Europe in the Belle Époque, 1871–1914513The early twentieth century witnessed a second pe-
riod of radical reform in Britain, comparable to Glad-
stone’s great ministry. The Liberal Party built a new
majority in 1905, sometimes supported by the twenty-
nine M.P.s of the new Labour Party, which had been or-
ganized in 1906 by a Scottish miner, Keir Hardie, and a
Scottish journalist, Ramsay MacDonald. One of the
first legislative actions of the new government, the
Trades Disputes Act of 1906, responded to labor’s
greatest grievance. Gladstone’s Trades Disputes Act of
1871 had given legal recognition to unions, and they
had gradually gained such rights as picketing. In 1901,
however, the House of Lords had rendered a dramati-
cally antilabor ruling in a legal case known as the Taff
Vale Railway Company v. Amalgamated Society of Railway Ser-
vants.The Taff Valeruling held that a union could be
sued for the actions of its members and that a union
could be held liable for a company’s losses during a
strike. The Liberal government of 1906 repaid labor
support by overturning the Taff Valedecision and restor-
ing the right to strike and picket, through the Trade
Disputes Act.
The Liberal coalition found its radical voice in
David Lloyd George, who typified the changing nature
of liberalism from a laissez-faire doctrine of noninter-
ventionist government to an activist doctrine of gov-
ernmental intervention to protect the vulnerable. A
Welsh lawyer possessed of a charming yet ferocious
mastery of debate, Lloyd George drafted the govern-
ment’s economic policies as chancellor of the exche-
quer (minister of finance) and led Britain into the age of
welfare legislation. A Workmen’s Compensation Act
(1906) greatly expanded benefits; an Old Age Pensions
Act (1909) replaced the workhouse system; and the
National Insurance Act (1912) introduced health and
unemployment insurance. The cornerstone of the lib-
eral welfare state was the budget that Lloyd George in-
troduced in 1909. The “people’s budget” attacked the
conservative tradition that the state could spend large
sums for military preparations (such as large new battle-
ships) but not for social welfare (see document 26.2).
Lloyd George further angered conservatives by propos-
ing to pay for these expenditures by taxes on the rich.
The Lloyd George budget led to the democratiza-
tion of Parliament (by ending the power of the House
of Lords to block legislation) and therefore to hopes for
a third Home Rule Bill. The Lords, which remained an
unelected body defending the interests of the landed
aristocracy, traditionally held the power to veto any
legislation except a budget. Lloyd George, however,
had presented them with an irresistible target. The
House of Lords vetoed the People’s Budget of 1909,
creating a constitutional crisis and exposing itself to a
Liberal assault. The Liberal government turned to theDOCUMENT 26.2
Lloyd George The “People’s Budget”
The provision for the aged and deserving poor—was it not
time something was done? It is rather a shame that a rich
country like ours—probably the richest in the world, if not
the richest the world has ever seen—should allow those
who toiled all their days to end in penury and possibly star-
vation. It is rather hard that an old workman should have to
find his way to the gates of the tomb, bleeding and foot-
sore, through the brambles and thorns of poverty. We cut a
new path for him...: There are many in the country
blessed by Providence with great wealth, and if there are
amongst them men who grudge out of their riches a fair
contribution towards the less fortunate of their fellow coun-
trymen they are very shabby rich men.
We propose to do more by means of the Budget. We
are raising money to provide against the evils and suffer-ings that follow from unemployment. We are raising
money for the purpose of assisting... to provide for the
sick and the widows and orphans....
Some of our critics say, “The taxes themselves are un-
just, unfair, unequal, oppressive—notably so the land
taxes... .” They are now protesting against paying their
fair share of the taxation of the land, and they are doing
so by saying, “... You are putting burdens upon the peo-
ple which they cannot bear.” Ah! they are not thinking of
themselves. Noble souls!... [W]e were so impressed by
this tearful appeal that at last we said, “We will leave
[small landowners] out.”
George, Lloyd. In The Times,July 31, 1909