of self-protection. It had become an end in itself which, almost incidentally, raised additional revenues that could be used for desirable purposes. A tariff with ‘preference’ for the colonies would be the hoop of steel which bound the Empire together.
Chamberlain’s agreement that the decision on imperial preference had yet to be taken was enough to satisfy Balfour that the Colonial Secretary accepted sufficient collective responsibility to allow his continued membership of the Cabinet. It did not convince the diehard free traders in the government that Chamberlain – who possessed an almost unique talent for attracting personal animosity – was a trustworthy colleague. They were sure that he should go. Their leaders and spokesmen – Ritchie, Lord George Hamilton and Lord Balfour of Burleigh – were neither as devious nor as tolerant as Arthur Balfour.
Esher wrote in his diary for 10 June 1903 that, on the previous day, ‘AJB saw the King and did not seem very hopeful about keeping his team together.’ Esher himself was even more gloomy. ‘They will break up this year. There is little doubt of it.’10 Balfour’s reports from Parliament to the King explained how the division over ‘tariff reform’ had immobilised the process of government: ‘The whole time of the Cabinet was occupied by a discussion of the present position created by … recent utterances on the subject of retaliation and Colonial preference. On this subject, as Your Majesty knows, the Cabinet is not agreed. The divisions amongst us greatly weaken our position and give the opposition a new and unexpected advantage in the parliamentary game.’11
On 11 September, the Cabinet discussed a Blue Paper on the subject of ‘retaliatory tariffs’ – a policy which it was at least possible to argue was not ‘protectionism’ but the unavoidable response to discrimination against British goods. That, in a sense, was its weakness. It did not attract – or at least it did not enthuse – Joe Chamberlain, who wanted to make the Empire a worldwide customs union which was held together by bonds of trade as well as the ties of history. But it did antagonise the out-and-out free traders, the Liberal Unionists who had learned their politics at Gladstone’s knee and still agreed with everything which he had taught them save for the necessity of Irish Home Rule.
The Prime Minister should have known – and possibly did know and rejoiced – that ‘the Cobdenites’ within his Cabinet would not accept what he regarded as a modest proposal. The free traders decided they had a duty to make a stand. Ritchie and Balfour of Burleigh sent a memorandum of their own to every Cabinet minister which contradicted many of the Blue Paper’s conclusions. That might have been acceptable, but it also dismissed (in trenchant language) Economic Notes on Insular Free Trade, the Prime Minister’s own writing on the subject. That was a declaration of war too overt and gratuitous to be overlooked. At the Cabinet meeting of 14 September, Balfour made clear – more by attitude than words – that the two critics of his paper would have to go. Lord George Hamilton, also regarded by the Prime Minister as, in the slightly dismissive phrase, ‘a Cobdenite’, took it for granted, as a matter of honour, that he would go with them. Letters of resignation – the obligations of honour – were sent but never published nor formally accepted. Balfour was scheming to save his government.
The next day the Prime Minister sent the usual letter to the King reporting on the day’s Cabinet meeting. It suggested that the free traders were right to suspect that Balfour had become sympathetic to the principle of colonial preference. He saw ‘retaliation’ as the first step towards much more general ‘tariff reform’.
The root principle for which Mr Balfour pleads is liberty of fiscal negotiation … There are, however, two quite different shapes in which this freedom to negotiate might be employed – one against Foreign Governments, the other in favour of our own Colonies … It is hard to see how any bargain could be contrived which the colonies would accept and which would not involve taxation on food … There are ways in which such taxation could be imposed which would add in no degree to the cost of living of the working class.12
The scheme which the Prime Minister described to the King was virtually identical to Joseph Chamberlain’s plan for subsidising a state pension with the income raised from customs duties. It would not have been difficult to recruit the Colonial Secretary’s services in its implementation, but the co-operation of Chamberlain caused more problems than it solved. The Duke of Devonshire had for some time hinted that he found it difficult to serve in the same Cabinet as Chamberlain – ostensibly because of the Colonial Secretary’s protectionist views but equally because of a personal antipathy which amounted to hatred. Without Devonshire the Unionist coalition would collapse. Yet Balfour had no doubt that the Duke would feel an obligation to resign if he learned that three ‘free trade ministers’ had left the Cabinet because of their irreconcilable opposition to ‘Chamberlainite’ policies. The Prime Minister needed time to manoeuvre. Fate and royal protocol provided an opportunity. Balfour of Burleigh was ‘minister in attendance’ on the King at Balmoral. The announcement of the resignations could be plausibly delayed until his return.
It was not difficult to convince Devonshire that there was no need for him to leave the government. Gambling on the Duke’s less than complete mastery of tariff reform’s arcane details, the Prime Minister began by arguing that a final decision had still to be taken. He promised that a speech he was to make in Sheffield to the National Union of Conservative Associations would make clear that he remained personally agnostic. He might have added that, on 9 September, Joseph Chamberlain had written to him with what can best be described as a post-dated resignation saying that he wanted the freedom to campaign for protection. But Balfour chose to tell Devonshire only half the truth. After the Cabinet meeting of 14 September, Devonshire was asked to stay behind for a private word. He described the conversation which followed when later, belatedly, he too resigned: ‘I had an interview with the Prime Minister in which he again referred to the possibility of the resignation of Mr Chamberlain. But even at that time it was not presented to me in such a manner as to lead me to understand that a definite tender of resignation had been made, still less that it was likely to be accepted.’13
There can be little doubt that, although Chamberlain did not propose to go at once, he certainly had every intention of going sooner or later. In an extraordinary compact with the Prime Minister, it was agreed that, when he ceased to be Colonial Secretary, a promotion would be offered to his son, Austen – thus preserving the family’s connection with the Cabinet. The news of Chamberlain’s imminent departure would certainly have kept Devonshire in the Cabinet – necessary in the Prime Minister’s view, to avoid the collapse of the coalition. But it might also have made Hamilton, Ritchie and Balfour of Burleigh offer to withdraw their resignations. The Prime Minister wanted them out, not so much for opposing his policy of retaliation but because of what they might do in the future when the issue of tariff reform came to a head. But he did not want to provoke a rank and file revolt by apparently turning on (and turning out) the ‘Cobdenite’ Cabinet ministers or risk the future of the coalition by alienating Devonshire. One obvious, though apparently undetected, aspect of Balfour’s sleight of hand was his habit of talking of the free traders’ resignation in public and their dismissal in private.
Balfour knew that the Duke’s sense of honour far exceeded his intelligence. So it was necessary to explain how he could remain in the government with a clear conscience. Ritchie and Balfour of Burleigh had, he insisted, behaved in a way which Devonshire would not even contemplate. Their resignations would be accepted, not because they held views which the Duke shared, but because they had expressed them in a disloyal way. John Dunville, the Duke’s private secretary, made a note of what at least one party to the Downing Street conversation believed had been said. ‘Mr Balfour’s remarks led you to believe that Lord Balfour and Ritchie were dismissed on account of the memorandum on the fiscal question which they had recently circulated … He hinted that Chamberlain might resign.’14
The next day, at least accordi
ng to the Duke’s diary note, Balfour went a little further. Once again news of Chamberlain’s intention was linked to an explanation of why the free traders had to go. Their insubordination had not been confined to one incident. Indeed the Memorandum was the least of their offences. Devonshire showed no sign of noticing that the explanation had changed. ‘You saw Mr Balfour at 7 pm. He informed you that Chamberlain was almost certain to resign. Asked you not to mention it to anyone. He further informed you that Ritchie and B of B were not dismissed on account of the Memorandum which they circulated but on account of the attitude that they had assumed towards the fiscal question through all its stages.’15
Balfour must have believed that his object had been achieved. But the Duke of Devonshire had qualms about breaking ranks with his free-trade comrades. The qualms were not sufficient to make him resign on the spot, and his wife was determined that he should not sacrifice what was left of his career. According to one acerbic observer, she had ‘not yet surrendered the ambition that he should be Prime Minister’*16 and found it easy to convince her husband that it was his public duty both to survive in government and to make sure that Chamberlain did not. So he took advantage of Balfour’s calculated ambiguities to claim that he feared that Chamberlain would remain – a situation which he would find intolerable. On 15 September, the day after the ‘confidential’ conversation, Devonshire sent the Prime Minister a formal letter of resignation. It virtually invited Balfour not to accept it. Once again he provided his own record of events with a note dictated to his secretary. ‘After leaving Mr Balfour you decided to send on your letter of resignation with a covering note saying that if you had written under any misapprehension of the position, it would be for Mr Balfour to correct you if he wished to do so.’
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