Churchill

by Paul Johnson

  Baldwin, who had briefly served as prime minister before a Labour interlude under Ramsay MacDonald, was returned with a handsome majority at the election and was in a generous mood. His most important Tory colleague was Neville Chamberlain, whom he originally intended to make chancellor of the exchequer. But Chamberlain wished to be a reforming minister of health. Baldwin, a fellow Old Harrovian, took the opposite view of Churchill to Bonar Law’s: “I would rather have him making private trouble in the Cabinet than public trouble outside it.” He said, half joking, “I wish to make a Cabinet of which Harrow can be proud,” and had Churchill into Number Ten. Churchill was expecting little, and when Baldwin said, “I want you to be Chancellor,” he thought it meant of the Duchy of Lancaster, the nonjob he had held in the dark days of 1915. He was tempted to refuse, when Baldwin added, “Chancellor of the Exchequer, of course.” Churchill was transformed. He “lit up like a gigantic light-bulb.” In a split second he was transformed into a radiant, joyful prince of politics again, a man at the top of fortune’s wheel. He said: “This fulfills my ambition. I still have my father’s robes as Chancellor. I shall be proud to serve you in this splendid office.”

  Chapter Four

  Success and Disasters

  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 prosperity.

  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 Keynes ianism 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 anti-union 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 of police 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 appealed for volunteers and had a tremendous response from Oxford and Cambridge undergraduates who worked in gangs to replace de liverymen 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 wanted.

  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 altogether, 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 un-gladly’ 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 20, 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 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 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.