The late Charles W. Smith, among others, identified the racial component of European/Western Liberalism. What he referred to as “racial liberalism” had systematically excluded non-whites as well as other groups such as Jews from the individual rights and freedoms that were associated with liberalism since the end of the eighteenth century. This essay traces the idea of racial liberalism and contextualizes it by delving into late Victorian liberal thought. By focusing on a few central British and German liberal scholars (all residing in Britain), such as Karl Blind, E.A. Freeman, Goldwin Smith, Max Müller and others, the essay illustrates how racial liberalism shaped their view of historical time. Through a shared idea of Anglo-Saxon and Teutonic (Germanic) supremacy, these liberal thinkers imagined a racial hierarchy in which the Teutonic and Protestant nations of England and Germany, who dominated the racial ladder, distributed the idea of freedom throughout history. Thus, according to these scholars, it was also through the dissemination of liberal values that these nations validated their racial supremacy. The scholars’ perception of Europe (West) was tightly linked to this ideology since it was their Germanic forefathers who shaped history, ever since the fall of the degenerated Roman Empire. While making such historical claims, these Victorian scholars also discriminated against other people such as the Ottoman-Turks, Jews, and others, claiming that these people were in a stationary stage, unfit to adopt liberal values. The racialization of other people, as I will show, originated from the unique historical context of the late Victorian era. It was in this period, following the outbreak of the famous ‘Eastern Question’, that many British liberals adopted a harsh stance against the Ottoman Empire, claiming that Aryan-Christian Europe must once again oppose the Turanian and Semitic races.