Steel tariffs: a triumph of Tory protectionist tradition

Before the Tory leadership election dominated the headlines and political conversation, there was a brief flurry over the Government maintaining steel import tariffs and quotas for another two years. This prompted outraged tweets by Dan (now Lord) Hannan and a condemnatory Daily Telegraph article from Liam Fox, a former Trade and Defence Secretary. The modern Conservative Party is so associated with free trade that it obscures the fact that the present Government’s actions are very much in the historical mainstream of the Conservative Party.

Dan Hannan acknowledges as much on his Twitter biography when he describes himself as an Old Whig, not an Old Conservative. The modern Conservative Party was constructed by Sir Robert Peel in the 1830s, but it was soon smashed over the repeal of the Corn Laws. This trade liberalisation destroyed Peel’s government in 1846, but it was Peel and his followers who left the Conservatives over it, not the Conservative Protectionists.

From 1846 to 1852 the Conservatives were the protectionist party. Why was this? Simply because the Conservative Party was representing its rural members’ interests and seeking to protect their incomes. In representative terms the remaining Conservative Party MPs were simply doing job and not giving in to the factory owners and merchants who wanted cheap bread for their underpaid urban workforce. If it were not for this conflict between protectionists and free traders, Benjamin Disraeli would not have become a great Victorian Prime Minister and William Gladstone would be remembered as a long-serving Conservative Prime Minister, not a Liberal one.

The next great Conservative struggle over protectionism came from its ally the Liberal Unionists, in the formidable form of Joe Chamberlain (pictured above). Having split the Liberals over Home Rule in 1886, Chamberlain did the same to the Conservatives over protection after 1903. Chamberlain sought a system of imperial preference, in part in response to the protectionism of the United States. Just as with 1846 this conflict contributed to the Conservatives’ loss of office. However, the fact that Britain almost starved in the First World War, due to the huge amount of food imports sunk by German U-boats showed the limits of free trade. While the United States choice of protectionism from the 1870s soon enabled their industries to overtake Britain and become the world’s largest economy by the 1890s.

One politician who made his name supporting Chamberlain’s protectionism was Bonar Law. This would play its part in the embrace of protectionism by the Conservative governments of 1922 to 1924, initially led by Bonar Law before his untimely death. Stanley Baldwin fought the 1923 General Election on a protectionist platform but lost. Baldwin still gained the most votes and seats, but the last gasp of the Liberal Party as a major party allowed in the first Labour government.

Yet the ghost of Joe Chamberlain had the last laugh in the end. When the Great Depression swept the world in the 1930s, the Conservative Party, as the dominant part of the National Government, won 470 seats on a protectionist mandate in the 1931 General Election. It was his son, Neville Chamberlain, as Chancellor of the Exchequer, who introduced protectionist measures in the form of the Import Duties Act of 1932. His brother Austen, a former Chancellor himself, rose from the backbenches and embraced his brother for delivering on their father’s vision. There were no electoral consequences for this protectionism. In the 1935 election the National Government won a second crushing majority. The only defenders of free trade were the Liberals and they lost many of the few seats they had.

The wider consequences of 1930s protectionism are well known, but consider: what other option did the Conservatives — and Britain — face in 1931? If Britain, which was racked by industrial unrest and economic turmoil, had not embraced protectionism when the rest of the world did, the British economy would have been crushed. It is even conceivable that Britain might have followed Germany and Spain in descending into political extremism and dictatorship. It could be argued that the Import Duties Act of 1932 was vital to boosting Britain’s domestic industrial base, a base that was desperately needed in the late 1930s to re-arm against the menace of Nazi Germany.

The truth is that the Conservatives have always been pragmatic over balancing protectionism and free trade. It could be noted that the last forty years of neo-liberal free trade has produced as Britain’s largest company Unilever, a company first founded by a merger in 1929. Unlike China Britain does not have a Alibaba (founded in 1999) or Tencent (founded in 1998) to take on the Tech Giants of the United States. That, however, is an argument for another article.

Commentators and activists can argue over the rights and wrongs of protectionism and free trade, but they cannot pretend that protectionism has not been a powerful strain in the Conservative Party and the British Conservative tradition. The extension of the present steel tariffs is only the latest example of that tradition.

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