1

Origins, 1916–31

The Liberal National party owed its existence to differing opinions within the ranks of British Liberalism about how to react to Ramsay MacDonald’s minority Labour government of 1929–31. Thirty years after the event, a party publication offered a succinct description of the issues at stake:

The consequences [of allowing Labour to take office] were disastrous for Britain and for the Liberal Party. Under the Labour Administration the volume of trade dropped alarmingly, the steel industry was brought almost to a standstill, the numbers of unemployed rose from little more than one million to little fewer than three million, the Unemployment Insurance Fund became bankrupt, and the budgetary situation impossible. Britain was brought to the verge of economic collapse. The majority of Liberal MPs soon found that they could no longer continue their support of the Labour Administration.1

As will be shown below, resulting splits led eventually to the emergence of a new political party. But the Liberal National defection also needs to be set in the context of the previous decade of the Liberal party’s history. The years since the end of the First World War had been characterised by ongoing internal division, the lack of a clear sense of direction and purpose, defections to other parties and mounting frustration at the party’s impotence within the political nation. Such factors pre-disposed British Liberalism to the sort of seismic upheaval which occurred at the end of the Labour government in 1931.

This is not the place to rehearse the copious literature on the impact of the First World War on the fortunes of the Liberal party. Suffice it to say that the governing party of 1914, with almost a decade of distinguished administration to its credit, had been reduced by the end of the conflict to virtual third-party status, a position formally recognised in 1922 when Labour successfully laid claim to the style and privileges of the country’s ‘official opposition’. The outcome of the Coupon Election of December 1918, held just weeks after the guns fell silent, could hardly have been worse from a Liberal point of view. The party itself was still divided following the catastrophic falling-out of David Lloyd George and Herbert Asquith in December 1916. One hundred and thirty-three coalition Liberals, supporting Lloyd George, were returned to parliament, but they were comfortably outnumbered by 335 Conservatives. Only 28 independent Liberals, under the leadership of Asquith, took their seats when the Commons reassembled, overtaken now by 63 Labour MPs and a further ten elected as Labour supporters of the government.² By the time of the next General Election in 1922, the forces of Liberalism remained divided but their combined total of 116 MPs – 54 Asquithian ‘Wee Frees’ and 62 Lloyd Georgeite National Liberals – was significantly less than Labour’s tally of 142 seats.

It is difficult to overstate the significance of these developments, especially in the context of a political system whose structure and operation favour the interests of no more than two serious contenders for power. As the third party in the state the Liberals faced questions which had not really confronted them before. Their failure to produce coherent and unanimous answers to these questions goes a long way to explain the parlous state into which the party had descended by the time of Ramsay MacDonald’s second administration in 1929. Describing the impact of the election of the first cohort of Labour MPs in 1906, George Dangerfield famously suggested that the Liberal party had been outflanked. ‘It was no longer the Left.’³ Few would now accept Dangerfield’s thesis in anything like its original form. Whatever its pre-war problems, the Liberal party before 1914 largely retained control of the political agenda, seemed capable of responding effectively to the aspirations of a mass workingclass electorate and remained the dominant partner in the Progressive Alliance which it had formed with Labour and which had proved remarkably successful in keeping the Conservatives (Unionists) out of power. Applied to the 1920s, on the other hand, Dangerfield’s assessment is fundamentally correct. The Liberal party no longer was ‘the Left’ and, in the context of an enormously strengthened Labour party, theoretically committed now to a socialist constitution, it was not sure that it wanted to be ‘the Left’ or even associated with it.

Fundamental to the Liberals’ post-war predicament were the twin problems of poor leadership and divided counsels. The shattered Asquithian remnant, without even Asquith’s presence – he having lost his seat at East Fife after a tenure of more than 30 years – seemed devoid of ideas for the future, intellectually bankrupt and bound together by little more than personal loyalties and historic memories. The selection of Donald Maclean to act as sessional chairman pending Asquith’s return to the Commons was unlikely to fill the void to any great advantage. At a time when radical voices were looking to create a land fit for heroes to live in, Maclean seemed to want to return to the ideas of an earlier age, insisting that a future Liberal government would need to impose rigid and detailed economy measures. ‘They would go right back to the Gladstonian policy of saving the pence and even the ha’pence.’⁴ Not surprisingly, Charles Masterman, one of the ministerial architects of the pre-war ‘New Liberalism’, judged that ‘the poor old Liberal Party is dead or dying’.⁵

Even when Asquith engineered a return to the Commons at a byelection in Paisley in 1920, it is doubtful whether he did his party any service by holding on to the leadership. Drained by the trials of war and increasingly dependent on drink, it is hard to escape the conclusion that he was now but a shadow of the man who had held the premiership through eight tumultuous and generally constructive years. But Asquith would retain the party leadership until 1926, a critical period during which Labour made remorseless gains at Liberalism’s expense. ‘The trouble is’, suggested Lloyd George in 1924, ‘that when you have a policy ready and Asquith launches it, it will freeze on his lips; all kindling warmth and hope will die out of it; he will present it accurately, but without sympathy.’⁶

Lloyd George was the obvious alternative leader to Asquith. But his own conduct in the post-war years did little to enhance his leadership credentials. On the one hand the longer the Coalition government continued, the clearer became the dominant Conservative voice in its direction. In this process Lloyd George lost any lingering claim to be the leading standard-bearer of British radicalism, a title few would have denied him before 1914. Many Liberals already nurtured a visceral hatred of the Prime Minister, convinced that by his actions in 1916 and ever since he had deliberately sought to wreck their party. If such figures needed any confirmation of their beliefs, Lloyd George’s ever-growing dependence on the Tories provided it. By contrast, right-leaning Coalition Liberals were less concerned by this development, particularly as they tended to regard blocking Labour’s route to power as their primary objective. But these men were in turn bewildered and alienated by the course taken by Lloyd George after the break-up of the Coalition in October 1922. By the middle of the decade he was clearly moving leftwards again, losing the support of those who had stayed with him in the years of the Coalition without necessarily recapturing the allegiance of those who had been appalled by his cohabitation with the Conservatives.⁷

Reunion was the sine qua non of any hope that the Liberal party would recover its sense of direction and purpose. Despite an increasing realisation at the party’s grassroots that this was the case, it ultimately took an outside agency – the conversion of the Conservative leader, Stanley Baldwin, to the cause of tariffs prior to the General Election of 1923 – to effect some sort of reconciliation between Liberalism’s warring factions. As in 1903, free trade still had the capacity to forge a sense of common identity among those who subscribed to the Liberal faith. But for many the process of reunion was difficult and could never be complete. There were, suggested Herbert Gladstone with his long experience of the party’s local organisation, important men in most constituencies who ‘could never be brought to accept Lloyd George and who would go out of active politics if he were once more brought in in an important position’.⁸ Asquith himself clearly found the experience of sharing a platform with his former rival a painful one. ‘I have rarely felt less exhilaration’, he confided, ‘than when we got to the platform amid wild plaudits and a flash-light film was taken, “featuring” me and LlG separated only by the chairman – an excellent local Doctor.’⁹ A year later Lloyd George was still arguing that only if past grievances were forgotten could a Liberal revival take place. If this were not done, he warned Asquith’s formidable wife Margot, ‘then neither of us will live to see the day when liberalism will become again a dominant force in the national life’.¹⁰

The General Elections of 1922 and 1923 revealed that the Liberals were already falling into the third party trap, with all the disadvantages that this status imposes. Even in 1922 the Lloyd George and Asquith factions combined had secured almost 30 per cent of the vote but less than 20 per cent of the seats in the new House of Commons. Moreover, the British electoral system makes it difficult for a party to escape from this predicament. A third party is no longer the alternative government in waiting and is likely to see its strength further eroded as the electorate seeks to cast its vote for a genuine contender for power. Increasingly, prominent Liberals began to speak a new language of politics which reflected the party’s changed status. The triumph of Liberalism, suggested Lloyd George, did ‘not necessarily depend upon a single party’. The possibility of converting other parties to Liberal principles and proposals also needed to be considered.¹¹ E.D. Simon, a prominent figure in the party’s Summer Schools, appeared to agree. ‘I don’t know whether there is much chance of the Liberal party surviving’, he conceded, ‘but Liberal opinion must survive whatever happens to the party.’¹² Meanwhile, one of the party’s leading intellectuals, Ramsay Muir, moved rapidly from a denunciation of multiparty coalitions as encouraging corrupt political bargains to the advocacy of the ‘true representation of voters’ through a system of proportional representation.¹³

For the time being, however, in the context of an unreformed electoral system, the most to which Liberals could realistically aspire was to hold the parliamentary balance between the other two parties. This, however, would force the party to decide on which way it inclined – had it in fact evolved into a party of the centre-left or of the centre-right? One of the most striking features of the Liberal decline of the 1920s was the way in which the party suffered defections to both the Conservatives and Labour. Moreover, as the central organisations of Liberalism weakened, local constituency associations were increasingly left to their own devices, a development which encouraged an existing tendency towards particularity and diversity. In consequence, Liberalism took on a variety of guises across the country. In general, however, and irrespective of what might be happening at Westminster, the trend in local politics during the 1920s was for the Liberal party to enter arrangements with the Tories, often involving the sacrifice of its own identity, in anti-socialist pacts.¹⁴

The General Election of 1923 brought this left-right dilemma into the open. The Conservatives remained the largest single party (258 seats) but, after an election fought specifically on the issue of tariffs, they were comfortably outnumbered by the combined free trade strength of Labour (191) and the Liberals (159). Asquith judged that this was a victory for free trade and that Labour, as the larger of the two free trade parties, should be given the chance of forming a government. Thus, with only a limited amount of advance planning and certainly no attempt to hammer out an agreed legislative programme, Liberal support enabled Labour to take office for the first time in its history in January 1924. But that support had to be active. As the Conservatives could on their own out-vote Labour, mere Liberal abstention would expose the new government to an early demise. Many Liberals certainly approved of what Asquith had done, but others harboured grave doubts. ‘The Liberal Party is divided on the question of supporting Labour’, reported Lloyd George. ‘Quite a number of the “important and influential” emphatically dislike it, but if Ramsay [MacDonald] were tactful and conciliatory I feel certain that the party as a whole would support him in an advanced Radical programme.’¹⁵ For many this represented the opportunity to recreate the Progressive Alliance of the pre-war era. As Labour unfolded its legislative programme, E.D. Simon enthused about the ‘immense field of constructive work in which we could fruitfully co-operate’.¹⁶ Some even fooled themselves into believing that the Liberals could again hold the whip hand in such a partnership. But others recoiled from Labour’s programme, particularly from the faintest suggestion of socialism. Percy Harris, MP for Bethnal Green South-West, remembered ‘a distinct cleavage of thought’ that emerged at every party meeting. ‘The old Coalitionists were always looking for excuses to vote with the Tories, while the Independent Liberals were pressing for radical reforms and were only too glad to support legislation of a kind they had been advocating for years.’¹⁷ In such a situation it proved virtually impossible for the party whips to assert any real discipline. Even on the initial vote which brought down Baldwin’s government and opened the way to a Labour administration, ten Liberals had gone into the Tory lobby. Prime Minister MacDonald watched the Liberal performance in a mood of amused contempt and interpreted it as a struggle for the party leadership. It was ‘really being badly conducted as such quarrels by small men usually are. None of the claimants attend the H. of C. very regularly, but when they do they plume themselves vulgarly (interrupt, cock their heads in the air, smile with superior airs – and have a good Liberal press next morning).’¹⁸

During the months of Labour government the Liberal party did little to enhance its standing. The parliamentary party regularly divided three ways between support for, opposition to and abstention from the measures put forward by the government. Such a spectacle made it difficult to take the Liberals seriously as a participant in the political arena. There was growing talk of the party being crushed between the upper and nether millstones of its political opponents. The Conservative party increasingly took on the appearance of the natural home for those who feared the advent of socialism, while Labour enhanced its claim to be the obvious vehicle of radical progress. When the government came to a premature but predictable end over its mishandling of the so-called Campbell Case, Lloyd George voiced his regret at what he regarded as a lost opportunity. Labour, he believed, could have formed a working alliance with Liberalism with the potential to provide ‘a progressive administration of this country for 20 years’.¹⁹ Such an assessment revealed a fundamental misunderstanding of the Labour party’s position.

Indeed, the period of MacDonald’s government served to highlight the attitude of both Labour and the Conservatives to what was now the third party in the state. Both had given considerable thought to the implications of three-party politics that had not been matched by the Liberals themselves. Labour had decided upon a political strategy which ruled out the sort of co-operation with the Liberals for which Lloyd George and others hoped. MacDonald in particular viewed one of the purposes of this first experience of Labour government as hastening the demise of the Liberals as a serious force in British politics. This objective could best be achieved by showing that Labour was a responsible and moderate party of reform, fully able to work in the national interest. His aim was not to re-create the pre-war Progressive Alliance but to replace it by a Labour party to which all progressive opinion could confidently adhere.²⁰ Any help which the Liberals offered to sustain Labour in power would be willingly accepted, but nothing would be proffered in return which might strengthen them. ‘The first Labour government’, writes Ross McKibbin, ‘cannot be understood other than in these terms.’²¹ Labour’s Hugh Dalton was quite brutal about his party’s goal. ‘I hope we shall be able to avoid giving the Liberals either Proportional Representation or Alternative Vote in this Parliament. Then they mayn’t live to ask for either in the next.’²²

Such thinking was fully paralleled inside the Conservative party. In the early post-war years many Tories had seen partnership with the Liberals as the best way to respond to the ‘impact of Labour’, the only way in fact to prevent Labour coming to power. Asquith’s decision to present MacDonald with the keys to 10 Downing Street, however, inevitably occasioned a major reappraisal. Leo Amery, advising Baldwin, was every bit as clear-sighted and frank in relation to the Conservatives’ course as was Dalton about Labour’s ambitions:

My whole object in this and subsequent talks and letters has been to convince him that our main object in the immediate future is the destruction of the Liberal Party and the absorption of as much of the carcase as we can secure … One of the three parties has to disappear and the one that is spiritually dead and has been so for thirty years or more is the natural victim.²³

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The General Election of 1924 was a predictable disaster. Strapped for cash, the Liberal party managed to field just 340 candidates, effectively disqualifying itself from the outset as a serious aspirant for power. The party’s campaign was itself undistinguished. ‘I doubt’, wrote Charles Hobhouse, a former cabinet minister, ‘if [the Liberal party] any longer stands for anything distinctive.’²⁴ Deriving no benefit from its interlude of holding the parliamentary balance, the party looked increasingly irrelevant. The real contest was between Labour and the Conservatives and the majority of the electorate seemed to appreciate this. Just 40 Liberal MPs were returned. Defeated at Paisley, Asquith determined to soldier on as party leader from the House of Lords, a decision which itself encapsulated Liberalism’s growing futility.

Over the next three years the party gradually fell under Lloyd George’s control. He faced a major crisis at the time of the General Strike in 1926, an event which again revealed not just differences of opinion within the party’s ranks but a fundamental division between its left and right wings. While Lloyd George blamed the Conservative government for what had happened, Asquithians insisted that society had an obligation to defeat the strikers, with the distinguished lawyer and former minister, John Simon, going so far as to declare the strike illegal. Lloyd George’s senior critics saw an opportunity to force him out of the party, but the grass-roots had no stomach for further blood-letting and insisted that some sort of accommodation be reached. When illness finally forced Asquith’s resignation in the autumn, Lloyd George’s succession was not seriously challenged. But acceptance of his leadership was motivated above all by the most practical of considerations. The party was desperately short of money and Lloyd George, still controlling the profits of his ill-gotten Political Fund, was the only person capable of providing it. In the words of one leading Asquithian, ‘as for money, the answer is simple, there ain’t none’.²⁵ On such a basis, however, the Lloyd Georgeite take-over of the party could never be complete, even though the new leader made the shrewd appointment of Herbert Samuel as chairman of the party organisation with a clear brief to build bridges between the warring factions. On Lloyd George’s appointment as sessional chairman of the parliamentary party after Asquith’s defeat at Paisley, 11 right-leaning MPs led by Walter Runciman had formed the rather inappropriately named ‘Radical Group’, effectively renouncing Lloyd George’s authority. Now, in January 1927, the former Foreign Secretary Edward Grey took the lead in organising a group of dissidents into the Liberal Council, with officers and funds separate from those of the party. The stated aim of the new body was ‘to enable Liberals who desire to uphold the independence of the Party to remain within it for the furtherance of the aims of Liberalism’, a form of words designed presumably to highlight Lloyd George’s inability to achieve such ends.²⁶

In the period before the General Election of 1929 Lloyd George poured both his money and his energy into reviving an almost moribund party. Under his leadership the party took on a clearer sense of identity than at any time since before the First World War. That identity, notwithstanding his earlier years in coalition with the Conservatives, was of a radical party of the left, building upon the New Liberalism of the pre-war era in order to respond to the social and economic needs of modern, industrial Britain. Out of this energy and activity came Land and the Nation, the report of the Land Enquiry Committee, published while Asquith was still nominally in charge in October 1925. Towns and the Land followed in November and focussed on policy for urban areas. But of altogether more importance was the so-called ‘Yellow Book’, Britain’s Industrial Future, published in February 1928, which formed the basis for the party’s campaign in the General Election of the following year. All told, it amounted to something of an intellectual renaissance, staking out a clear position for the Liberal party between the protectionism of the Conservatives and Labour’s theoretical commitment to socialism, with ideas that would become the common currency of political debate after the Second World War.

The problem was that it was not an image to which all Liberals could subscribe. Some openly, some covertly opposed the interventionism and high expenditure which Lloyd George’s proposals entailed and which ran counter to their deeply entrenched understanding of Gladstonian Liberal principles. In September 1928, shortly after the publication of the Yellow Book, John Simon warned the party not to go into the next election ‘like a cheap-jack in the fair’, offering a ‘patent remedy’ for the immediate cure of unemployment.²⁷ In the privacy of his diary, Richard Holt, former MP for Hexham, was more explicit:

Lloyd George has made things very difficult for sober minded Liberals by a reckless promise to cure unemployment in 12 months. All sorts of public works financed by loan which will only add to the difficulties of all legitimate trade by enhancing prices and wages. It is a terrible misfortune to have him on our side.²⁸

Meanwhile, in pamphlets such as Liberalism As I See It, Runciman propounded an alternative economic strategy based on the classic Liberal principles of retrenchment and free trade, and designed specifically to counteract Lloyd George’s attempts to move the party in a collectivist direction. He was ‘against trying to work on borrowed money [because] to do so compels you to pay the penalty at some time or other’.²⁹ Yet, for the time being, Lloyd George was in the ascendant. The party won an encouraging series of by-elections between March 1927 and March 1929, albeit largely in rural areas at the expense of an increasingly unpopular Conservative government and with little impact upon the erosion of the party’s urban support to Labour which had been proceeding unchecked throughout the decade. The Liberal party’s future prospects would be heavily dependent upon its performance at the next general election.

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‘All of the features which a political party needs for victory’, writes Roy Douglas, ‘seemed to be present: unity; a sense of purpose; enthusiasm; personalities; money; organisation.’³⁰ Such an assessment requires serious modification. The appearance of unity was plain to see. A campaign poster featuring Lloyd George, Grey, Samuel, Simon, Runciman and Lord Beauchamp was designed to suggest that the Liberal family had at last put its petty feuds behind it, the better to confront the nation’s problems. The sense of purpose was real enough. Even Lloyd George’s severest critics seemed ready to acknowledge that he had breathed new life into an almost moribund party and to give him the benefit of the doubt, at least for the time being. Richard Holt, standing in North Cumberland, had been one of the leader’s most strident opponents. But even he, if never really converted to the philosophy which underlay ‘We can conquer unemployment’, the policy document based on a Keynesian programme of public works which provided the basis of the Liberals’ campaign, conceded that ‘LlG has touched the popular imagination and that we ought not to throw cold water on his schemes’.³¹ Yet Liberalism’s unity of purpose was shaped very much around Lloyd George’s personal vision of the right course for the party to follow and was unlikely to survive for long in the event of a further electoral setback. Indeed, just beneath the surface picture offered for public consumption, all was far from well. To his secretary and mistress Lloyd George confided at the beginning of 1929: ‘I am fighting with an army paralysed by divided generalship. It is cankered with jealousy and suspicion.’³² Samuel had been only partially successful in his efforts to win over the members of the Liberal Council. Grey and others were reluctant to appear on the same platform as their leader, while Runciman, ‘an embittered malcontent who could never be reconciled to Lloyd George, no matter what the latter did’,³³ professed his loyalty but really hoped to see enough like-minded Liberals elected to be in a position to take control of the party away from Lloyd George after the election.

The leader himself had no real expectation of a Liberal victory and his thoughts still focussed on some sort of co-operation with the Labour party. The very existence of the Liberals, he suggested to C.P. Scott in December 1928, would force Labour to come to terms by depriving it of any hope of an independent majority in the new House of Commons. Labour and the Liberals could ‘go together a long way along the road to progress’ and it was ‘very sad’ that they should fight each other ‘for the benefit of the reactionaries and the revolutionaries’.³⁴ Such ideas have permeated the thinking of key Liberal strategists for the last hundred years, from Herbert Gladstone at the time of the 1903 electoral pact to Paddy Ashdown in the run-up to the General Election of 1997. Given the Liberal party’s composition at the end of the 1920s, however, any move to repeat the tactics employed in 1924 would be almost certain to re-open fundamental divisions in its ranks. Of this Lloyd George was apparently fully aware. He ‘said that if any attempt were made in the next Parlt. to induce the Lib. Party to support a Socialist Govt. the Party would be split from top to bottom’.³⁵

Much then depended on the outcome of the General Election. The results gave little cause for comfort. The Liberal party’s representation went up to 59 MPs, compared with 40 in 1924. More than five million voters had given their support, 23.4 per cent of the total. But such figures only served to confirm that the Liberals were firmly locked into third-party status. Support was spread too thinly to be fully effective within the existing electoral system. After the heightened expectations of the last two years, the party was inevitably overcome by a mood of gloom and disillusionment. The almost immediate defection of William Jowitt to Labour where, with somewhat indecent haste, he was rewarded with the office of Attorney-General, and of Freddie Guest, who had lost his Bristol seat, to the Tories, was symptomatic of the fate of the party as a whole and of its failure in the post-war era to carve out its own distinctive identity within the political spectrum. The goodwill directed towards Lloyd George, even on the part of some of his least natural allies, was unlikely to survive for long. Crucially, the party had to decide once more how it would respond to a minority Labour government. There was one important difference from the situation that had existed at the end of 1923 which should have worked to the Liberals’ advantage. With 288 seats in the House of Commons Labour was now, for the first time in its history, the largest single party. Liberal support would therefore be less vital to the new government’s survival. Even so, it is doubtful whether the party used this second opportunity of holding the parliamentary balance to any greater effect.

At the first party meeting after the election pledges of support and loyalty to the leadership were offered from all shades of opinion. But Lloyd George’s predisposition to look sympathetically upon the new government was almost bound to lead to further dissension. Ever since the General Election of 1924, at which Asquith had lost his Commons seat, and more particularly since Asquith’s retirement from the leadership in 1926, Lloyd George had sought to move the party in a distinctly more radical and anti-Conservative direction than had been the case at any time since before the First World War. Frances Stevenson, as well placed as anyone to assess Lloyd George’s aims, believed that he intended to co-ordinate and consolidate all the country’s progressive forces against Conservatism and reaction. ‘Thus he will eventually get all sane Labour as well as Liberalism behind him.’³⁶ To a large extent, then, Lloyd George’s attitude had not changed since the time of the last Labour government. Here though was the danger, for neither had MacDonald’s whose basic strategy of destroying the Liberal party remained intact. A diary entry from November 1928 summed up the Labour leader’s thinking. ‘If the three-party system is to remain’, he noted, ‘it is obvious that the question of coalition in some shape or form has to be faced.’ Therefore, ‘our immediate duty is to place every obstacle we can in the way of the survival of the three-party system’.³⁷ So, unless the course of events moved MacDonald from this position, it would not be easy for Liberals to derive any advantage from again holding the balance of power. At least Lloyd George seemed determined to take a tougher line towards Labour than had Asquith five years earlier. MacDonald ‘must not imagine he could have Liberal support for the asking’.³⁸ The Liberals would look to secure a reform of the electoral system, ‘a speedy redress of this glaring wrong’. Yet even this suggestion of a firmer approach failed to please all Liberals, especially those who, against all evidence to the contrary, still believed in the possibility of re-creating the pre-war Progressive Alliance. E.D. Simon, who had recaptured the seat of Manchester, Withington, found Lloyd George’s tone ‘threatening’, instead of ‘looking forward to legislation in the fruitful field which is common to both parties’.³⁹

Over the first months of Labour government two distinct points of view emerged within the parliamentary Liberal party – or rather two extremes between which individual Liberal MPs took up their particular stances. On the one hand there was a readiness to look benignly on the programme of the new administration. The raising of the school leaving age and the continuation of the Wheatley housing subsidy were, judged E.D. Simon, ‘two really important things’ which showed that Labour would pursue social reform in a totally different spirit from the previous Conservative government. In these two instances the government was doing ‘exactly what a good Liberal Government would also have done’. It was therefore in the national interest to keep Labour in power to carry out ‘an effective progressive policy’. It was true that the strictly party interest was more complicated since it would be Labour which would derive the credit from a constructive period of government. Even so, the electorate would not take kindly to any move by the Liberals to turn Labour out, as it would judge that it had not been given a fair chance. In Simon’s opinion the majority of the parliamentary Liberal party took this view. But there were also ‘perturbing signs’ of a different attitude among Liberals who did not want ‘economic equality’ and who hoped that the government would go too far and afford the opportunity for Liberal criticism. Among this second group Simon named George Lambert, Tudor Walters and Sir Ian Macpherson, two of whom would be among the defectors to the Liberal National camp.⁴⁰

Such divisions were not new. They represented a re-opening of the fundamental dilemma confronting Liberalism in the age of three-party politics, which had been temporarily concealed during the party’s fleeting revival during the late 1920s. Granted that the only realistic short-term aspiration open to the Liberals, now that they had become the third party in the state, was to hold the balance of power, would they prefer to use this position to uphold a minority Conservative or a minority Labour government? To this very basic question the party was unable to respond with a single voice. While E.D. Simon looked kindly upon what he thought was ‘in effect a moderate Liberal Government’, some of his colleagues clearly favoured the Tory option.⁴¹ Dr Henry Morris-Jones, MP for Denbigh, found himself ‘getting more and more inclined towards Conservatism’. His experience of the Labour government quickly disillusioned him. ‘I have seen what a Labour majority would be like. They are crude and insufferable and bring into the atmosphere of debates in this old House some of the manners of our town councils in big industrial areas.’⁴² Similarly, Walter Runciman felt ‘great sympathy’ for many Conservatives, especially those of the younger generation. ‘We can aim at the same thing, almost at the same methods’ as such ‘excellent fellows’ as Ralph Glyn and Harold Macmillan, though Runciman admitted that the Tories’ renewed flirtation with protection would inevitably pose problems.⁴³ But at this stage Runciman’s position remained flexible. The important thing was to effect a break with Lloyd George and this might just as easily lead to some sort of realignment with Ramsay MacDonald and moderate Labour colleagues as with the Conservatives.⁴⁴

Fissures soon began to appear in the façade of Liberal unity as the Labour government brought forward its legislative agenda. These divisions foreshadowed in broad outline, though not always in every detail, the split of 1931 which would give birth to the Liberal National party. On the second reading of the government’s Coal Mines Bill in December, 44 Liberals followed the instructions of the leadership and went into the opposition lobby, two voted with the government and a further six abstained. But there was an element of bluff in this apparent display of independence, as the party knew that it was in no condition to force another general election. The state of party organisation and the morale of its workers were such that it could not risk pulling the rug from beneath the government and precipitating a dissolution. As a result, this particular anti-Labour demonstration was only authorised after it had been ascertained that sufficient Conservatives were absent from the Commons to ensure that the government would not be defeated.⁴⁵ The important point about the Coal Mines Bill vote was the evidence it gave of renewed Liberal division which, as Lord Beauchamp, the party’s leader in the upper house, fully recognised, would ‘once more give the enemy an opportunity to mock’.⁴⁶ But Lloyd George, while accepting that the power and influence of the party in the present parliament would depend upon its cohesion, was reluctant to take action against the rebels.⁴⁷ Almost certainly, his indulgence at this stage was a fatal mistake. ‘This three-way division was to become an embarrassingly common characteristic of parliamentary Liberalism over the next few years, one which diminished the party’s reputation and effectiveness.’⁴⁸ Lloyd George was still hoping to keep Labour in office long enough to bring about an agreement on electoral reform and he held talks with leading members of the cabinet in early February 1930. But MacDonald’s private diary entry shows how difficult it would be to extract the sort of concessions which Lloyd George sought. ‘The bargain proposed really amounts to this’, noted the Prime Minister. ‘We get two years of office from the Liberals and give them in return a permanent corner on our political stage.’⁴⁹

Over the course of 1930 the divisions within the Liberal party became more obvious. For many these were important primarily in confirming their disillusionment with the current state of the party and their conviction that a radical remedy was required. ‘The struggle is rather a difficult one’, noted Clement Davies, newly elected MP for Montgomeryshire. ‘The position in the House is well nigh hopeless … I feel that the Party as a Party is dead. There is neither health nor spirit in us … When the time comes for us to go to the country we will go without a policy and without a party, and the result will be that less than a handful will come back next time.’⁵⁰ Morris-Jones was equally blunt: ‘Liberal party is almost done for in my opinion … finished as a separate party in the state’.⁵¹ The whole position of the parliamentary party, confirmed E.D.Simon, was ‘most disappointing. The Party is not in any way organised. There is no consultation or consideration of policy.’⁵²

Herbert Samuel later recalled that the Liberals’ weekly meetings were not happy occasions, with about a third of the parliamentary group openly distrustful of Lloyd George, another third his definite adherents, while the remainder ‘tried to keep the party together and to guide it along what seemed to us the right lines of policy’.⁵³ The position was scarcely helped by the apparently inconsistent course followed by Lloyd George himself, which left his party both confused and suspicious of his real intentions. As E.D. Simon put it, at the outset Lloyd George announced

a policy of general support of the Labour Government. This lasted until the second reading of the Coal Bill when he … endeavoured to beat the Government. From that time came a phase of pretty active opposition to the Government until Lloyd George’s Naval Treaty speech, when he announced that he had changed his mind, and that we ought not to defeat the Government on any essential issue. He then co-operated with the Government for a few months … Then came, quite suddenly last week, another swing-round, and the attempt to defeat the Government on the Finance amendment …⁵⁴

There was in fact more consistency in Lloyd George’s strategy than Simon appreciated, but his efforts to force a bargain out of Labour involved secret negotiations and tactical reversals which only a leader enjoying the full confidence of his party could have successfully executed. By the summer of 1930 the problem was acute. As Morris-Jones noted, the party was

in a ferment and nearly crumbling. Members complain that they never know where they are with LlG. One day he wants us to refrain from embarrassing the Govt: another he says we must vote against them. Prominent members say that he does not take the party into his confidence, treats us like a lot of children … A crisis is imminent.⁵⁵

Calls for party unity had little impact. A meeting on 21 July 1930 heard the chief whip, his voice ‘broken with emotion’, declare that the party was doomed unless it could act together. George Lambert (South Molton) insisted that he could not vote consistently for the government for fear of losing his seat at the next election. Harry Nathan, MP for Bethnal Green North-East, who would later defect to Labour, said that the party was ‘done for’. Its organisation was falling to pieces and the disunity of the parliamentary party was communicating itself to the party outside Westminster. He ‘did not see how we could fight the next election as a party’. Frank Owen, MP for Hereford, appealed to Lloyd George to take fellow Liberals more into his confidence, while Archibald Sinclair threatened that he would have to consider whether he could remain in the party any longer if matters continued as they were going.⁵⁶ It was a sorry picture. Henry Morris-Jones saw little chance of improvement:

We promise to act as a united party. Division lobby shows we cannot and I question whether anything will alter us for it is inherent in our position. There are 3 parties and only 2 lobbies.⁵⁷

The very diversity of Liberal thinking, once seen as one of the party’s strengths, was now contributing to its undoing.

By the second half of 1930 John Simon, former cabinet minister and eminent lawyer, had emerged as the leading Liberal critic of Lloyd George’s strategy. The intellectual poverty of Labour’s response to the mounting scourge of unemployment convinced him that only unequivocal dissociation on the part of the Liberals from the doings of the government could save them from guilt by association. In late October, just before the opening of the new parliamentary session, Simon wrote to Lloyd George about his current feelings on relations with the Labour government. He argued that, after 17 months in power, the government had proved a total failure in almost all respects. As a result, the Liberals were deriving no benefit from keeping it in office, but were exposing themselves to the charge that their one concern was to save their own skins by avoiding another general election. Simon gave notice that, should the government try to repeal the trade union legislation enacted by the last Conservative administration, he would not be able to support it, but would join with the Tories in any resulting vote of confidence. ‘We are in danger’, he concluded in a telling indictment of Lloyd George’s whole strategy, ‘of carrying offers of assistance to the point of subservience and I do not believe that this is the way in which Liberalism is likely to become a more effective force in national and imperial affairs.’⁵⁸ Rather than considering each issue on its merits, Simon had made up his mind that the Liberal party should try to bring the government down at the earliest possible opportunity. Lloyd George, by contrast, continued to argue that Labour should be kept in office until there had been a revival of world trade sufficient to invalidate Conservative calls for protection or until the Liberals had managed to extract a commitment to electoral reform. The publication of Simon’s letter in the press brought this latest, and possibly terminal, episode in the Liberal party’s longstanding civil war into the public arena.

The reality of the party’s disarray became clear when parliament reassembled and the Conservatives put down a motion on the King’s Speech. The official Liberal line was to abstain, but five MPs including John Simon and the chief whip, Robert Hutchison, voted with the Tories, while four more went into the government lobby. After defying the discipline for which he himself bore primary responsibility, Hutchison had little option but to resign from his post. Yet only 30 Liberal MPs bothered to attend the meeting called to select the chief whip’s successor. Meanwhile, Lloyd George continued to pin his hopes on extracting concessions from the government. In September he and Samuel held talks with MacDonald at which the Liberals demanded electoral reform in return for their continued support. The Labour cabinet agreed only to undertake further investigation into the Alternative Vote. This was not proportional representation, but was seen as a step in the right direction or, as the Manchester Guardian put it, ‘a good starting off point for more comprehensive reforms’.⁵⁹ MacDonald tried to persuade Lloyd George that the Alternative Vote would result in significant electoral gains for the Liberals at the expense of the Conservatives.⁶⁰ Yet the government’s sincerity is open to question. Any change to the voting system would take at least two years to implement and might then be at the mercy of a new administration; but MacDonald’s government would have had its survival guaranteed by Liberal support during this period.

Leading party members gathered on 20 November to hear Lloyd George propose a formal two-year pact with Labour. John Simon spoke forcefully against such an idea:

I said that even if such a plan was entered into, and was carried through for two years, at the end of that time no Liberal candidate could have a chance against a Labour candidate. He would not be able to criticise the Government for his Party would have been doing nothing but keep them in. The Government was already discredited and I could see no reason in our putting Liberal assets into a bankrupt concern.

As ‘expert investigation’ had suggested that the Alternative Vote would be of no great advantage to the Liberal party, Simon was at a loss to understand Lloyd George’s continuing enthusiasm for a pact with the government.⁶¹ The meeting broke up in confusion with little having been established apart from the extent of intra-party dissension. Warned that Lloyd George was now trying to capture the Liberal Candidates’ Association to strengthen his hand in negotiations with the government, Simon prepared for a showdown.⁶² By the time that the debate was resumed a week later, he had enlisted the support of Lord Reading, soon to become the Liberal leader in the House of Lords. Thus, when Lloyd George put forward a modified version of his plan which would have amounted to a one-year deal with Labour coupled with the immediate introduction of the Alternative Vote, both Simon and Reading voiced their opposition:

A one year’s arrangement would only amount, in the end, to a bargain for two years, for it would be said in 12 months’ time that various things were on the way, and we must not unhorse the Government before they were secured. We both expressed ourselves as gravely concerned at the idea of any bargain at all.

Sensing that the mood of the meeting was against him, Lloyd George sought refuge in obfuscation, prompting Reading to confess that he did not know what the outcome of the discussion amounted to or whether what was going to be pursued was an understanding or not. ‘Something was said at the end by L.G. about the difference between an agreement and an understanding’ and the meeting ended with no clear picture of how Lloyd George would now proceed.⁶³

Simon now faced a choice of continuing to give nominal backing to a strategy which he regarded as profoundly mistaken, striking out on his own in the near certainty of courting political oblivion or exploring the possibility of an accommodation with his erstwhile political enemies. In the circumstances it was hardly surprising that he began to put feelers out to leading Conservatives. His thinking needs to be put in a broader context of growing disillusionment with the existing British party political structure, a mood that would soon give rise to calls for experiments in allparty government and to a minor growth of political extremism. ‘Amongst the younger generation in all parties’, suggested J.L. Garvin of the Observer, ‘the strongest sentiment is in favour of “clearing out all the Old Gangs”.’⁶⁴ Significantly, Reading had told Simon that the possibility of a National Government, headed perhaps by the veteran Tory Lord Derby, was now being discussed in certain quarters and that Simon’s membership of such an administration was widely favoured. Simon met with Neville Chamberlain on 1 December, the object of the meeting being ‘to ascertain how strongly I felt about the necessity of terminating the life of this Government’, and whether any form of co-operation with the Conservatives was possible to this end. The two men seemed to be in agreement as regards the parlous state of the country which necessitated the ‘frankest talk’. Simon mentioned the idea of a ‘broad-bottomed Administration’, but insisted that, as far as Liberals were concerned, this would depend on the extent to which such a government would promote tariffs and whether it would carry a reasonable measure of electoral reform. At the same time he indicated that Reading, himself and a sizeable number of other Liberals were no longer irreconcilable on the issue of protection. Simon also sought assurances from the Conservatives. It would be much easier if Liberals who took the same view as he did could be informed that they would not be opposed by Conservatives at the next election. Simon believed that, in the event of the Labour government being brought down, the King might invite Baldwin to form a coalition. The two men did not discuss the composition of such a hybrid administration, but Chamberlain got the clear impression that Simon would not object to being included.⁶⁵

A few days earlier, seven Liberal MPs, representing predominantly agricultural seats, including Hutchison, Lambert, Macpherson and Roderick Kedward, MP for Ashford, had supported the motion of a Conservative backbencher deploring the government’s failure to take action in relation to cereal dumping. Simon’s own apparent weakening in his commitment to free trade soon provoked comment among those who remained faithful to the old Liberal doctrines. ‘I can’t make out what he is after’, noted Leif Jones. ‘He seems to be bent on turning the government out, even if it involves the return of a Protectionist Government.’⁶⁶ Yet it was not clear whether Chamberlain’s idea of Conservative-Liberal co-operation was exactly what Simon had in mind. According to the former:

The whole argument rests on the assumption that the continued existence of the Liberal party is a national interest, and that a coalition between Liberals and Conservatives would be able to hold the fort for at least ten years. I doubt if either of these assumptions could be sustained.⁶⁷

For his part Simon now seemed ready to make a complete break from his Liberal colleagues. In advance of a party meeting scheduled for 11 December, he warned Sinclair, who had succeeded Hutchison as chief whip, that he would have to insist upon Liberal opposition to any move to change the Trade Union Political Levy from a contracting-in to a contracting-out basis. If the party preferred ambiguity, he would reluctantly go his own way.⁶⁸ At the meeting itself the atmosphere was palpably tense. ‘One could sense it.’ Simon, studiously courteous towards Lloyd George, argued that the Liberal party had secured precisely nothing out of 18 months of Labour government and would get nothing in the future. More probably, indeed, it would find itself dragged down with Labour. But Simon was not a man who readily inspired others. The meeting gave hints of some of the later problems he would experience as a party leader. As one broadly sympathetic observer noted:

The matter of JS’s speech was good and I agreed with nearly all of it. But he was pleading as a Barrister and he was studiously over-polite and over-courteous in matters where he felt deeply. He only got two or three ‘hear hears’ in a gathering of about 34.⁶⁹

In the event an open rupture was avoided. Simon, perhaps concerned at the amount of support he could command within the parliamentary party, seemed now to hesitate. Having reiterated his criticism of the Liberal strategy of sustaining the Labour government in power, he withdrew his resolution on the Political Levy and left the meeting. Morris-Jones assessed the balance of forces within the party: ‘Conclusion – about 90 per cent of the Lib. Party will go to almost any length to keep the Government in office until the Electoral Reform bill is thro’ even if it takes 2 years’. Still in the dark about Lloyd George’s negotiations with the government, Morris-Jones judged that, although there might not be a written pact, there was ‘unquestionably an understanding’.⁷⁰ Two days later Simon told his constituents in Cleckheaton that they should not be surprised to find him in future exercising an independent judgement and following an independent line in public affairs. Chamberlain was hopeful that Simon would soon be forming an independent group ‘which will work with us’.⁷¹

In the first months of 1931 the Liberal party visibly collapsed as a unified force in the House of Commons. The parliamentary party gave every appearance of a disorganised rabble. While Simon continued to negotiate with the Conservatives about the possibility of a free run at the next general election for himself and those Liberal MPs prepared to follow him, Lloyd George moved closer to Labour, telling George Lansbury that ‘the great majority of our party are in accord with yours in the general line of advance for the next ten years’.⁷² The new chief whip despaired of his task in trying to assert a measure of discipline over the warring factions. ‘I am all for the party being independent and having a mind of its own’, he conceded, ‘but if individual members claim the same right, it is impossible for us to work effectively in the House of Commons.’⁷³ When the government introduced legislation designed to undo key provisions in the 1927 Trades Disputes Act, another clash was inevitable. The party meeting called to determine the Liberal approach to the government’s bill was ‘the most antagonistic to the party leadership’ of any Morris-Jones had attended. Sinclair threatened to resign if there were further public splits and advised his colleagues that the party was in no position to fight a general election. ‘We had neither the money nor the candidates.’ Lloyd George confirmed that, while he too opposed the bill, it would be ‘suicide’ to defeat the government at the present time. He suggested that the party should declare its opposition to Labour’s proposals but abstain at the bill’s crucial second reading. With Simon again leaving the meeting early, this course of action was approved by a vote of 32 to 10.⁷⁴ Simon, however, refused to be bound by this majority decision. In a major Commons speech he clashed publicly with Lloyd George and called for the ‘humane slaughter’ of the government’s bill. He was, thought Morris-Jones, ‘brilliantly clever’ but ‘over suave and over courteous’. ‘Personally I instinctively feel the insincerity when he is most suave.’⁷⁵ But the key issue remained, as before, the number of Liberal MPs whom Simon could rally to his cause. ‘Simon’s following was first estimated to be 30 and came down by stages to six who followed him into the Tory lobby tonight’, recorded MacDonald on 28 January.⁷⁶

At least many Conservatives had been impressed by Simon’s contribution to the debate. George Lane Fox doubted whether he had ever done better. ‘There was not a dull moment and, though very closely reasoned, his speech was not so subtle and hair-splitting as some of his speeches have been.’⁷⁷ In the minds of a number of leading Tories Simon had become the key figure in the determination of events. Austen Chamberlain organised a dinner with Philip Sassoon, Robert Horne and Simon, with the purpose of putting ‘fire in the belly of the latter’. His message was, ‘you are a great figure. I want you to be a great force. To be that, you must do as my father did in ’86: organise as well as speak.’⁷⁸ The feeling was clearly in the air that a major split in the Liberal ranks was now a distinct possibility, comparable to the defection of the Liberal Unionists nearly half a century earlier. Edward Grigg, the former Liberal MP for Oldham, convinced that Lloyd George was ‘going left … with a vengeance’, had also entered into negotiations with the Tories and was hopeful of organising a ‘Liberal-Unionist party’.⁷⁹

A mood of expectation surrounded Simon’s every move. According to the political columnist in Punch, he had become ‘the biggest man and the most formidable debater’ in the House of Commons. His prestige at Westminster was ‘tremendous’.⁸⁰ ‘J.S. has the ball at his feet’, confirmed Morris-Jones. ‘His reputation in the country is very high.’ And yet a problem remained. ‘What it is to have a reputation – a brave courageous Liberal and yet every member of the party knows that he has no courage. If he had he could sweep the board.’⁸¹ It was inherent in Simon’s nature to move cautiously. After a public declaration that, if Liberalism was to be merely a variant of socialism, as the party’s continuing support for the discredited Labour government seemed to imply, there was no reason for its independent existence, he renewed his negotiations with Neville Chamberlain. The latter was disappointed that Simon had, as yet, not marshalled his Liberal supporters into a coherent body, but noted with approval his intention to speak out in public against the government and against Lloyd George’s policies of increased public expenditure.⁸²

If Simon was going to make any further progress, one particular bullet had got to be bitten and that was tariffs. He gave the first public indication of a change in his thinking on this matter in an interview with the editor of the Sunday News at the beginning of March, 1931. He had, he stressed, no intention of abandoning essential Liberal principles, but neither did he wish to become ‘a sort of indoor servant to Socialism’. A telling sentence implied a significant change of heart. ‘I, at any rate, am not going to shut out of my mind the consideration of fiscal measures which may be found to be necessary, even though they involve steps which in times of prosperity and abounding trade Liberals would never contemplate.’ The phraseology was convoluted, but its meaning clear. Simon was no longer wedded to the principle of free trade.⁸³ Two days later, and symbolically in Manchester, the historic seat of free trade, he asserted that the limits of direct taxation had now been reached and invited his audience to consider the fiscal measures they might be obliged to adopt.⁸⁴ A letter to Lord Reading was more explicit. He now stressed that his conversion to tariffs was a matter of practical necessity rather than economic doctrine. The government’s prospective budget was alarming; a series of loans to the Unemployment Fund had all but eaten up the Sinking Fund. It was to be hoped that expenditure could be reduced, but economies would take time. He had no intention of professing enthusiasm which he did not feel, but ‘I do not think I can go to Economy meetings and talk generalities without making the observation which the very disturbing facts of the financial situation are forcing upon me’.⁸⁵

After Simon’s Manchester speech the pace of Conservative-Liberal negotiations quickened. Neville Chamberlain had a ‘satisfactory discussion’ with Hutchison and Lambert, after which the two Liberals agreed to draw up a statement of their position and have it signed by as many Liberals as possible with a view to publication. Thereafter Chamberlain hoped to try to get Conservative opposition withdrawn in the constituencies of the signatories. ‘If this succeeds’, he suggested, ‘it might have a wonderful effect on Liberal opinion both in and out of the House.’⁸⁶ Lloyd George’s position was shaken when his tactical manoeuvring over the Trade Union Bill appeared to backfire. Believing they had the government’s tacit approval to do so, Liberals helped pass an amendment at the committee stage only to find themselves sharply criticised by the government for their action. This was followed by a further outbreak of disunity over a clause in the Electoral Reform Bill which proposed the abolition of University seats. When only 19 Liberals obeyed their whip and the clause was defeated, Sinclair offered his resignation. ‘LlG looked angry after Govt. defeat. He cannot deliver the goods.’⁸⁷ But the next day’s party meeting found the Liberal leader in defiant mood. Denying that he had been offered a post in the Labour government, Lloyd George nailed his colours to the mast:

He said we cd. not go on like this, said a small united party cd. do much and be a great power and force but he had no use for a disorganised rabble. He said that certain proposals wd. be put before us on Tuesday for our consideration and acceptance and those who cld. not agree to them cld. go their own way.

Morris-Jones believed Lloyd George would now try to tie down as many MPs as he could to give conditional support to the government and to split the party into those who were pro-Labour and those who were pro-Tory.⁸⁸ The Times reported that supporters of Lloyd George were openly declaring that a purge of the party would do no harm. No one now seriously believed that a working arrangement could be devised which would be satisfactory to both factions. Yet it was by no means certain that Simon and those who thought like him were prepared to leave the party to Lloyd George’s mercies. They were more inclined to present themselves as the only true Liberals left and to argue that, if Lloyd George agreed to any working arrangement with the government, this would confirm that he had aligned himself with the Socialists. ‘A critical position’, the newspaper concluded, ‘has been reached in the affairs of the Liberal party.’⁸⁹

The party meeting held on 24 March was, Morris-Jones suspected, probably the longest in its history. Including a one-hour adjournment for dinner, it lasted for more than six and a half hours. All Liberal MPs, except those prevented by illness, were in attendance and it soon became clear that Lloyd George would have to fight to save his leadership of the party. He warned his colleagues of the danger of a general election and the return of a Conservative government. But those MPs, led by Leslie Hore-Belisha, who spoke in favour of the party’s independence ‘got loud cheers in spite of LlG saying that he would resign if the declaration [in favour of supporting any government which backed Liberal policy] were not carried’. In the end the leader won the day by a vote of 33 to 17. Morris-Jones summed up the prevailing mood as being in favour of independence and against a pact with either of the other two parties. Lloyd George’s personality was as strong as ever, but ‘party getting more and more restless and antagonistic. Assertion of independence much stronger and issues debated on results.’⁹⁰ Most, but not all, of the dissenting minority, including Hore-Belisha, Geoffrey Shakespeare, Ernest Brown, Leslie Burgin and Murdoch Macdonald, would in due course become members of the Liberal National group. Five of the dissidents, suggested The Times – Simon, Hutchison, Macdonald, England and Pybus – were now ready to co-operate with the Tories to remove the government from office at the earliest opportunity, and to their number could be added George Lambert who had not voted in the final division on Lloyd George’s motion.⁹¹ Sinclair now believed, perhaps prematurely, that Simon had secured the necessary assurances from the Conservatives about Tory abstentions at the next election. At all events, Simon seemed more confident than before about the future development of events. Dining two days later with Leo Amery, an old friend from their shared time at All Souls in the 1890s, he talked openly about his aspirations for the future. His hope, it appeared, was to join a future government, preferably as Foreign Secretary – ‘an ambition which it had never occurred to [Amery] that he cherished’.⁹²

A final parting of the ways now appeared to be imminent. But any positive Tory response was likely to be dependent upon the size of the Liberal defection which Simon could engineer. By early April Neville Chamberlain was becoming impatient at Simon’s reluctance to act. ‘I got him so far as to say that he would certainly join a Committee of Liberals (if they would call themselves Independents and not Unionists) to vote against the Govt., but he did not seem to think he could count on more than four to join.’ Chamberlain did not see how he could make an appeal to local Conservatives to withdraw candidates and sacrifice their organisation ‘for a single vote and an ineffective one at that’.⁹³ But by the middle of the month potential numbers looked more promising. Chamberlain now believed that ten Liberals were ready to join a new independent group at once, with the prospect of a further dozen if satisfactory constituency arrangements could be reached. ‘Twenty-two would be worth talking about.’⁹⁴ In the event it was the government’s proposed land tax, a cause to which Lloyd George had attached himself before the First World War, which brought matters to a head. A party meeting on 7 May saw further wrangling with Lloyd George criticising Simon for opposing the government’s proposals before they had even been published. In such a situation Simon was no match for his opponent. ‘With LlG in a room he seems to shrink into his shell.’⁹⁵ The following day Chamberlain reported that Simon had turned up at the Commons with a speech prepared against the government’s proposals, but went away without having delivered it. ‘So like him … Simon won’t give a lead.’⁹⁶ But events at the National Liberal Federation in Buxton a week later may have emboldened him. A resolution moved by Leslie Hore-Belisha to reaffirm the ‘absolute and unfettered independence of the Liberal party’ in opposition to Lloyd George’s on-going negotiations with the government was defeated but received significant support. At all events, Simon spoke out in the Commons on 19 May against the government’s proposed land tax. It was, he suggested, ‘quite impossible’ for a Liberal to support land taxes, except for tactical reasons. They represented a ‘very definite test of our relations to Socialism’.⁹⁷

Finally, accompanied by Sir Robert Hutchison and Ernest Brown, Simon formally resigned the Liberal whip on 26 June. The occasion of the breach was the Liberals’ confused and divided parliamentary tactics over the land tax proposals and the success of Philip Snowden, Labour’s Chancellor of the Exchequer, in exposing the hollowness of the party’s position. As the chief whip rightly stressed in his published acknowledgement of Simon’s withdrawal, the imposition of a land tax of a penny in the pound on capital values was scarcely a matter for resignation.⁹⁸ But what Simon could no longer tolerate was his party’s continued disunity which had once again enabled the Labour government to avoid parliamentary defeat. The Liberal party, by its ‘pitiful exhibition’, had reached a ‘lower depth of humiliation than any into which it had yet been led’.⁹⁹ The Times offered its support for what Simon had done:

It is small wonder that some Liberals, seeing the disintegrating confusion to which their party has been reduced by the subordination of principle to tactics, have decided to make a stand for a Liberalism which is more modern, more constructive and more courageous … Whatever may be the electoral fate of the nucleus of untrammelled Liberalism which they propose to create, the results of the recent byelections, the contempt with which the official Liberal Party is regarded by allies and opponents in the House of Commons and the discords existing even among the more docile section of that party are all facts which show that, failing the practical assertion of independence, there will soon be no Liberal Party left at all.¹⁰⁰

Yet it seemed possible that Simon and his two colleagues had miscalculated. Their resignation of the whip failed to precipitate a mass exodus from the party. Simon’s efforts to persuade Hore-Belisha to join him – ‘if three or four of us do this at the same time, during this weekend, we should form a nucleus which would grow’ – were unavailing.¹⁰¹ Hore-Belisha explained that in his opinion it would be more sensible to remain inside the party, not least because Lloyd George was so keen to see the dissidents depart.¹⁰² Indeed, it was possible that Lloyd George and those who felt like him would themselves soon quit the party and join Labour, thus leaving Hore-Belisha and his followers in control of the Liberal machine.¹⁰³ The possibility of Lloyd George’s migration to Labour has to be taken seriously. Though the evidence is slender, with important documents now missing from his surviving private papers, it seems that by the summer Lloyd George was in talks with the government about a formal coalition which would have seen him become Leader of the House and Foreign Secretary or Chancellor.¹⁰⁴ Even more intriguingly, there is a suggestion that Hore-Belisha was contemplating joining the so-called New Party, the ideologically confused grouping which represented a staging post on Oswald Mosley’s journey from mainstream politics to overt fascism. He had ‘joined us in spirit’, noted Harold Nicolson on 22 July, ‘and hopes to bring with him a group of Liberals. He will remain in the Liberal camp for the present and work for us there.’¹⁰⁵

Hore-Belisha’s uncertain intentions merely compounded Simon’s problems. The latter’s personality also remained a stumbling block. According to the Sunday Observer around ten Liberal MPs shared Simon’s views but some of them, while agreeing that the policy of supporting the government would lead to Liberal annihilation at the next general election, would have preferred Hore-Belisha as their leader.¹⁰⁶ Then, there was the response in the constituencies to consider. While Simon, Hutchison and Brown claimed that they spoke for Liberalism in the country, the reaction of their local associations would be critical in determining the outcome of their rebellion. Brown, MP for Leith, was the first to test the water. His rejection of the whip would, he suggested, make no difference to his relations with his constituents, except that he would fight the next election as an independent Liberal out of his own resources. The chairman of the Leith Liberal Association was quick to offer his full support.¹⁰⁷ At least the reaction of Lloyd George was entirely predictable. Seldom since the days of his famous Limehouse speech on the House of Lords had he used such venomous language. On 3 July, during the third reading of the government’s Finance Bill, Lloyd George launched his attack, comparing Simon to a teetotaller who had turned to drink. He did not, he said, in the least object to Simon changing his opinion, ‘but I do object to this intolerable self-righteousness … Greater men … have done it in the past, but … they, at any rate, did not leave behind them the slime of hypocrisy in passing from one side to another.’¹⁰⁸ At least by the end of the debate on the Finance Bill it was impossible to ignore the extent of the Liberal party’s disarray. Both in the final vote on third reading and in an earlier division on a Conservative amendment the party was hopelessly divided. Still, however, it was not easy to discern the shape of the future Liberal National party. Among those supporting the government were Clement Davies, William Edge and Frederick Llewelyn-Jones; Ernest Brown, Godfrey Collins, Robert Hutchison, Murdoch Macdonald and John Simon went into the opposition lobby; while Hore-Belisha, Geoffrey Shakespeare, Robert Aske and R.J. Russell abstained. All of those named would eventually find their way into the Liberal National ranks. The tactical machinations of individual MPs no doubt made sense to themselves, but they invited ridicule and contempt from impartial observers.

*          *          *

Had events been allowed to follow their natural course, it seems likely that there would have been an attempt by the Conservative party, and such dissident Liberals as Simon could muster to his cause, to bring down the government in the autumn session of parliament. As it was, such a possibility was quickly overtaken by the dramatic collapse of the Labour cabinet at the end of August. With the pound under severe speculative pressure, and unable to agree on a package of economy measures to balance the budget which necessarily included a cut in unemployment pay, the cabinet authorised MacDonald to tender their collective resignations. In the event the Prime Minister re-emerged from inter-party talks, facilitated by the King, with a commission to form an all-party administration to tackle the country’s mounting economic crisis. With Lloyd George indisposed by illness, the Liberals were represented in these negotiations by Herbert Samuel. Indeed, pressure from the King for an immediate decision effectively ruled out wider consultation with the parliamentary party.¹⁰⁹ Recent events determined the nature of Liberal representation in the resulting National Government. In a ten-man emergency cabinet there were places for Samuel and Lord Reading as Home and Foreign Secretary respectively. The Liberal party was also well represented in posts which would normally have merited cabinet rank, with a position even found for the veteran Marquess of Crewe who, at 73 years of age, resumed his ministerial career as Secretary of State for War. By contrast, Simon could hardly expect preferment through an organisation which he had so recently renounced, but it is striking that other prominent figures such as Runciman, Hore-Belisha and Godfrey Collins were also excluded, the victims it seemed of Lloyd George’s veto, delivered via Samuel from his sick-bed.¹¹⁰ As Morris-Jones put it, ‘the influence of LlG’ had excluded from office ‘all those patriotic Liberals who foresaw the coming crises’.¹¹¹ This selection may have been significant in determining their future allegiance, but for the time being it appeared that the Liberal dissidents might have badly misjudged the situation.

There was at least a chance that the national crisis would relegate the internecine disputes of the Liberal party to the political long grass. The meeting of MPs, peers and candidates held on 28 August was the most harmonious for many months, ‘quite a remarkable demonstration of unity’.¹¹² From a sick-bed in Churt and an engagement in Scotland Lloyd George and Simon sent their respective messages of support and goodwill. Resolutions of confidence in the leadership were moved by Kedward and Hore-Belisha, while Ernest Brown announced that he was ready to ‘come back to the Party’.¹¹³ All could rejoice that Liberals were once again occupying governmental office, while Simon and those who thought like him could feel vindicated by the way in which the Labour government had been found wanting in the country’s hour of need. That government which had provoked such divisions within the Liberal ranks had now been consigned to the pages of history. But, as has been argued above, contrasting attitudes to the Labour government concealed a more profound crisis of identity which had beset the post-war Liberal party. To this extent its problems had now been postponed but scarcely resolved, especially as the newly formed National Government was only meant to be a temporary expedient. ‘There is no question of any permanent coalition’, stressed Baldwin on the very day that the new administration was formed. ‘The National Government has been allotted a definite task [of balancing the Budget and restoring confidence in sterling] and on its completion it is understood that Parliament will be dissolved as soon as circumstances permit, and that each of the parties should be left free to place its policy before the electors.’ To his own followers, indeed, he promised ‘a straight fight on tariffs’.¹¹⁴

In all the circumstances it was hardly surprising that the Liberals’ internal harmony shown on 28 August was of short duration. Simon lost no opportunity to emphasise an almost embarrassing willingness to help the Prime Minister. Not only did he offer to move a vote of confidence in the new government, but he even suggested that, should MacDonald feel obliged to resign his seat at Seaham Harbour because of pressure from his constituency Labour party, he would be prepared to stand down in Spen Valley in MacDonald’s favour.¹¹⁵ Events soon conspired to shift the balance of advantage back towards Simon The national financial crisis continued to worsen. News of a minor disturbance in the Royal Navy at Invergordon sent shock-waves through the already fragile façade of international confidence, resulting in renewed withdrawals of gold on a massive scale from London. This, in turn, made it less likely that the emergency could be resolved, as originally believed, merely by balancing the budget. Then, on 19 September, the cabinet was forced to abandon the Gold Standard whose maintenance had been at the very basis of the government’s formation. Meanwhile, Geoffrey Dawson, editor of The Times, having first sounded out Baldwin, used his newspaper to suggest that the next election should, contrary to earlier commitments, be fought by the National Government.¹¹⁶ Around this proposition two opposing Liberal camps began to coalesce. Simon was now encouraged to believe that the possibility of a tariff election would be sufficient to force Samuel and his Liberal followers out of the administration. In such a situation it would be important to show that an alternative group of Liberals was ready to take their place to maintain the government’s ‘National’ identity. With Neville Chamberlain declaring publicly that the Liberals deserved to be wiped out for having sustained Labour in office, but at the same time praising Simon and his followers for opposing this strategy, the prompting could scarcely have been clearer.¹¹⁷ In fact, Chamberlain’s private comments would have offered Simon less cause for comfort. The Liberal party, he warned, would have to face up to ‘the fiscal decision’. That decision ‘will split it from top to bottom, and … will end it, the two sections going off in opposite directions; and bring us back nearly to the two party system’.¹¹⁸

Nonetheless, Simon used a speech in the House of Commons on 15 September to make his boldest statement yet on the question of tariffs:

I find myself – I take no pleasure in it – driven to the conclusion, as I can see it, by a pure course of deduction and reasoning, that if it is true that our broad condition has changed in connection with our overseas trade, if it is true that even when you bring in the whole sum total of invisible exports and add it to our sales, you cannot make a figure which pays for our imports; if it is further true that it is absolutely necessary to stop the consequences which might follow, I ask myself and I ask my colleagues … , if these facts are true, is there any alternative but to insist upon putting at once some block in the way of the flow of free imports?¹¹⁹

Quite suddenly, the mood was changing. ‘Staunch free traders now in favour of a Tariff’, noted Morris-Jones, ‘and it seems certain to come.’¹²⁰ Baldwin had already sensed that the whole country was ‘tobogganing’ towards protection.¹²¹ The Times suggested that perhaps as many as 30 Liberal MPs had now ‘put their free trade views into cold storage’.¹²² The financial situation seemed only to confirm the error of Lloyd George’s ways:

the Liberal party or the majority of it – now represented in the National Government – bear a heavy responsibility for our present situation. They encouraged Labour in its policy of trying to keep up its election promises of increased expenditure on the social services. They were responsible for helping Labour in passing the clause in the unemployment Insurance scheme which abolished the genuinely seeking work clause and added 200,000 people on to the state dole. A small section of it lead by Sir John Simon – about six in all – must be excluded from this responsibility, for they have seen the rocks ahead some time ago.¹²³

If, however, the minority was now to claim its reward, Samuel and his colleagues would have to be dislodged from their privileged position inside the government. Events moved rapidly to transform the temporary expedient of national government into a more permanent arrangement. The spectacle of party politicians sinking their differences in the broader interests of the country as a whole met with clear popular approval. The Conservatives became determined to hold an election to secure a mandate for tariffs as soon as possible. If this had the effect of driving Liberal free traders from the government, so much the better. Members of the Conservative Business Committee, the shadow cabinet of the day, meeting on 24 September, were ‘all agreed as to the great importance of pitching our tariff demands high enough to make sure of getting rid of Samuel and, if possible, Reading’.¹²⁴ Since early September MacDonald had also been moving towards the idea of a long-term programme which would probably include protection. Now, the departure from the Gold Standard had removed the strongest argument against an early election. Indeed, it could be argued that it would be best to get the election over as quickly as possible to enable the government to prepare for an extended battle to prevent a steady depreciation in the value of the currency. Simon, moreover, used material provided by his Tory friend and arch-protectionist, Leo Amery, to argue against the idea that a devalued pound had removed the need for tariffs.¹²⁵ Samuel, by contrast, vigorously backed by the still side-lined Lloyd George, remained vehemently opposed to an early election, partly in the expectation of Liberal losses and partly because it would be likely to result in the endorsement of tariffs. It had been difficult enough, MacDonald told Hore-Belisha, to come to a decision with the old Labour cabinet, but it was no easier now that Samuel was involved. Hore-Belisha responded that he could provide evidence that Samuel and his followers no longer represented the parliamentary Liberal party’s views on tariffs and he presented the Prime Minister with a memorial signed by those Liberal MPs who were prepared to offer unqualified support for any measure necessary in the interests of the finance and trade of the country.¹²⁶ By 23 September this memorial had been signed by 29 MPs. In most cases this represented a clear commitment to tariffs, though Runciman stressed that in his case, while he would not rule out any step to deal with the present emergency, he still set his face against a permanent protective tariff.¹²⁷ Invited by Hore-Belisha and Geoffrey Shakespeare, Simon now agreed to lead a new parliamentary group of more than two dozen Liberal MPs. Immediately, he began to seek funds to reassure his followers that, in cutting themselves adrift from the party machine, they were not consigning themselves to electoral disaster.¹²⁸

By the end of the month the House of Commons had become ‘literally a beehive of rumours and intrigue’. Morris-Jones described the sorry condition of a party which he regarded as ‘finished’:

Liberal members of the Government with Samuel at their head – in order to keep their offices and their seats – are swallowing the poison which a week ago they were saying would ruin the country. Simon and others who have predicted and warned the country of this crisis [are] being outmanoeuvred by those who helped to bring it about … Politics is a hard game – everybody is now out to save his own skin.¹²⁹

On 3 October The Times noted that, until Samuel made up his mind on the issue of an election, the question of inviting the co-operation of Simon and his colleagues did not arise, though MacDonald was in the strong position of knowing that ‘however the situation develops he can rely upon the support of a substantial section of the Liberal members of the House of Commons’.¹³⁰ Simon made his position clear in a statement to the press:

I cannot help feeling that the game of formula hunting has gone on long enough. The reality of the national crisis is not in dispute, and in such circumstances the best course is for the country to put its confidence in the Prime Minister, which I feel sure it is quite ready to do. That is the course that I mean to follow. I have the best of reasons for knowing that this is also the view of many other Liberal members of parliament and we are forming an organisation at once for the purpose of carrying it into effect.¹³¹

Liberal party headquarters expressed ‘complete equanimity’ about Simon’s actions, claiming that he was already so distanced from the party as to render this latest move of little relevance. He had become, it was suggested, a ‘Conservative endeavouring to keep one foot in the Liberal camp for purposes best known to himself’.¹³² Yet such a display of studied indifference could not hide the fact that the Liberal party now faced its gravest crisis since the Asquith-Lloyd George split of 1916.

Two decisive meetings were held on the evening of 5 October. On the one hand the cabinet decided to call a general election without further delay. Almost until the last moment Samuel seemed likely to resign. Then, according to the Lord Chancellor’s diary entry, ‘suddenly Samuel said he agreed and in less than 90 seconds we decided to stick together when it had appeared hopeless. I was never so surprised in my life.’¹³³ The formula which produced this last minute accord was the decision to seek authority from the electorate for whatever policies were needed to restore the national finances, the so-called ‘Doctor’s Mandate’. The parties would be free to make their separate – and, in the case of the Samuelite Liberals, different – appeals to the country beneath the umbrella of a general statement from the Prime Minister to which all ministers would assent. Then, with the cabinet meeting still in progress and its outcome unknown (although Simon must at least have been considering the possibility of Samuelite resignations), a ‘secret conclave’ of 22 Simonite Liberals gathered at 9.30 p.m. No invitations had been extended to Liberal members of the government. The following resolution was passed unanimously: ‘This meeting of Liberal members of Parliament resolves to form itself into a body to give firm support to the Prime Minister as the head of a National Government and for the purpose of fighting the General Election.’ The Times listed those present as Hore-Belisha (Plymouth Devonport) in the chair, Simon (Spen Valley), Sir Robert Aske (Newcastle East), Sir Robert Hutchison (Montrose Burghs), Sir Murdoch Macdonald (Inverness), Sir William Edge (Bosworth), Sir Godfrey Collins (Greenock), Ian Macpherson (Ross and Cromarty), Rev. Roderick Kedward (Ashford), George Lambert (South Molton), Ernest Brown (Leith), Col. Abraham England (Heywood and Radcliffe), Geoffrey Shakespeare (Norwich), Arthur Harbord (Great Yarmouth), Dr Leslie Burgin (Luton), Thomas Ramsay (Western Isles), Cecil Dudgeon (Galloway), Richard Russell (Eddisbury), Frederick Llewelyn Jones (Flintshire), Henry Morris-Jones (Denbighshire West) and James Blindell (Holland-with-Boston).¹³⁴ That evening Simon wrote to the Prime Minister to convey the news. The purpose of the new body, he said, was to give MacDonald full support in any steps he decided were necessary and to support one another and any other likeminded Liberal candidates at the election. ‘We shall’, Simon concluded, ‘call ourselves Liberal Nationals.’¹³⁵