Neville Chamberlain: Encyclopedia II - Neville Chamberlain - Return to the Exchequer

Neville Chamberlain - Return to the Exchequer

After the 1931 general election, Chamberlain became Chancellor of the Exchequer a second time. As Chancellor, Chamberlain hoped to introduce protective tariffs, but the economic situation threatened government unity; at the general election, the parties supporting the government had agreed to ask for a "Doctor's mandate" to enact any legislation necessary to resolve the economic situation. Now the government, made up of Conservatives, Liberals, National Labour, and Liberal Nationals, faced a major crisis. The government agreed that no immediate steps would be taken; instead, the issue was referred to a subcommittee of the Cabinet – whose members were largely in favour of tariffs. In the meantime, Chamberlain introduced the Abnormal Importations Bill, which allowed temporary duties to be imposed if importers seemed to be taking advantage of government delays.

The Cabinet committee reported in favour, albeit not unanimously, of introducing a general tariff of 10 per cent with exceptions for certain goods such as produce from the Dominions and colonies, as well as higher tariffs for excessively high imports or for particular industries which needed safeguarding. In addition, the government would negotiate with Dominion governments to secure trading agreements within the British Empire, promoting Chamberlain's father's vision of the Empire as an economically self-sufficient unit. The Liberals in the Cabinet, together with Lord Snowden, refused to accept this and threatened resignation. However, on the suggestion of Lord Hailsham, the government agreed to suspend the principle of collective responsibility and allow the free-traders to publicly oppose the introduction of tariffs without giving up membership in the government. This unprecedented move had the effect of keeping the National Government together at this stage, but Chamberlain would have preferred to force the Liberals' resignations from the government, despite his reluctance to lose Snowden. Nevertheless, when he announced the policy in the House of Commons on February 4, 1932, he considered it "the greatest day of [his] life". For effect, he used his father's former dispatch box from his time at the Colonial Office and made great play in his speech of the rare moment when a son was able to complete his father's work. At the end of his speech, Austen walked down from the backbenches and shook Neville's hand amidst great applause.

Later that year, Chamberlain travelled to Ottawa, Canada, with a delegation of Cabinet ministers who intended to negotiate free trade within the Empire. The resulting Ottawa Agreement did not live up to expectations, as most Dominion governments were reluctant to allow British goods in their markets. A series of bilateral agreements increased the tariffs on goods from outside the Empire even further, but there was still little direct increase in internal trade. The agreement was sufficient, however, to drive Snowden and the Liberals out of the National Government; Chamberlain welcomed this, believing that all the forces supporting the government would eventually combine into a single "National Party".

Chamberlain served as Chancellor until 1937, during which time he emerged as the most active Minister of the government. In successive budgets he sought to undo the harsh budget cuts of 1931; he also took a lead in ending war debts, which were finally cancelled at a conference at Lausanne in 1932. In 1934, he declared that economic recovery was under way, stating that the nation had "finished Hard Times and could now start reading Great Expectations." However, from 1935 on, financial strains grew as the government proceeded on a programme of rearmament.

Chamberlain, aware of the strain this was placing on the Exchequer, found himself being attacked on two fronts: Winston Churchill accused him of being excessively frugal with defence expenditure, but the Labour Party attacked him as a warmonger in the 1935 general election. In the 1937 budget, Chamberlain proposed one of his most controversial taxes, the National Defence Contribution, which would raise revenue from excessive profits in industry. The proposal produced a massive storm of disapproval, and some political commentators speculated that Chamberlain might leave the Exchequer, not for 10 Downing Street, but for the backbenches.

Despite these attacks from the Labour Party and Churchill, Chamberlain had adopted a policy that would serve to be vital to Britain during wartime. This process was called Rationalisation. Under this policy the government bought old factories and mines. This was a gradual process as the depression had hit Britain hard. Then the factories were destroyed. Gradually, newer and better factories were built in their place. They were not to be used when Britain was in a state of depression. Rather, Chamberlain was preparing Britain for the time when Britain would emerge out of the depression. By 1938 Britain was in the best position for rearmament, as thanks to this policy Britain had the most efficient factories in the world with the newest technology. This meant that Britain was able to produce the best weaponry the fastest, and they had the best technology available.

Adapted from the Wikipedia article "Return to the Exchequer", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki