Keith Hunt - The Life of Winston Churchill #4 - Page Three   Restitution of All Things

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The Life of Winston Churchill #4

Success and Disaster


by Paul Johnson


     Delighted with his unexpected return to ample power,
Churchill was determined to be on good behavior. He would be an
exemplary chancellor. There would be no rash gestures of the kind
which destroyed his father, no meddling with the work of other
ministers, to which he was so prone, above all no disloyalty to
the prime minister, to whom he felt profoundly grateful. He
formed the habit, early each morning, of going from his own
house, Eleven Downing Street, through the connecting inner door
to Number Ten, and having a chat with Baldwin before each began
work. They became very close and like-minded and never had a
dispute, let alone a quarrel, throughout the ministry (1924-29).
Churchill introduced five budgets, each with a two-hour speech of
pellucid clarity, superbly delivered in majestic language-the
best by far since Gladstone's golden age and never equaled since.
They were immensely popular in Parliament and the country, since
they made MPs feel they understood difficult problems of finance
and economics, and the population as a whole felt that the man in
charge of the national accounts blended prudence and generosity,
compassion and common sense, with wit and grandeur. On budget day
he always walked from Number Eleven to the Commons, top hat on
head, huge overcoat with astrakhan collar, bow tie, his family
around him, smiling, waving, exuding self-confidence and

     His first budget, in 1925, was the most celebrated because
in it he not only reduced income tax but also brought Britain
back to the gold standard at the prewar parity. No decision in
the whole of Churchill's life has been more criticized, then and
since. It has been presented as a characteristically rash
personal move by an ignorant man who did not trouble to foresee
the disastrous consequences. Nothing could be further from the
truth. Almost from the moment he received his seals of office -
there is a splendid photo of him returning from Buckingham Palace
with them, smiling hugely, eyes lit up, the picture of
happiness-to April when he announced the change in his budget,
Churchill went into the matter with typical thoroughness and
enthusiasm. He heard all sides of the case and took the opinion
of everyone who had a right to hold one: Montagu Norman, governor
of the Bank of England, the great international finance pundit
Otto Niemeyer, senior treasury officials past and present like 
R. G. Hawtrey and Lord Bradbury, academics, and top City men. He
had a special lunch with Reginald McKenna, former chancellor and
chairman of the Midland Bank, and John Maynard Keynes, the two
leading opponents of the gold standard. He received scores of
memos and wrote as many. Opponents argued that the gold proposal,
especially at a high priority, would make the price of Britain's
exports, notably cotton, shipbuilding, steel, and coal,
uncompetitive, thus raising unemployment, already dangerously
high at over a million. Supporters argued that a strong pound
would restore the self-confidence of the City and London's
position at the world's financial center and attract capital and
investments, thus in the long run creating more jobs. The
overwhelming opinion was in favor of gold. Churchill was by
nature an expansionist, especially in his private finances, where
he never stinted but simply worked harder to pay the bills. But
over four months he gradually allowed himself to be persuaded to
go for gold.

     Keynes attacked him with a famous pamphlet, The Economic
Consequences of Mr Churchill. After World War II, when
Keynesianism became the orthodoxy, Churchill was condemned on all
sides and he himself admitted he was wrong. Later still, however,
when Thatcherism became the vogue, Churchill was vindicated. By
then, of course, he was dead, but the Iron Lady was delighted to
come to the aid of his memory: she adored "Winston," as she
always called him. We can now see that there is much to be said
for the gold standard. It encouraged entrepreneurs to switch from
old, low productivity industries to new ones - electrics,
automobiles, aeronautics, high-technology research - and provided
the capital to finance such efforts. The kind of advanced
industry which came into existence in the thirties, eventually
producing the Spitfire and the Lancaster, the jet engine and
radar-the new technology which proved so vital in the Second
World War-owed a good deal to the gold standard.
     At the time, however, there were mixed results. The Tories
were pleased, Neville Chamberlain writing to Baldwin: "Looking
back over our first session, I think our Chancellor has done very
well, all the better because he hasn't been what he was expected
to be. He hasn't dominated the Cabinet, though undoubtedly he has
influenced it. He hasn't intrigued for the leadership, but he has
been a tower of debating strength in the Commons. What a
brilliant creature he is!" Birkenhead noted: "Winston's position
with the Prime Minister and the Cabinet is very strong." But the
effect of high parity soon made itself felt, especially in the
coal industry. It had been Britain's biggest and still employed
1,250,000 men. But many of the pits were old, dangerous, and
underequipped. The owners, said Birkenhead, were "the most stupid
body of men I have ever encountered." In July 1925, claiming that
export orders were down as a result of the new higher parity of
sterling, they asked the unions to accept a sharp cut in
wages-otherwise they would impose a lockout. The unions flatly
refused to accept lower wages or improve their productivity. They
would turn a lockout into a strike, and with the railwaymen and
the transport workers coming out in sympathy, the strike would
become general.
     For once Churchill was far from belligerent. He was not
antiunion at this stage. He had voted for the 1906 act which gave
unions exemption from actions for tort (civil damages despite
F.E.'s powerful argument that to create a privileged caste in law
was against the Constitution and would, in the end, prove
disastrous. Rather than have a general strike, Churchill would
prefer to nationalize the mines, or at least the royalties on
coal, the government making up any deficit by a subsidy, which he
as chancellor would provide. In the meantime he proposed a royal
commission to inquire into an agreed solution for the stricken
coal industry. "That will at least give us time to prepare," he
said. This proved a shrewd move. The prospect of a general strike
had been mooted for a generation and inspired terror in many. It
was an uncontrolled monster and, once unleashed, where would it
end? In a revolutionary socialist government, even a
Communist-type regime?
     If Churchill had no special animus against the unions, the
prospect of Bolshevism in Britain filled him with horror. "Of all
the tyrannies in history, the Bolshevik tyranny is the worst," he
had said, "the most destructive, the most degrading." They "hop
and caper like troops of ferocious baboons amid the ruins of
cities and the corpses of their victims." The Russian regime was
"an animal form of barbarism," maintained by "bloody and
wholesale butcheries and murders, carried out by Chinese-style
executions and armoured cars." This was true enough: even under
Lenin, there had been 3 million slaughtered. Churchill warned
that a soviet in London would mean "the extinction of English
civilisation." It was therefore legitimate to do everything to
prepare for a general strike, in terms ofpolice and troop plans,
emergency supplies, and legal measures. The commission reported
in March 1926, accepting his proposal for nationalizing royalties
as well as some cuts in wages. The miners, most of whom had
already been on strike for a number of months, rejected any cuts:
"Not a minute on the hour nor a penny off the pound." Churchill
introduced his second budget in April in a stiffening mood. A
week later, in May, the general strike began and he took charge
of the business of defeating it.
     At once he changed back into his earlier activist persona of
the Sidney Street siege and the battle of Antwerp. He organized
convoys led by armored cars to get food supplies into London. He
ap pealed for volunteers and had a tremendous response from
Oxford and Cambridge undergraduates who worked in gangs to
replace deliverymen and from young society ladies who operated
telephone switchboards. It was class warfare: the upper and
middle classes showing class solidarity on the lines of the trade
unionists. Above all, Churchill kept up the supply of information
to replace the lack of newspapers caused by a printing strike.
His original plan had been to commandeer the British Broadcasting
Corporation and run a government radio. But Sir John Reith, its
director general, flatly refused to let him on the premises and
ran a strictly neutral emergency service. So Churchill seized the
Morning Post presses instead and the reserve supplies of
newsprint built up by the press barons, and contrived to produce
and distribute a government propaganda sheet called the British
Gazette, which reached an eventual circulation of 2,250,000.
Churchill, having been put in charge of the negotiations, brought
about a settlement, which represented a victory for the forces of
order. As Evelyn Waugh put it: "It was as though a beast long
fabled for its ferocity had emerged for an hour, scented danger
and then slunk back into its lair." Churchill had enjoyed himself
hugely. His enthusiasm embarrassed his more sophisticated
colleagues and evoked jeers and fury from the Labour Party, but
in a debate on the strike he dispelled the rancor with a witty
and hilarious speech which dissolved the Commons in tempests of
laughter. Then he went back to his good behavior: moderation and
emollience. But he, with the help of Birkenhead, produced and got
passed a Trade Disputes Act which stripped the unions of their
more objectionable privileges and held good until 1945, when the
Labour Party got an overwhelming majority and, to Churchill's
dismay, gave the unions, by statute, virtually everything they
     Churchill's tenure of the exchequer had more serious
consequences in a field where he might have been expected to be
more sensible: defense. Here he changed his persona completely.
From the first lord of the Admiralty who had built up the fleet
to over a thousand warships, he reverted to his father's policy
of stinginess to the armed services, adding a good deal of
rhetoric of his own. He was particularly hard on plans to replace
aging warships with new ones such as "silly little cruisers,
which would be no use in war anyway." Given his earlier foresight
about airpower, he showed no interest in pushing for a class of
large aircraft carriers to replace battleships. When in charge of
the War Office under LG, he had taken a lead in the government's
adoption of the Ten Year Rule, an official assumption there would
be no major war in the next ten years, renewed and extended
annually. This made exceedingly difficult getting higher spending
estimates adopted. It meant Britain emerged from the twenties
seriously underarmed for a world power.
     What made matters worse was that Japan, hitherto a staunch
friend of Britain's, had changed from an ally into a potential
enemy. From the 1860s Japan had been transforming itself into a
modern power. The Prussians had trained and armed its army and
the British its navy, with all its warships being built in
British dockyards until the Japanese were taught to design and
build their own. The Anglo Japanese naval treaty, the key to the
friendship, came up for renewal in 1922, by which time the Lloyd
George coalition was in disarray and had other things to think
about. Instead of renewing it, Britain agreed, under pressure
from America, which was strongly anti -Japanese, to substitute an
international agreement known as the Washington Naval Disarmament
Treaty. This laid down a 5:5:3 ratio of capital ships for
Britain, the United States, and Japan. The Japanese considered
this a condescending insult and never forgave Britain for
agreeing to it. There were other irksome provisions-an upper
limit of thirty-five thousand tons for capital ships and what the
Americans called a "naval holiday." Japan turned nasty and
insisted, as part of the agreement, that Britain build no naval
bases north of Singapore or west of Hawaii.
     Why Churchill did not protest against this antagonism of
Japan and the drastic weakening of Britain's naval position in
the Pacific, which was to have appalling consequences in 1941-42,
is a complete mystery. At this stage of his life he seems to have
been completely blind to any danger from Japan. On December 15,
1924, flush with his new office as chancellor and determined on
economy, he wrote a letter to Baldwin which used long arguments
backed by statistics to show there was no need at all to consider
a possible war with Japan:

     I do not believe there is the slightest chance of it in our
     lifetime. The Japanese are our allies. The Pacific is
     dominated by the Washington Agreement ... Japan is at the
     other end of the world. She cannot menace our vital security
     in any way. She has no reason whatever to come into
     collision with us ... war with Japan is not a possibility
     which any reasonable government need take into account.

     Churchill's blindness to the power and intentions of the
Japanese extended to the vulnerability of the new base being
built in Singapore. Though he frustrated the Labour plan to scrap
it alto gether, he believed it could be defended mainly by
airpower, and it never seems to have occurred to him that the
Japanese army could overwhelm it by land, sweeping through
Malaya. When this happened, of course, he blamed himself-he never
shrank from accepting responsibility when it was just-but it must
be admitted he was a prime author of the British debacle in the
Far East in 1941-42.

     Nevertheless, the twenties were a splendid period in
Churchill's life. Baldwin, constantly full of his praise in his
letters to the king, called him "the star of the government." The
press formed the habit of describing him as "the Smiling
Chancellor." His budgets became the "great events of the
parliamentary year" (the Times). He seemed to Lord Winterton, MP,
hitherto a sharp critic, "a man transformed ... head and
shoulders above anyone else in the House (not excluding Lloyd
George) ... he has suddenly acquired, quite late in Parliamentary
life, an immense fund of tact, patience, good humour and banter
on almost all occasions; no one used to 'suffer fools ungladly'
more than Winston, now he is friendly and accessible to everyone,
both in the House and in the lobbies, with the result that he has
become what he never was before the war, very popular in the
House generally."
     Everyone tried to have a good time in the twenties. Few
succeeded as well as Churchill. He loved bricklaying and
excavating, and Chartwell daily grew more beautiful (in his eyes)
and "comfy." He painted with increasing skill, having received
much detailed advice from the modern master Walter Sickert (who
wrote it down and it is well worth reading). He was energetic in
play. He kept up his polo until 1927, when he was fifty-three. He
hunted, especially wild boar, on the estate his friend Bendor,
Duke of Westminster, kept for this purpose in southwest France.
He drove a fast motorcar until, in 1925, Clemmie insisted he
leave it to the chauffeur. He wrote when possible, completing his
Great War volumes and starting work on a grandiose life of his
ancestor Marlborough. Bracken arranged highly lucrative
contracts. The Churchills lived grandly-he probably consumed more
bottles of champagne in the twenties than in any other decade of
his life, and there is a vignette of him enjoying 1863 brandy. He
had plenty of secretarial help, research assistants and young
history dons to advise him. He earned, he spent: it was his
philosophy of wealth which he set down in the twenties:
The process of the creation of new wealth is beneficial to the
whole community. The process of squatting on old wealth, though
valuable, is a far less lively agent. The great bulk of the
wealth of the world is created and consumed every year. We shall
never shake ourselves clean from the debts of the past, and break
into a definitely larger period, except by the energetic creation
of new wealth.
     He called for "a premium on effort" and "a penalty on
inertia," and he certainly practiced what he preached.
Despite his performance as chancellor, however, the country gave
thumbs-down to Baldwin at the general election in 1929. The
Tories got more votes than Labour but MacDonald secured the
largest number of seats and formed a new government. Ousted,
Churchill at once turned to the business of making money on a
large scale. In the stock exchange boom of the late twenties he
had been prevented from speculating by his position. Now he set
to. In America to give highly paid lectures and to write for
American magazines, he wrote joyfully to his wife on September
2o, 1929, from California that "very great and extraordinary good
fortune" had attended him on the stock exchange, thanks to the
advice of Sir Harry McGowan, chairman of Imperial Chemicals, whom
he had got elected to the Other Club and who, in return, was
looking after his money. He instructed Clemmie to embark on plans
for large-scale entertainment in London of "colleagues and MPs
and a few business people who are of importance." He had earned
nearly 20,000 pound since he last wrote:

     So here we have really recovered in a few weeks a small
     fortune. And this with the information I can get and now am
     free to use may earn further profits in the future. I am
     trying to keep 20,000 pound fluid for investment and
     speculation with Vickers da Costa [stockbrokers] and
     McGowan. This "mass of manoeuvre" is of the utmost
     importance and must not be frittered away. But apart from
     this, there is money enough to make us comfortable and
     well-mounted in London this autumn.

     A month later all had gone with the wind as the great Wall
Street crash reverberated through the skyscraper canyons. He was
present to hear a dinner host address a table full of top
businessmen with the words "Friends and former millionaires." He
added: "Under my window a gentleman cast himself down fifteen
storeys and was dashed to pieces." McGowan had been investing his
funds "on margin" (something Churchill did not understand), so he
not only lost all his money but had to buy himself out of the
mess. He considered selling Chartwell, but it was "a bad time."
Instead he redoubled his writing output, negotiating fresh
contracts and lecture tours. His earnings rose to over 40,000
pound a year, an immense income in those days. But his confidence
had been shaken, and in his bruised condition he began to make
political mistakes again.

     First he resigned his seat on the Conservative front bench.
The issue was India. True, both the new Labour government, plus
Baldwin and most of his colleagues, supported by the report of
the Simon Commission and the liberal viceroy, Lord Irwin (later
Lord Halifax), were united in backing a gradual progression to
self-rule. Churchill rejected this totally and got himself into a
die-hard position. He fought a campaign, making speeches all over
the country, associating with the extreme right-wing of the
Tories, and moving closer than ever before to the press barons,
especially Beaverbrook and Rothermere, who controlled the Daily
Mail group. Churchill had not been back to India since 1899. He
had only met Gandhi, who now led the resistance movement, once,
when undersecretary to the colonies, and mistaking his
significance dismissed him as "a half-naked fakir," a phrase
which stuck, to his own discredit. His speeches were notably less
impressive than those he made as chancellor. Worse, his
activities were seen as part of a move to replace Baldwin, in
which the press barons enthusiastically joined. This was a huge
mistake, for the drive to get rid of him gave "the old turnip
lanthorn," as Churchill called him, a new lease on life, and he
made some of the best speeches in his career, slaughtering the
press lords and putting Churchill right out into the cold. In
August 1931 the Labour government collapsed and MacDonald formed
a national coalition with Baldwin as number two but the real
power, as most of its huge majority were his Tory followers.
Churchill was away and does not seem to have been even considered
for office. The coalition went to the country and was returned
with a vast majority, Labour being reduced to a mere fifty-two
seats. Churchill found his majority doubled but he seems, for the
moment, to have been without direction in politics, obsessed with
the need to make money. So he returned to America to lecture and
     On December 13, 1931, crossing Fifth Avenue in the dark, he
looked the wrong way, as in England, and a fast car, coming from
the opposite direction, knocked him down. He was badly damaged on
the head, thigh, and ribs, and in terrible pain. But he remained
conscious and when a policeman asked what had happened insisted
it was entirely his own fault. He was in fact lucky to be alive.
A taxi took him to hospital, and he was a long time recovering.
He was very down. He told Clemmie: "I have now in the last two
years had three very heavy blows. First the loss of all that
money in the Crash. Then the loss of my political position in the
Conservative Party and now this terrible physical injury." He was
afraid he would never recover from these blows. In fact he began
the process while still in hospital by dictating a moving and
thoughtful article about his accident:

     I certainly suffered every pang, mental and physical, that a
     street accident or, I suppose, a shell wound, can produce.
     None is unendurable. There is neither the time nor the
     strength for self-pity. There is no room for remorse or
     fears. If at any moment in this long series of sensations a
     grey veil deepening into blackness had descended upon the
     sanctum, I should have felt or feared nothing additional.
     Nature is merciful and does not try her children, man or
     beast, beyond their compass. It is only when the cruelty of
     man intervenes that hellish torments appear. For the rest,
     live dangerously, take things as they come. Fear naught, all
     will be well.

     He got for this article 600 pound for world rights, the
largest sum he had ever received for a single piece. It was
printed everywhere. Then he went back to the fray, shaken but
calm, to live more dangerously than ever before, but to fear even

To be continued

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