Bonar Law - Tariff Reform

Tariff Reform

Law's chance to make his mark came with the issue of tariff reform. To cover the costs of the Second Boer War, Lord Salisbury's Chancellor of the Exchequer (Michael Hicks Beach) suggested introducing import taxes or tariffs on foreign metal, flour and grain coming into Britain. Such tariffs had previously existed in Britain, but had been abolished in the 1870s because of the free trade movement. The issue became "explosive", dividing the British political world, and continued even after Salisbury retired and was replaced as Prime Minister by his nephew, Arthur Balfour. Law took advantage of this, making his first major speech on 22 April 1902, in which he argued that while he felt a general tariff was unnecessary, an imperial customs union (which would put tariffs on items from outside the British Empire, instead of on every nation but Britain) was a good idea, particularly since other nations such as Germany and the United States had increasingly high tariffs. Using his business experience, he made a "plausible case" that there was no proof that tariffs led to increases in the cost of living, as the Liberals had argued. Again his memory came into good use — when William Harcourt accused Law of misquoting him, Law was able to precisely give the place in Hansard where Harcourt's speech was to be found.

As a result of Law's proven experience in business matters and his skill as an economic spokesman for the government, Balfour offered him the position of Parliamentary Secretary to the Board of Trade when he formed his government, which Law accepted, and he was appointed on 8 August 1902. As Parliamentary Secretary his job was to assist the President of the Board of Trade, Gerald Balfour. At the time the tariff reform controversy was brewing, with the Colonial Secretary Joseph Chamberlain, an ardent tariff reformer who "declared war" on free trade, leading. After returning from a speaking tour of South Africa in 1903, Chamberlain found that the new Chancellor of the Exchequer (C.T. Ritchie) had removed the tariff reforms suggested by Hicks Beach from the budget. Angered by this, Chamberlain spoke at the Birmingham Town Hall on 15 May without the government's permission, arguing for an Empire-wide system of tariffs which would protect Imperial economies, forge the British Empire into one political entity and allow them to compete with other world powers.

The speech and its ideas split the Conservative Party into two wings — the Free-Fooders, who supported free trade, and the Tariff Reformers, who supported Chamberlain's tariff reforms. Law was a dedicated Tariff Reformer, but for more mundane and worldly reasons than Chamberlain; while Chamberlain dreamed of a new golden age for Britain, Law focused on more practical results, such as a reduction in unemployment. L.S. Amery said that to Law, the tariff reform programme was "a question of trade figures and not national and Imperial policy of expansion and consolidation of which trade was merely the economic factor". Keith Laybourn attributes Law's interest in tariff reform not only to the sound business practice that it represented but also that because of his place of birth "he was attracted by the Imperial tariff preference arrangements advocated by Joseph Chamberlain". Law's constituents in Blackfriars were not overly enthusiastic about tariff reform — Glasgow was a poor area at the time that had benefited from free trade. In Parliament itself Law worked exceedingly hard at pushing for tariff reform, regularly speaking in the House of Commons and defeating legendary debaters such as Winston Churchill, Charles Dilke and Herbert Henry Asquith, former Home Secretary and later Prime Minister. His speeches at the time were known for their clarity and common sense; Sir Ian Malcolm said that he made "the involved seem intelligible", and L.S. Amery said his arguments were "like the hammering of a skilled riveter, every blow hitting the nail on the head". Despite Law's efforts to forge consensus within the Conservatives, Balfour was unable to hold the two sides of his party together, and resigned in December 1905.