In 1903, the Conservatives adopted a policy of imperial preference, meaning tariffs would be applied to imports, unless they came from British dominions and colonies. The British Empire would be a worldwide PROTECTIONIST TRADING BLOC. Joseph Chamberlain feared social violence due to poverty and destitution, so he felt tariffs would stop this by protecting British businesses. He didn't want revolutionary socialism (where people are heavily taxed and the money is redistributed to the poor); he viewed it as unjust.
The policy of imperialism was never adopted, but it was made a National issue. Officially the conservatives adopted the policy. Few were happy about it; it was only accepted because it meant the wouldn't have to use taxation. During the 1906 election, few conservatives could put forward a convincing argument for protectionism; they didn't believe in their cause, so the Liberals won. Balfour resigned as Conservative party leader. He tried convincing the king to dissolve parliament, meaning an election would have to occur early. He hoped to divide liberals over Home Rule, giving them a better chance of winning the next election. This failed; the Liberals remained united.
They were close in terms of votes, but were unable to distribute those votes in a way which would turn them into seats.
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