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On 21 December 1909 the house of lords rendered judgement in the Osborne case. The lords' decision, at a minimum, prohibited trade union contributions to the Labour Party, and therefore threatened with destruction the newly-formed party whose income depended almost entirely upon trade union support. The legal basis upon which a majority of the law lords rested their ruling was that trade union political activity was ultra vires – that is, beyond the unions' lawful authority – because not expressly sanctioned by the 1871–6 Trade Union Acts, which the law lords treated as the functional equivalent of a charter for trade unions. An alternative, possibly more convincing, rationale for the judgement, not mentioned by the law lords but relied upon by two of the lord justices in the court of appeal decision in Osborne and paramount in the public debate surrounding the judgement, was that trade union political fund-raising involved compelling individual trade unionists to support financially their political opponents. The Labour Party, quickly recognizing that the Osborne judgement threatened its very existence, launched an intensive lobbying campaign – both in parliament and in the country – to secure a complete legislative reversal of the lords' decision. Yet the Liberal government's posture towards a legal decision from which it stood to derive immediate political gain was unpredictable; by no means was it clear from the outset that the Liberal Party would acquiesce in any measure curtailing the effect of Osborne, much less indulge Labour's demand for complete rescission of the judgement.
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