After ten years in opposition, the Liberals again came to power in December 1905 under Sir Henry Campbell-Bannerman, who appointed Tweedmouth First Lord of the Admiralty, with a seat in the cabinet. In early 1908 he was criticised for corresponding with German emperor William II on the British naval programme. The matter was referred to the House of Commons. Chancellor of the Exchequer H. H. Asquith eventually stated that the correspondence was "a purely personal and private communication, conceived in an entirely friendly spirit" and no action was taken. However, when Asquith succeeded Campbell-Bannerman as Prime Minister in April 1908 Tweedmouth was removed as head of the Admiralty and became Lord President of the Council. He suffered a nervous breakdown in June 1908, a condition which was said to partly explain his indiscretion in communicating with the German Emperor on naval matters. Although his health later recovered, he resigned in October 1908. He was made a Knight of the Thistle in 1908.