Bonar Law - Post-war and Prime Minister

Post-war and Prime Minister

At war's end, he gave up the Exchequer for the less demanding sinecure office of Lord Privy Seal, but remained Leader of the Commons. In 1921, ill health forced his resignation as Conservative leader and Leader of the Commons in favour of Austen Chamberlain. His departure weakened the hardliners in the cabinet who were opposed to negotiating with the Irish Republican Army, and the Anglo-Irish War ended in the summer.

By 1921–2 the coalition had become embroiled in an air of moral and financial corruption (e.g. the sale of honours). Besides the recent Irish Treaty and Edwin Montagu's moves towards greater self-government for India, both of which dismayed rank-and-file Conservative opinion, the government's willingness to intervene against the Bolshevik regime in Russia also seemed out of step with the new and more pacifist mood. A sharp slump in 1921 and a wave of strikes in the coal and railway industries also added to the government's unpopularity, as did the apparent failure of the Genoa Conference, which ended in an apparent rapprochement between Germany and Soviet Russia. In other words, it was no longer the case that Lloyd George was an electoral asset to the Conservative Party.

Lloyd George, Birkenhead and Winston Churchill (still distrusted by many Conservatives) wished to use armed force against Turkey (the Chanak Crisis), but had to back down when offered support only by New Zealand, but not Canada, Australia or South Africa; an anonymous letter appeared in "The Times" supporting the government but stating that Britain could not "act as the policeman for the world", and it was an open secret that the author, "A Colonial", was in fact Bonar Law. At a famous meeting at the Carlton Club, Conservative backbenchers, led by the President of the Board of Trade Stanley Baldwin and influenced by the recent Newport by-election which was won by a Conservative from the Liberals, voted to end the Lloyd George Coalition and fight the next election as an independent party. Austen Chamberlain resigned as Party Leader, Lloyd George resigned as Prime Minister and Bonar Law returned on 23 October 1922 in both jobs.

Many leading Conservatives (e.g. Birkenhead, Arthur Balfour, Austen Chamberlain, Robert Horne) were not members of the new Cabinet, which was contemptuously referred to as "the Second Eleven". Although the Coalition Conservatives numbered no more than thirty, they hoped to dominate any future Coalition government in the same way that the similarly sized Peelite group had dominated the Coalition Government of 1852–5 – an analogy much used at the time.

Parliament was immediately dissolved, and a General Election ensued. Besides the two Conservative factions, the Labour Party were fighting as a major national party for the first time and indeed became the main Opposition after the election; the Liberals were still split into Asquith and Lloyd George factions, with many Lloyd George Liberals still unopposed by Conservative candidates (including Churchill, who was defeated at Dundee nonetheless). Despite the confused political arena the Conservatives were re-elected with a comfortable majority.

Questions were raised about whether the elderly Conservative Party Treasurer, Lord Farquhar, had passed on to Lloyd George (who during his premiership had amassed a large fund, largely from the sale of honours) any money intended for the Conservative Party. The Coalition Conservatives also hoped to obtain Conservative Party money from Farquhar. Bonar Law found Farquhar too "gaga" to properly explain what had happened, and dismissed him.

One of the questions which taxed Bonar Law's brief government was that of inter-Allied war debts. Britain owed money to the USA, and in turn was owed four times as much money by France, Italy and the other Allied powers, although under the Lloyd George government Balfour had promised that Britain would collect no more money from other Allies than she was required to repay the USA; the debt was hard to repay as trade (exports were needed to earn foreign currency) had not returned to prewar levels. On a trip to the USA Stanley Baldwin, the inexperienced Chancellor of the Exchequer, agreed to repay £40 million per annum to the USA rather than the £25 million which the British government had thought feasible, and on his return announced the deal to the press when his ship docked at Southampton, before the Cabinet had had a chance to consider it. Bonar Law contemplated resignation, and after being talked out of it by senior ministers, once again vented his feelings in an anonymous letter to The Times.