David Lloyd George

1916 - 1922

Like Asquith, Lloyd George (1863-1945) came from a poor background, but unlike Asquith he traded on it throughout his life. A fiery Radical Welsh MP and a Boer War pacifist in his early years, he was a notably capable President of the Board of Trade before becoming a high-achieving reforming Chancellor of the Exchequer. His 1911 National Insurance “ninepence for fourpence” scheme was not especially popular but was well designed and became the foundation of the modern Welfare State.

Throughout his career, Lloyd George had a phobia about the landed rich – not the rich in general, just those with inherited land, whom he consistently demonized. His 1909 Budget was a necessary tax increase to pay for old age pensions, which were generally accepted by both parties, but included a Land Tax with modest yield but major political aggravation capability, which he exacerbated by irresponsible “Limehouse” class-warfare rhetoric. This was followed by a 1912 Land Campaign that fortunately came to nothing, another tax-increasing Budget in 1914, the land tax portions of which became a dead letter when war broke out, and a further Land Campaign in the 1920s after he had lost office. The economic reality was that rural landowners had suffered cruelly since 1873 because of unilateral free trade, and by 1910 many of them were approaching bankruptcy, which occurred after World War I.1

As Chancellor of the Exchequer in the first year of the war, Lloyd George set a bad example for his successors by not raising taxes sufficiently to finance war expenditure -- the same mistake made by Pitt in 1793-1800 until Addington and Pitt’s other successors corrected it. The total cost of World War I over the five fiscal years ending on April 6, 1914 to 1919 was £9,593.3 million. Of this, revenues provided £2,733.1 billion, 28.5% of the total, while the deficit totalled £6,860.2 million, all of which was added to the National Debt, taking it to £7.48 billion, 130% of GDP at the end of the war.2 In the Napoleonic Wars, by contrast, tax receipts had financed 58% of war expenditures3 and in World War II tax receipts were to finance 52% of expenditures.4 Lloyd George doubtless wanted to cushion the war’s effect on the economy; he also cushioned any adverse effect of higher taxes on his own popular standing.

Lloyd George was energetic and notably successful as Minister of Munitions and Secretary of State for War, bringing in outside businessmen to overcome ossified bureaucracies, albeit at the cost of significant corruption. This period convinced him that government intervention, throwing resources at problems to achieve narrow targeted goals, could make the economy more efficient – he became a believer in “war socialism.”

With Press support, he then succeeded in ousting Asquith to become Prime Minister at the head of a new Coalition, even though he remained distrusted by most of his colleagues.

As Prime Minister Lloyd George continued energetic but solved few of the problems that bedevilled Britain’s war effort. There was little historical memory of the Napoleonic Wars a century earlier, so that it took until April 1917 for the Admiralty to organize a convoy system, which had operated throughout the previous conflict. Lloyd George had poisonous relationships with his two mediocre top Generals, Sir William Robertson (1860-1933) and Sir Douglas Haig (1861-1928) -- very different from Liverpool’s deep friendship and support for Wellington -- but his replacement for Robertson, Sir Henry Wilson (1864-1922), was no better. Lloyd George’s hatred of Haig went so far as to deny him reinforcements in early 1918 (to prevent Haig launching another bloody “Big Push” offensive) which when Germany attacked in strength in March 1918 nearly proved fatal to the Allied cause.

Lloyd George survived 1917 and the first half of 1918 mostly for lack of acceptable alternatives, then after July 1918 benefited from massive popular relief as the final arrival of American forces on the Western Front tipped the scale to Allied victory. He then secured his peacetime position by leading the Coalition into a landslide victory at a snap General Election, which had the disadvantage of promising the electorate a punitive peace against Germany.

The period’s historical oblivion continued at the 1919 Congress of Versailles, where Lloyd George took the opposite approach to Liverpool’s in 1813-15 and imposed punitive peace terms on Germany and its allies, including a reparations bill far larger than that for any previous war, several superfluous Colonial acquisitions for Britain, and the pointless destruction of the long-established state of Austria-Hungary.5 Woodrow Wilson was mostly responsible for Versailles’ naivete and folly, and Georges Clemenceau for its vindictiveness, but Lloyd George was a prime mover in making it the least successful “peace” settlement in history.

Lloyd George’s peacetime coalition was marked by industrial unrest and economic instability. He continued his interventionist policy, making economic soap operas out of every strike threat, and undertaking social and housing programs the country could not afford. After the slump of 1920-21 caught the government completely by surprise (1816-20’s difficulties having vanished down the memory hole) it was only the “Geddes Axe” wielded by Sir Eric Geddes (1875-1937) in 1921-22 that brought public spending under control.

Lloyd George’s Irish policy was a vacillating mess, causing four years of civil war.6 When in 1922 scandals broke over Lloyd George’s sale of honours, there was an unsurprising loss of confidence in his leadership, which led to the fall of the Coalition – Conservatives were so thankful to break free from Lloyd George’s leadership that their back-bench organization is called the “1922 Committee” to this day.

Lloyd George is often grossly over-ranked. He was an unpleasant man, able but corrupt and distrusted by his colleagues, who deserves only part of the Chatham/Churchill bonus for inspirational war leadership. He also made some major blunders and poisoned the atmosphere of British politics. Overall, he should rank at highest in the teens and possibly lower.

[1] David Cannadine “The Decline and Fall of the British Aristocracy,” Yale University Press, 1990, sets out in painful detail the tribulations of the landed aristocracy during these years.

[2] International Encyclopedia of the First World War – War Finance (Great Britain and Ireland) https://encyclopedia.1914-1918-online.net/article/warfinancegreatbritainand_ireland

[3] “The political economy of British taxation, 1688-1815” Patrick K. O Brien, Economic History Review, February 1988, Table 1, p4.

[4] British Historical Statistics, ed. B.R. Mitchell, Cambridge University Press, 2011, pp584 (Income), 592 (Expenditure). The year-end is March 31, for the years 1939-40 to 1945-46.

[5] To be fair, Austria-Hungary’s break-up was already in progress before the Congress convened and was ratified by the Treaty of St. Germain in the following year.

[6] When Sinn Fein won 73 seats at the 1918 election, they became legitimate representatives of Irish will and full Irish independence should have been granted immediately, albeit with the predominantly Protestant Ulster retained in the United Kingdom.

© 2020 Martin Hutchinson