Tariffs and trade
Ian Bradley
It is ironic that the voices crying loudest for the imposition of import controls at the Present time should come from the left, for historically in British politics protectionism has been a cause associated with the right. Those who are currently advocating a return to it might care to reflect on this and also on the considerable difficulties which earlier politicians have had in trying to convince the public of its merits.
Britain's great economic boom during the mid-Victorian period depended on the acceptance of the doctrine of free trade by successive governments. Import duties imPosed on manufactured goods since the seventeenth century had been largely swept away in the 1820s by William Huskisson, President of the Board of Trade in Lord Liverpool's administration, in response to the demands of the mercantile and manufacturing community, particularly the cotton interest. The movement towards free trade culminated in Peel's abolition of the duty on imported foreign wheat in 1846 after the long campaign fought by the AntiCorn Law League. From then on, free trade became the dominant economic policy of every government.
As a result, Britain was able to import Cheap food and raw materials from the best source of supply and to export manufactured goods freely to all markets. It was in the interests of the United Kingdom, as the Only fully industrialised nation and the greatest importing and exporting country in the world, to have as few barriers to the free flow of world trade as possible. Other countries with weaker economies were less happy about removing protective barriers. In 1866 the Times quoted a prominent American as remarking that 'free trade was a system devised by England to enable her to Plunder the world'.
The principle of free trade first came under serious assault in Britain during the great trade depression of the 1880s when unemployment in certain key industries reached 15 per cent. Other countries, most notably Germany and the United States of America, had by now reached industrial maturity and were building up their infant industries behind the protection of high tariff barriers. Several manufacturers felt that Britain put itself in a vulnerable position by continuing to operate a free trade Policy in these circumstances. In 1881 they formed the Fair Trade League to agitate for reciprocal tariffs on imports to match those being imposed by other industrial countries. Six years later the conference of the National Union of Conservative Associations passed a resolution in favour of tariffs and in 1892 Lord Salisbury, the Tory
leader, declared himself to be in favour of them.
The next cyclical slump in world trade brought a renewed call for import controls. In 1903, when unemployment had again reached 15 per cent in many industries, Joseph Chamberlain launched his famous campaign for tariff reform based on imperial preference. His idea was simple: goods exported to Britain by countries within the Empire would be free of all duties as would British exports to the colonies. Everything imported from outside would carry duties. Chamberlain calculated that this basically protectionist measure would create 166,000 new jobs at home. He set up a Tariff Commission and a Tariff Reform League to hammer home his message. The Conservative Party was still not wholly committed to the abandonment of free trade but Chamberlain campaigned vigorously in the 1906 election for tariff reform. Liberal propaganda that his proposals would mean dearer food won the day and the resounding victory for the Liberals in the election was an indication of the electorate's continued attachment to the principle of free trade.
The Tories' commitment to protectionism remained rather half-hearted in the early years of this century. In 1910 Balfour declared that a Conservative government would not introduce tariffs on imports unless it was specifically approved in a referendum. Three years later Bonar Law said that while the party would continue to press for certain protectionist measures they would never advocate the imposition of duties on imported foodstuffs. Attempts that were made in this period to protect British industry from the growing threat posed by American and German competition foundered largely because most people felt that the maintenance of a free trade policy was essential to the survival of a country so dependent on imported food and raw materials and on exported manufactured goods.
It was not until 1915 that the exceptional circumstances of world war finally forced the Government to impose certain protectionist measures. In that year the Chancellor of the Exchequer, Reginald McKenna, imposed tariffs of up to 33i per cent on various luxury imports. After the First World War was over the Safeguarding of Industries Act maintained in force those tariffs which had been introduced to protect industries launched in the war to produce goods previously made by the Germans. The McKenna duties also remained on imported motor cars to the considerable benefit of the infant British car industry.
The depression of the 1920s brought renewed demands for import controls to preserve the home market for British-made goods. In 1923 Stanley Baldwin announced that he regarded protectionist policies as the main solution to the terrible problem of mass unemployment. However, when the Conservatives put import control to the country in the 1923 election, fears of dearer food once again scared people off. One of Ramsay MacDonald's first actions on becoming Prime Minister was to repeal the McKenna duties. It was not until 1931, when the economic crisis was at its worst and when unemployment had soared above 20 per cent, that Britain finally abandoned its free trade traditions. Neville Chamberlain, son of the advocate of tariff reform, introduced the Import Duties, Act which imposed a 10 per cent tariff on the import of all manufactured goods. Of his colleagues in the National Government, the Conservatives were all in favour, the National Liberals accepted it as 'a temporary expedient' but the Liberals and National Labour group were implacably hostile. It was not simply that they felt protectionism was a substitute for increasing the efficiency of home industries and an invitation to other countries to retaliate in like manner. They also believed that it marked a retreat from internationalism into narrow selfinterest. It would be interesting to know how the contemporary advocates of import controls feel about this.
Previous page
