‘Make the Foreigner Pay’: When Britain Tried Tariffs

In the early 20th century few political issues inspired such passion and vitriol in the United Kingdom as whether to impose tariffs on imported goods. An apparently esoteric issue of high-level fiscal and trade policy, politicians and journalists wreathed tariff reform in signifiers relating to national pride and imperialism. The conservative Morning Post, one of the most persistent pro-tariff newspapers, declared in 1914 that the policy should ‘appeal to the national and Imperial spirit of Englishmen’. Tariff proponents derided their opponents as ‘little Englanders’, not capable of ‘thinking imperially’. Free trade advocates mocked tariff reformers for ignoring economic realities and accused them of planning to impoverish Britain’s working classes.

From 1903, the issue was interwoven with contentious partisan politics, as tariff proponents were increasingly associated with unionism – members of the Conservative Party or their Liberal Unionist allies – while the Liberals were officially opposed to tariffs. Nationalistic and imperialistic rhetoric rallied many people around the tariff reform banner, and promises were made that the policy could solve virtually every social problem facing Britain and the Empire. In 1913 F.E. Smith, the future 1st earl of Birkenhead, called tariff reform ‘the master-key of all Unionist activities’: 

Labour unrest will be settled, or at least mitigated; the condition of the masses will be improved; agriculture will be restored; and the Empire will be firmly consolidated. 

Chamberlain’s crusade

Britain completed its transition from a mercantilist economic policy to one based on free trade in the mid-19th century. In 1846 Parliament repealed the Corn Laws, which had protected British agriculture by taxing foreign-grown grains. Three years later, the Navigation Acts – designed to direct colonial trade towards Britain – were also repealed. Free trade was not entirely uncontested, but taxing imports was not within the realm of practical politics until Joseph Chamberlain, secretary of state for the colonies, adopted the idea with relish in 1902.

In that year Chamberlain tried – unsuccessfully – to convince the rest of Arthur Balfour’s Conservative Cabinet to implement imperial preference, whereby Britain would tax goods imported from foreign countries at a higher rate than its own overseas territories. In a November 1902 letter to Canadian finance minister W.S. Fielding, Chamberlain described his idea as ‘establishing the principle that we intend wherever possible to treat the colonists better than foreigners’. Representatives of the British Empire’s self-governing colonies – Australia, Canada, Newfoundland, New Zealand, and parts of what is now South Africa – had called for such a scheme at the 1902 Colonial Conference, held in London at the end of the Second Boer War. New Zealand’s prime minister, Lancashire-born Richard J. Seddon, accused European nations of making ‘war upon the trade of the British Empire’, a reference to other countries’ duties on British and imperial goods. As the New York Times reported on 6 July, Seddon said he ‘would have been wanting in duty to his country and his colony if he had not brought the matter forward’ at the conference.

Chamberlain first spoke publicly about tariff reform in his hometown, Birmingham, on 15 May 1903. He said little about how the policy would affect Britain’s economy. Instead, he focused on the need ‘to consolidate an empire which can only be maintained by relations of interest as well as by relations of sentiment’. Chamberlain warned that Britain and its empire were surrounded by rivals, who would ‘do all in their power to prevent the future union of the British race throughout the world’. By September it was clear that Balfour’s Conservative government would not sanction imperial preference. Chamberlain resigned and took his plan directly to the people.

Chamberlain was already known as a maverick politician. He began his political life as a Liberal, but when the party officially embraced self-government, or home rule, for Ireland in 1886, he and like-minded colleagues left to form the Liberal Unionist Party. The pro-tariff campaign Chamberlain launched in 1903 threatened to rupture the unionist alliance, but only added to his own aura as a man of action, regardless of partisan dogma. He quickly converted his Liberal Unionists and some Conservatives to imperial preference, and in 1903 they formed the Tariff Reform League with the aim of influencing public opinion.

A colonial question

Chamberlain’s arguments focused on the necessity of uniting the Empire with Britain, regardless of potential costs. Speaking in Glasgow on 6 October, he told an audience of Conservatives and Liberal Unionists that if imperial trade declined, ‘we sink at once into a fifth-rate nation’. Chamberlain claimed that Britons across the political spectrum should support his proposals: ‘I have not raised this question as a party question. I have raised it as a national question … as a Colonial question … and I have raised it as a business question’. He had been a partner in a successful screw manufacturing company before becoming involved in politics and later biographers such as Ian Cawood and Peter Marsh have argued that this experience informed his approach. Chamberlain’s speeches, delivered primarily in industrial centres in Scotland and northern England, were replete with business language and statistics. Speaking in Newcastle on 20 October, he told his audience that Britain exported £278 million in goods in 1902 and imported £528 million. He described the trade imbalance as two sides of a ledger and joked: ‘This is the result of our splendid trade during the year.’ Despite such rhetorical detours, his main points were ideological. Pride at being the centre of a global empire was fundamental to British nationalism and Chamberlain relied on these sentiments to override public anxiety about potential changes to their personal finances. On 28 October in Liverpool he said that free trade was outdated and implemented ‘in times before we appreciated our position as a great Imperial race’. Chamberlain assured his audience that ‘no one is prouder of England, Scotland, and the United Kingdom than I am’, but ‘we are a mere speck on the globe’. Britain only wielded power as part of an empire, and depended on that partnership: ‘In that Empire we may find with our kinsmen and our children a future … which will be greater than anything to which we can look back.’

Much of the tariff campaign was tinged with xenophobia. Chamberlain told audiences that they should embrace imperial preference because people in the self-governing colonies were ‘like them’: 

Here are eleven millions of white men, flesh of your flesh, blood of your blood, of the same religion, and with the same reverence for the British Empire, claiming to share its history and its glorious past; they are willing to unite their future to yours. 

He accused foreign companies of flooding the British market with cheap goods, or ‘dumping’, undercutting domestic manufacturers and endangering factory jobs. A Liberal Unionist poster declared: ‘Free Imports Have Made Britain the Dumping Ground of All Nations.’ Uncle Sam, bedecked in stars and stripes, smokes a cigar in the foreground beside a spike-helmeted caricature of the German kaiser. A poem beneath the latter reads: ‘There was a young man of Berlin / Who often remarked with a grin / Your free trade is free / to the Yankee and me / But I don’t see where Britain comes in.’ John Bull stands in the background, hands in pockets, looking helplessly at the two foreign mascots.

Chamberlain described tariffs as a benevolent policy – if enacted by Britain. Taxes imposed on British or imperial goods by other governments, however, were malicious acts, akin to warfare. He often invoked Canada, which was engaged in a trade war with the German Empire over rising mutual tariffs. Chamberlain urged Parliament to get involved to ‘defend our colonies’. They must make ‘the German people find out that they cannot wreak vengeance upon Canada without suffering to some extent in their own pocket’.

Who’ll pay?

While Chamberlain and his supporters made the sentimental case to the country, opponents mobilised around the plan’s economic weaknesses. Tariff reformers admitted that British consumers might suffer under imperial preference. During one of his first speeches on the issue in May 1903, Chamberlain told Parliament: ‘If you are to give a preference to the Colonies … you must put a tax on food.’ He added: ‘The working classes are going to pay three-fourths of it’, but said that these were funds the government ‘ought to and must devote to social reform’, implying that those who paid the taxes would get their money back in a different form.

The Liberals seized on the admission that tariffs would raise food prices. A flyer was promptly produced depicting a scowling Chamberlain pushing a barrel labelled ‘Taxation’ over a man wearing a hat marked ‘Working Classes’. Staring straight ahead, wearing his trademark monocle and a top hat adorned with ‘Tariff Reform’, he embodied the callous British upper class, unaware of, or indifferent to, the suffering he was causing. In a more genteel rebuke, the Liberal MP Allan Bright quipped in Parliament in 1905 that ‘a man should not be taxed until after he had had his dinner … nor a woman until she had had her tea’. Tariff opponents, increasingly called ‘free fooders’, suggested that the policy might discourage non-British companies from importing food at all, evoking visions of food shortages and empty shelves.

Chamberlain and his supporters tried to disavow his assertion about prices. In a speech in Glasgow on 6 October 1903, he said: 

I do not believe that these small taxes upon food would be paid to any large extent by the consumers in this country. I believe, on the contrary, they would be paid by the foreigner. 

Liberals countered with amusement and scorn. The MP William Harcourt declared at a meeting in Rawtenstall: ‘Oh! This is a capital plan; we will make the foreigner pay. That is a fallacy that can only deceive the most ignorant people.’ After the Conservative MP Andrew Bonar Law likened tariffs to a toll that foreign companies should pay to enter the British market, Liberal Alexander Ure asked a Woodend audience in December 1903: 

Why, sir, are you and I tormented with an income tax? Why don’t we raise all our revenue by the Customs? Why don’t we make the malevolent foreigner pay toll?

Opposition to tariff reform was not confined to the Liberal Party. Conservative non-believers formed the Unionist Free Food League in July 1903. A key member, Hugh Cecil, pointed out a major flaw in tariff reform logic: the purpose was to increase trade with the colonies by making foreign goods more expensive. Any decline in revenue would be alleviated by the tariff payments themselves. However, if foreign companies passed price increases on to British consumers who then bought them anyway – which seemed likely given their ubiquitousness – colonial traders would see no benefit. In any case, Cecil argued, domestic buyers should expect higher prices: 

Finance would have to be revolutionised if they were going to adopt a theory that foreigners could pay a tax by import duties and that we should not suffer at all.

Defeat and digging in

The test as to who was winning the tariff reform argument came just over two years after Chamberlain launched his campaign. The Conservatives and Liberal Unionists went into the 1906 general election campaign divided. Balfour had developed an alternative plan for retaliatory tariffs, imposing duties on countries that taxed British goods at the same rate. While perhaps more prudent than the Tariff Reform League’s blanket policy, it drew little attention against the latter’s dramatic campaign. Some tariff reformers even ran against free fooders from their own party. The Greenwich United Conservative Association nominated tariff reformer Ion Hamilton Benn as their candidate. However, Conservative free fooder Hugh Cecil was already the constituency’s MP, and he refused to stand down. Benn received 3,565 votes to Cecil’s 2,356, but the split unionist vote allowed the Liberal R.S. Jackson to take the seat with 4,906 votes. The overall result has been remembered as a ‘Liberal landslide’. Conservatives and Liberal Unionists lost a combined 245 seats. The Liberals gained 216 seats and their allies, the burgeoning Labour Party, another 27. The Conservatives and Liberal Unionists were assailed on several fronts during the campaign. They were blamed for poor performance in the Second Boer War and the harsh measures against Boer civilians taken to win it, the use in South Africa of Chinese indentured servants (described by opponents as ‘slaves’), and public funding of Church of England schools. Nonetheless, in his book Liberal Landslide (1973), the historian A.K. Russell called tariff reform ‘the most important single issue to bring over to the Liberals the organised support of erstwhile opponents and uncertain friends’.

Despite the crushing defeat, Chamberlain – who easily retained his seat in Birmingham – declared that he would continue to promote tariffs. Lord Lansdowne, the Unionist leader of the House of Lords, called this an ‘egregious blunder’. In a scathing editorial on 9 February, the Cambrian News declared: ‘The masses of the people are determined that they will not have dear food’ and called Chamberlain ‘the most stupendous failure of his times’. He would not get another chance to convince voters of his plans. In July 1906 Chamberlain suffered a stroke that left him partially paralysed. He lived until 1914, but did not play any further significant role in politics.

But far from these events sidelining tariff reform among unionists, a rising generation of journalists and politicians clung to it tenaciously. Some, such as Leo Maxse’s conservative monthly National Review, insisted that there was nothing wrong with the policy, merely with its presentation. When Balfour resigned the Conservative leadership in 1911 the magazine argued that one reason he had to go was that audiences did not believe that ‘a vote for Mr. Balfour is a vote for Tariff Reform and Imperial Preference’ – policies that would be wildly popular if advocated properly. The most convinced acolytes portrayed tariff reform as a panacea that would solve all social and political problems. The Conservative MP W.A.S. Hewins wrote in 1911 that Britain needed money to maintain its international position and improve the standard of living for all classes. Taxing imports would provide the funds necessary for ‘large measures of social reform long overdue’. These included increased spending on the navy, education, agriculture, and industry.

The post-Chamberlain generation of tariff reform activists applied the formula to issues he had not emphasised. The rise of the Labour party and the apparent popularity of socialist ideas were particularly vexing for Conservatives. Traditionally the party of property, they increasingly cast tariff reform as facilitating national unity against what they described as socialist agitation. On 17 May 1912 the Daily Express denounced ‘cheap excitations of class hatred’ from Liberal and Labour leaders and insisted that ‘tariff reform must be the basis of any real improvement in our social and economic conditions’. In an editorial on 23 September 1911 the Morning Post argued that protecting British industry would lead to higher wages for workers, thus eliminating the need for strikes. This would facilitate a cooperative relationship between capital and labour: 

The worker often looks on his work as meaningless routine and on his employer as a natural enemy. If in place of this dull acquiescence can come an intelligent interest in the marvellous mechanism of industry in which he himself is a tiny but necessary part … not only will the productive power of the nation be vastly increased, but the life of the humblest worker will be more worth the living. 

The analysis was, ironically, strikingly similar to Karl Marx’s theory of alienation.

Tariffs against socialism

After two elections in 1910 the Liberals remained in government but depended on Irish home rulers for their Parliamentary majority, raising again the question of limited self-government for the ‘sister island’. Unionists were convinced that the Irish question was a matter of economics, not politics. The land question had been virtually settled by a series of bills – passed by both Unionist and Liberal governments since the 1880s – that enabled tenants to purchase land at affordable rates. However, as the demand for home rule had not abated, unionists decided that the new prescription for Irish ills was a tariff policy.

In 1912 Leo Amery urged the new Conservative leader Andrew Bonar Law to declare that, once returned to office, the unionists would frame their tariff policy ‘with a special regard to the needs of Ireland’, particularly by protecting agricultural products. Amery was sure that this ‘would have a very great effect and help most materially in killing the Home Rule Bill in Ireland’. The Morning Post argued that denying Ireland self-government but instituting agricultural tariffs would ‘turn the heart of every Irish farmer to his interest in Great Britain’. Furthermore, it would ‘repopulate Ireland with a new generation which found in the Union its cause of being and means of livelihood’. Like other supporters, the paper’s editor, H.A. Gwynne, believed that tariff reform could spark spiritual as well as material regeneration.

The xenophobia that had accompanied the early tariff reform campaign returned to the forefront during the First World War. Some Britons – including a few Liberals and labour organisations – turned their fury against all things German into support for import duties against goods from enemy countries. The Daily Mail declared: ‘The Hun must be made to suffer in pocket as well as in person.’ Many people blamed Germany for the war and wanted the punitive import taxes to continue after peace was restored. More extreme proponents said this should be just a first step in removing alien influences from Britain’s national life. The Morning Post invoked the fear of spies when it asserted: ‘German traders are German agents who all work together to advantage the Fatherland.’ The paper insisted: ‘The ideal before this country should be to eradicate German influences and re-establish our economic independence.’

The anti-German tariff did not materialise but another Conservative leader, Stanley Baldwin, took up the policy again after the war. He made tariff reform his party’s main platform during the 1923 general election. W.A.S. Hewins recorded that Baldwin hoped to block Labour from power by providing an alternative economic policy to socialism. If this was the motive, the move backfired. The Conservatives lost 94 seats. Though Labour was the second-largest party, its leaders formed their first cabinet with the aid of Liberal votes. Tariff reform had, again, proven a vote-loser and made its proponents’ arch-enemies a party of government.

Imperial preference did, however, finally have its moment under a coalition, the National Government of 1931. This combination of the Conservative, Liberal, and Labour parties took office with a mandate for tariff reform as a means of mitigating the global effects of the Great Depression. In 1932 they convened the British Empire Economic Conference in Ottawa, Canada. Representatives of Britain and the self-governing colonies – by then called dominions – negotiated a series of trade agreements that amounted to imperial preference. Almost three decades earlier Chamberlain had called it a national and imperial policy, and it was only through a non-party government and negotiation among the states of what was increasingly known as the British Commonwealth of Nations that it came about. The impact is difficult to gauge, coming as it did during the Depression and the adoption of similar protective policies by countries around the world. Writing in 1996, the historian B.W.E. Alford asserted that British trade was declining before the 1929 collapse, and continued to do so after the 1932 tariff measures. He described tariff policy as of ‘minor economic importance’. The historian Francine McKenzie noted in 2016 that the trade agreements signed in Ottawa, rather than the cooperation and unity that Chamberlain and his followers had hoped for, caused tension and attempts at renegotiation among the participating states.

The price of tariffs

Scholars have long debated why Joseph Chamberlain adopted tariff reform in 1902, and why he launched his public campaign the following year. Theories have included personal ambition, a desire to lay the foundations for a permanently unified British Empire, and an effort to shake fellow unionists from a malaise induced by years in power. Whether it was his aim or not, he was by far the most successful on the final point. Unionists who adopted tariff reform did so with enthusiasm and dedication. Chamberlain and the Tariff Reform League promised a new era of prosperity and plenty for Britons of all classes, at the centre of a global empire, supported by populations around the world who shared their heritage and goals. Such promises resonated with many who wanted to believe them, whether the economics behind the rhetoric was sound or not. Unionist anxieties included the increasing assertiveness of the self-governing colonies, the rise of socialism, the demand for Irish home rule, and the growth of other powerful global economies. Tariff reform seemed to offer a single answer to these complex problems.

The political and economic pitfalls of tariff reform were so obvious that even Chamberlain had to admit them. Most voters in Britain rejected the policy due to its association with higher prices, regardless of the nationalistic and imperialistic messaging. The tariff reform campaign was divisive beyond partisan politics. The ‘make the foreigner pay’ idea was initially a means of trying to convince voters that they would not suffer adverse effects. It was also another way of defining who should play a prominent role in Britain’s economic life and who should not. Combative rhetoric underscored that tariffs could be weaponised, employed as deterrence or vengeance for national wrongs, real or perceived. But tariff reform could never live up to the promises made by its promoters. For Britons who simply wanted to run a business or purchase affordable goods, the attendant risks were simply too great.

M.C. Rast is an assistant professor of History at the Louisiana Scholars’ College, Northwestern State University.