A running subplot during December was the ‘Bank Rate Tribunal’. Reluctantly granted by Macmillan under political pressure, and sitting at Church House, Westminster under Lord Justice Parker, its brief was to determine whether there had been a ‘leak’ that accounted for the heavy selling of gilt-edged stocks just before the 2-per-cent rise in the Bank Rate on 19 September. The individuals under most suspicion were two of the Bank of England’s non-executive directors, Lord Kindersley of Lazards and W. J. (‘Tony’) Keswick of Mathesons. Keswick’s cross-examination on the 6th, conducted by the Attorney General, Sir Reginald Manningham-Buller, included the question of what he and his brother had discussed five days before the rise. ‘It is difficult for me,’ he observed in a memorable phrase that would be much cited, ‘to remember the exact timing of conversation on a grouse moor.’ Overall, Macmillan was privately reflecting by the second week that the evidence to the tribunal, ‘tho’ not really damaging, does the Capitalist system as a whole no particular good’, while the following week the City establishment’s increasing vexation with the proceedings was encapsulated by Kindersley’s angry missive to the banker George Bolton about Manningham-Buller’s ‘offensive’ winding-up speech: ‘If he was the next gun to me tomorrow I would certainly use my cartridges in a different direction to the pheasants!!!’ Even so, for outsiders it was a fascinating spectacle, watching (as Panter-Downes put it) ‘a succession of spruce, pink-joweled City gentlemen easing themselves and their briefcases into the witness chair’ and speaking a ‘totally different language’ about ‘“comparatively small”’ deals of a million or so pounds. ‘It has all been a revealing glimpse into a special, jealously guarded world,’ she added, and ‘many Conservatives are wondering what the average hard-up voter is going to make of it’.35
Christmas Day was marked by the Queen’s first Christmas television broadcast, live from the Long Library at Sandringham. ‘That it is possible for some of you to see me today is just another example of the speed at which things are changing all round us,’ she observed. ‘Because of these changes, I am not surprised that many people feel lost and unable to decide what to hold on to and what to discard, how to take advantage of the new life without losing the best of the old.’ Viewers were predictably delighted:
Her Majesty was so natural and her message must surely have moved and inspired many viewers. The innovation of TV in the Queen’s home made us feel, as she herself said, that she is really our friend and not a removed figure.
Her Majesty’s relaxed, sincere and charming approach was captivating. It seemed in contrast to her former style of speaking, which always struck me as slightly aloof.
A real thrill to see the Queen so clearly and so close.
It was a prosperous-feeling Christmas in Chingford. ‘Had a picnic lunch in the lounge, which was most enjoyable,’ Judy Haines noted two days later. ‘Now we have electric fires in both dining and lounge we can use both rooms at a moment’s notice.’ Another diarist, Dennis Dee, was just starting out. A farm worker and horse breaker turning himself into a horse, pig and poultry breeder, he was 31 and had recently acquired a smallholding in the East Riding village of Winestead. A countryman of few words, he began his journal at the start of 1958 as economically as he intended to go on:
1 January. Keen frost today. W [his wife Wendy] went to Hedon to see her mother. I am working for Mr Patchett at ‘Westlands Farm’, Winestead.
2 January. More frost. I punctured George’s car today.
3 January. Frosty again today. Mowing the big ditches out at Westlands.
4 January. Milder weather. Started to cut the large rough hedge round the paddock. A big job and a hard one.
That same day, Saturday the 4th, fellow diarist Madge Martin went to the Old Vic to see A Midsummer Night’s Dream, in which ‘Frankie Howerd, the comedian from the music-halls and radio, was a good, but quiet Bottom’, playing alongside (she did not mention) Ronald Fraser as Flute and Judi Dench as First Fairy; next day, Anthony Heap visited his mentally unstable wife Marjorie at Friern Barnet, to which she had recently returned and where the doctors were going to try ‘electric shock treatment’ again. The weekend also saw, amidst stirring scenes, the last passenger train run between Abergavenny and Merthyr Tydfil. ‘I have lived in a house where the back garden adjoins the line,’ Graham Jones of 36 Rhyd-y-cae, Rassau wrote soon afterwards to the Merthyr Express.
The trains passing by have formed part of our lives. Last Monday was so quiet and then we realised that no longer would those grand ladies of the steam track pass by again. To many on-lookers we may seem perhaps sentimental and a little foolish, but that sad last train with its even sadder whistles as it graced the track for the last time was to me and many others the end of something in our lives which will never be replaced.36
5
Not a Matter of Popularity
On Monday, 6 January 1958 a disgruntled housewife in Paddington gave her Detergent Survey interview to Mass-Observation; Dennis Dee in Winestead did ‘hedging and ditching at the farm’ amidst ‘heavy rain nearly all the day’; Madge Martin in Oxford went to Barnacle Bill at the Ritz (‘amusing enough, but a little too farcical’); Judy Haines in Chingford took her daughters as a pre-school treat to Norman Wisdom’s Just My Luck at the Odeon (‘no indication as to where queues should form until opening time and there was a great reshuffle in the wind and rain’); the Queen took Charles and Anne to the Bertram Mills Circus at Olympia (‘both the Royal children bounced up and down in their seats with excitement’);1 and all three Treasury ministers resigned – a unique event in twentieth-century British political history.2
The story had begun a year earlier when Macmillan, as the new prime minister, had chosen his Treasury team: Peter Thorneycroft as Chancellor of the Exchequer, Enoch Powell as Financial Secretary and Nigel Birch as Economic Secretary. The 47-year-old Thorneycroft, president of the Board of Trade since 1951, was a capable, seasoned politician whose main quirk was dropping into fashionable 1930s’ Cockney twang at the end of sentences, and Macmillan had deployed him as campaign manager in the post-Eden succession battle with Rab Butler. Few doubted Thorneycroft’s free-market instincts. ‘No system of social security, no schemes of unemployment insurance,’ he had written ten years earlier, ‘are a substitute for enterprise, hard work, modern methods and up-to-date machinery,’ adding that Keynesian ‘remedies for unemployment still remain in the realm of theory’. And at the Board of Trade, his implacable opposition to import controls to protect the Lancashire textile industry had earned him the sobriquet ‘the hangman of Lancashire’ from Cyril Lord. Thorneycroft’s instincts were shared by his two junior ministers: Powell, fresh from steering through legislation to de-control rents in the private housing sector, and Birch, an acerbic operator who had made his fortune as a stockbroker. In Powell’s case, though, there was a paradox, namely the juxtaposition of a classical free-market approach (including, later in 1957, pushing fruitlessly for an extensive denationalisation programme) with a deep-dyed English nationalism. As William Rees-Mogg would put it after Powell’s death, ‘his two big ideas were not entirely compatible with each other’. For Powell himself in 1957, his new post – requiring uncompromising Gladstonian parsimony resting upon unbending willpower and unassailable grasp of detail – felt like destiny calling. ‘As frigid as any spell woven by some ice maiden of a Nordic saga’, noted one parliamentary sketch writer of his performance in May. ‘Under his chilling touch the Finance Bill was laid out like a fish on a slab.’3
Within weeks of his appointment in January 1957, Thorneycroft was taking a hard, unyielding, non-Keynesian line. The government, he told his Cabinet colleagues at the end of the month, ‘spends too much, drifts into inflation, then seeks to cure the situation by fiscal and budgetary measures’. And in case anyone misunderstood, he reiterated: ‘We shrink from the measures necessary to cut expenditure, and inflation starts again.’ His Budget in April was avowedly ‘disinflationary’, emphasising the indispensable ‘maintenance of a sati
sfactory budget balance’; the next month he wrote to Macmillan insisting that government not ‘spend more than we are spending already’, asking for his support to help counter the inevitable pressure from spending ministers, and claiming there was a ‘real danger’ of ‘an economic crash – or at any rate a sufficient stumble to throw the Conservatives out of office for quite a considerable time’.
During July, Thorneycroft’s analysis of what needed to be done to slay the inflationary dragon developed significantly. On the 17th (three days before Macmillan’s Bedford speech sought to highlight the dangers of inflation) he told the Cabinet that ‘we should lose no opportunity of making it clear in public that the source of our inflationary disease is wages increasing out of all proportion to increases in production’ – an understandable enough approach in the wake of the unions’ victory in the engineering and shipbuilding strikes that spring. But by the 30th, his line to Macmillan was that ‘the only resolute action which is really within the power of the Government’ was ‘to restrict the supply of money to the point where cost and price increases were checked by severe unemployment’ – a strategy, he accepted, that ‘would involve cuts in public investment and checking private investment by a savage credit squeeze’. In short, it was an embryonic form of monetarism, though the term itself had yet to be coined, and almost certainly, moreover, monetarism of a less full-blooded kind than that embraced by either Powell or Birch.
Then came September’s sterling crisis, largely caused by ‘hot money’ speculators. A Keynesian economist, J.C.R. Dow, subsequently reflected that what was ‘remarkable’ about Thorneycroft’s view of the crisis was ‘the way in which he accepted rising prices at home as the cause of the run on the reserves’. Or, as the historian Ewen Green has suggested, it was an emergency that – for all Thorneycroft’s undoubted, deeply sincere wish to protect the currency – also provided him ‘with one more stick to belabour his colleagues into accepting his deflationary strategy’. Accordingly, the measures announced on 19 September included not only a 2-per-cent rise in the Bank Rate but also a two-year standstill in public-sector investment, and in his statement Thorneycroft stressed that, given his determination ‘to maintain the internal and external value of the pound’, there could be ‘no remedy for inflation’ that was ‘not founded upon a control of the money supply’. Soon afterwards, at the IMF’s annual conference in Washington, he loudly banged the same drum, prompting The Economist to observe that a British politician had, for the first time since 1945, ‘openly offered to face unemployment, should that be the price of beating inflation and defending the pound’.4
There was another, highly symbolic aspect to the economic debate this autumn. Back in April, in his Budget speech, Thorneycroft had pointed out that the British economy was facing particular problems as a result of what he called ‘our function as banker for a large part of the world’, i.e. the sterling area. That in itself was a breakthrough, bringing the issue out into the open. Siegmund Warburg would recall that when he told people soon after the war that sterling’s reserve currency status no longer made sense for what had become a debtor country, he had been chastised by the governor of the Bank of England for breaking ranks from the general view, while when – in the immediate aftermath of the Suez crisis – Eden and Macmillan swapped notes on the burden of being bankers for the sterling area (with the latter noting laconically that ‘we must either carry on the business with all its risks, or wind it up and pay 5s in the £’), it was very much a private exchange of views. But now, in the autumn of 1957, following the September measures that had placed in sharp focus the domestic implications of sterling’s international role, the issue definitively broke cover. Two left-inclining figures, the economist A.C.L. Day and the economic journalist Andrew Shonfield, led the way in November. ‘What Price the Sterling Area?’ was the title of Day’s Third Programme talk in which he asserted that ‘the only sensible policy for the United Kingdom is to withdraw from our over-extended commitments to the sterling area’, adding that it was ‘extremely easy to exaggerate the importance of the financial services [i.e. invisible earnings] provided by the City’. As for Shonfield, a trenchant News Chronicle piece (‘We should stop playing fairy godmother’) claimed that the sterling area contributed nothing ‘except a warm feeling that we still count for something pretty important in the world of international finance’, accused it of ‘taking away British capital for investment abroad, which we badly need to build more factories at home’, and argued that internationally it put Britain ‘in the position of a kind of buffer at the end of a long line of trucks’.
The orthodoxy, though, remained firmly the other way, and Shonfield quoted Thorneycroft himself stating recently in the Commons that the sterling area ‘brings us a great deal in the way of wealth, strength and prestige’. Such was also the line, in a lengthy analysis entitled ‘What Is At Stake’, taken by The Economist shortly before Christmas: ‘A major retreat from sterling’s present responsibilities, whether on capital account or on current account, cannot possibly be represented as an unequivocal advantage to this country. It would create a new set of troubles.’ Either way, the issue was live – much to the displeasure of the Bank of England’s deputy governor, Humphrey Mynors, who soon afterwards privately referred to the wartime gunner and intelligence officer in the British Army as ‘Andrew Shönfeld’.5
Meanwhile, a political crisis was coming to a head. On 22 December, after a long talk with Thorneycroft, Macmillan noted that ‘the Chancellor wants some swingeing cuts in the Welfare State expenditure – more, I fear, than is feasible politically’. The timing of the denouement was determined by Macmillan’s long-planned departure on Tuesday, 7 January on a lengthy Commonwealth tour. At Cabinet on Friday the 3rd, Thorneycroft found himself isolated over his demand that, in addition to an agreed £100 million of cuts in estimated civil and defence expenditure for 1958–9, a further £50 million of savings be found, including through abolishing family allowances for the second child. An aggrieved Macmillan wrote next day, ‘Thorneycroft behaved in such a rude & “cassant” way that I had difficulty in preventing some of the Cabinet bursting out in their indignation.’ Increasingly over the weekend he came to the view that ‘Nigel Birch & especially Enoch Powell’ were ‘egging him on’, with the former appraised by Macmillan as ‘a cynic’, the latter as ‘a fanatic’. By the end of Sunday’s lengthy Cabinet meeting, Thorneycroft was still refusing to give significant ground, while Macmillan for his part was adamant that the abolition of the second child’s allowance was ‘neither politically nor socially desirable – it would be contrary to the tradition of the Conservative Party’. It is tempting but probably mistaken to accept Macmillan’s picture of Thorneycroft as a pawn of Powell and Birch. Not only was Thorneycroft a substantial politician in his own right, with firm convictions, but Powell himself was insistent in later years that he and Birch were only ‘minor partners’ in the Chancellor’s decision. Tellingly, once Thorneycroft had taken the decision to resign, he told Powell and Birch, ‘that doesn’t mean you have to go too’.6 Both men, however, were just as determined to draw an unequivocal line in the sand.
In his resignation letter of the 6th, Thorneycroft flatly stated that ‘the Government itself must in my view accept the same measure of financial discipline as it seeks to impose on others’ and referred to the need for ‘politically unpopular courses’ – an implicit accusation that provoked Macmillan into replying: ‘This is not a matter of popularity. We have never shrunk from unpopular measures. This is a matter of good judgement.’ Birch’s resignation letter to the PM stressed even more emphatically than Thorneycroft’s that government expenditure must be reduced. ‘These reductions are certainly painful and distasteful,’ he declared, ‘but the electorate is more likely to forgive us for taking painful and distasteful measures which they will know in their heart are right than for lacking in courage and clear thinking.’ Macmillan himself, on a busy Monday, not only fulfilled the constitutional requirement of one Old Eton
ian (Thorneycroft) at No. 11 being replaced by another (Derick Heathcoat Amory), but found time to rehearse what he would say at London Airport the next day. Practice paid off. ‘I said a few words to the BBC, TV etc.,’ he duly noted, ‘about the Commonwealth trip and “our little local difficulties”. This will annoy a lot of people, but I think it will give them a sense of proportion.’7 ‘A little local difficulty’ passed into political folklore, a triumph of style over substance.
Modernity Britain Page 12
