No More Champagne
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About No More Champagne
About David Lough
Reviews
Table of Contents
www.headofzeus.com
To my mother Mary, who taught me to read and write
Contents
Cover
Welcome Page
Dedication
Introduction
Notes to the Reader
Prelude
Chapter 1: ‘Very little money on either side’:
The Churchills and Jeromes
Chapter 2: ‘How I long for you to be back with sacks of gold’:
Spendthrift Parents, 1875–94
Chapter 3: ‘We are damned poor’: Distant Army Duty, 1895–9
Chapter 4: ‘Fine sentiments and empty stomachs do not accord’:
The World’s Highest-Paid War Correspondent, 1899–1900
Chapter 5: ‘Needlessly extravagant’:
Bachelor, Author, MP, 1900–5
Chapter 6: No ‘rich heiress’:
Junior Minister and Marriage, 1906–8
Chapter 7: ‘The Pug is décassé’:
The HMS Enchantress Years, 1909–14
Chapter 8: ‘The clouds are blacker and blacker’:
The Legacy of War, 1914–18
Chapter 9: ‘It is like floating in a bath of cream’:
A Timely Train Crash, 1918–21
Chapter 10: ‘Our castle in the air’:
A Country Seat at Last, 1921–2
Chapter 11: ‘What about the 50,000 quid Cassel gave you?’:
Out of Office, 1923–4
Chapter 12: ‘No more champagne is to be bought’:
Chancellor under Pressure, 1925–8
Chapter 13: ‘Friends and former millionaires’:
Making – and Losing – a New World Fortune, 1928–9
Chapter 14: ‘He is writing all over the place’:
A Strategy for Survival, 1930–1
Chapter 15: ‘Poor Marlborough has been shunted’:
Trading Futures, 1932–3
Chapter 16: ‘The work piles up ahead’:
Summoning More Ghosts, 1934–5
Chapter 17: ‘We can carry on for a year or two more’:
Films, Columns and Debts, 1935–7
Chapter 18: ‘I shall never forget’:
Bracken and Partner to the Rescue, 1937–8
Chapter 19: ‘The future opens its jaws upon us’:
Struggling with History, 1938–9
Chapter 20: ‘All my arrangements depend on this payment’:
Early Burdens of War, 1939–41
Chapter 21: ‘Taxed to the utmost’:
Film Turns the Tide, 1942–5
Chapter 22: ‘A most profitable purdah’:
Minting the Memoirs, 1945–6
Chapter 23: ‘Agreeably impressed’:
Selling the Memoirs, 1946–8
Chapter 24: ‘The unfolding of time, life and fortune’:
Racing to the Finish, 1948–50
Chapter 25: ‘An insatiable need for money’:
Post-war Prime Minister, 1951–5
Chapter 26: ‘I shall lay an egg a year’:
A Third and Final Retirement, 1955–7
Chapter 27: ‘Good business’:
Sunset, 1958–65
Epilogue
Picture Section
Picture credits
Endpapers
Acknowledgements
Sources and Bibliography
Biographical Notes
Reference Notes
Index
About No More Champagne
Reviews
About David Lough
An Invitation from the Publisher
Copyright
Introduction
‘The only thing that worries me in life is money.’*1
Winston Churchill, 1898
THIS BOOK OWES its genesis to a provocative history teacher and to a scandalized grandmother. The first tried to stimulate independent thought in his fourteen-year-old pupils by describing Winston Churchill as ‘a romantic old windbag’; when I took his verdict home as my own, the second ordered my re-education by setting me to read each volume of Churchill’s official biography on its publication.
The early volumes of this work reveal how money problems weighed heavily on the young Churchill’s mind, but the trail becomes fainter in the later volumes as the public man takes centre stage. Only in 1998 when Churchill’s youngest daughter Mary published a collection of her parents’ private correspondence did it become clear that financial difficulties dogged him for most of his life.
Although Churchill’s many biographers have covered almost every imaginable angle of his life, none has tackled the story of his finances. Surprisingly most of the material needed to piece together the story survives and is open to researchers. One of Churchill’s endearing characteristics is that he happily left his own bank statements, bills, investment records and tax demands in his archive, despite the fact that they reveal evidence of debts, gambling losses and last-minute rescues. Some of his financial benefactors partially covered the trail by weeding out evidence from their own papers or by ordering their destruction, but it has been possible to fill most of the gaps. For example, Lady Soames kindly gave me permission, before her recent death, to examine those of her father’s bank statements which survive in his bank’s archive, although not in his own papers.
There are many reasons why the tale of Churchill and his money deserves to be told. It adds undeniable colour to a tapestry already rich in detail. It offers a human story of survival against the odds, although many of his difficulties were self-inflicted. It captures a time in British life when wealth was passing from a privileged few families of the landed aristocracy to a new class of entrepreneurs who were forging fortunes in businesses as varied as the railways, mining, newspapers and finance – the ‘plutocrats’, as they were known in their day. Unusually, Churchill had a foot in both camps: a grandson of the 7th duke of Marlborough, he was born a member of the aristocracy and enjoyed its trappings of expensive clothes, fine food, personal servants and the delayed payment of bills; yet he was equally at home among the new breed of entrepreneurs, many of whom were friends of his parents, especially of his talented and attractive American mother.
Churchill’s financial trials also had an impact on his politics. When his father Lord Randolph Churchill died aged forty-five, he left no immediate allowance for his children in his will and the twenty-year-old Churchill had to rely on his own talents. Within five years he had built up a capital sum equivalent to a million pounds today. This meant that he could make an early start in politics, but it also gave him a greater affinity with the attitudes of ‘new’ money rather than ‘old’ when party politics demanded he choose between them. His early defection from the Tory Party of his aristocratic friends to the Liberal Party of enterprise is explained at least as well by his personal experiences of the decade following his father’s death as it is by any abstract, ideological preference for ‘free trade’ over ‘protection’. A lasting sense of betrayal at this defection among many Tories contributed to Churchill’s loss of political office in 1915: his head was part of the price demanded by Tory leaders before they would join a wartime National Government.
Churchill’s Liberal colleagues, in contrast, suspected that he remained a Tory at heart. Their suspicions were confirmed when, some twenty years later, he rejoined the Conservative benches. Biographers variously attribute Churchill’s behaviour to a concern over social disorder following the war or to sheer political ambition, but there is a third possibility: Churchill had recently inherited his great-grandmother’s Irish estate, transforming the erstwhile entrepreneur into a proper
tied landlord for the first time in his life – a rentier, as his wife Clementine put it.
To her intense disappointment, Churchill consumed the entire inheritance within a decade – by underestimating the cost of converting his new country home at Chartwell, by gambling more than he ever let on and by losing heavily in the Wall Street Crash of 1929, an episode curiously omitted from his official biography.
These losses caused another financial impact on his political career in the 1930s: Churchill resigned from the Conservative front bench not just because he was out of sympathy with the party’s policy on future independence for India, but to devote sufficient time to writing books and churning out newspaper columns to keep the bank at bay. In return for his high fees as a journalist, Churchill’s friends among the press proprietors expected colourful copy that ran against the conventional political wisdom. Churchill delivered it, but the trenchant journalism made his political rehabilitation more difficult.
Several times during the decade he held his journalist’s pen in check while ministerial changes were in the air, but neither Prime Minister Stanley Baldwin nor his successor Neville Chamberlain was tempted to invite such an awkward talent back to the cabinet table at a time when the electorate preferred peace to adventure.
A common thread of exceptional risk-taking unites Churchill’s financial dealings and his political career. This was never more clearly on display than in the 1930s, when he was a married man in his fifties with four dependent children and already borrowing today’s equivalent of more than £2.5 million ($3.75 million). Yet, during the decade, he gambled heavily enough on his holidays to lose an average of £40,000 each year in today’s money.
I have never encountered risk-taking on Churchill’s scale during my career of advising people about their finances, including such natural risk-takers as entrepreneurs and politicians. I have sought an explanation for it in the growing body of literature that analyses Churchill’s mind. However, this is inconclusive as to whether his appetite was simply a facet of a wonderfully extravagant personality or whether it pointed to a more complicated state of mind. Churchill himself referred to periods when the ‘black dog’ of anxiety or depression struck him; this book tells of contrasting phases during which he gambled or traded shares and currencies with such intensity that he appeared to be on a ‘high’ – devoid of inhibition, full of self-confidence and energy, but prone to ‘risky behaviours’. The truth is that we will never know whether Churchill’s addiction to risk was a matter of personality or state of mind; by today’s standards of diagnosis, a psychiatrist would require a long, first-hand conversation with his subject before reaching a conclusion – and sadly Churchill is not available.
Whatever the driving force behind the risks he took, Churchill left behind him a trail of financial failures that required numerous rescues by family, friends and acquaintances, the story of which I tell in these pages. One rescuer alone wrote out two cheques, together worth more than £1 million ($1.5 million) today. He did so only because he admired Churchill’s political courage, another testament to the links between Churchill’s political career and his finances.
Throughout the Second World War many of those around Churchill worked hard to tame his risk-taking, their success ultimately evidenced by his willingness to delay the Allied invasion of Normandy until the summer of 1944. Churchill’s attitude to his own finances underwent a similar conversion over the course of the war, during which he devoted more time to his private affairs than is often realized. Having begun the war with substantial debts, he finished it with today’s equivalent of £4 million ($6 million) in his bank account. The secret of this turnaround lay not in books, as is often supposed, but in films.
The remarkable story of Churchill and his money only makes the man himself more fascinating. In an age when we demand that our politicians are paragons of financial virtue it is salutary to discover that one of the most successful political figures of the twentieth century ran up huge personal debts, gambled heavily, lost large amounts on the stock exchange, avoided tax with great success and paid his bills late.
*1 Letter from Winston Churchill to his brother Jack, 16 February 1898 (CHAR 28/152/148, Churchill Archives Centre).
Notes to the Reader
Biographical footnotes: biographical footnotes are given in the main text only if the person continues to play a role in Churchill’s financial life. Notes on those people who feature in Churchill’s public life are on page 432, before the Reference Notes.
‘Conservative and Unionist’ Party: the Tory group in British politics became known officially as the Conservative Party after 1845, although many people still used the term ‘Tories’ as a form of shorthand. Between 1895 and 1905 the Conservative Party formed governments with the help of Liberal Unionists; from 1909 it changed its name to the Conservative and Unionist Party. Until after 1922, when the Irish Free State came into existence, party members were most often known as Unionists. For simplicity, they are called Conservatives in this book – or Tories for short.
Monetary values: all amounts are quoted in the currency and the value of their day, as Churchill encountered them. A simple formula appears at the beginning of each chapter (and abbreviated at the top of each page) to help convert these amounts to an approximate value today.
This value can only be very approximate. Statistical techniques have changed over the period concerned, which exceeds 150 years. The conversion factors given in this book are also ‘rounded’ so as to help with quick mental arithmetic (rounded to the nearest 10 down to x50, to the nearest 5 down to x25, then to the nearest whole figure). Moreover no single multiple can cover the different rates at which different items of spending inflate in price: generally, manufactured goods have risen in price by less than the inflation multiple given, while the value of land, housing and wages has risen by more than the inflation multiple shown. Nevertheless, the conversion factors will give the reader a framework within which to appreciate the size of the sums Churchill earned, inherited, lost or spent.
Thus, in chapter 11, an American reader who wishes to convert Churchill’s gambling losses in 1923 – £2,000 - should use the chapter’s exchange rate ($5 = £1) to convert the sum to $10,000; then multiply by the chapter’s US inflation factor (x 15) to reach $150,000 as today’s approximate equivalent.
Likewise, in chapter 13, a British reader who wishes to convert Churchill’s losses in the Wall Street Crash of 1929 – $75,000 – should use the chapter’s exchange rate (also $5 = £1) to convert the sum to £15,000: then multiply by the chapter’s UK inflation factor (x 50) to reach £750,000 as the modern equivalent.*1
*1 The conversion factors are derived from statistics published by the United Kingdom Office of National Statistics (Composite Price Index, 1750-2003, Economic Trends 604; 2004); by the Bank of England (Three Centuries of Data, 2010); and by the United States Bureau of Labour Statistics (Historical Statistics of the United States, volume 3, Consumer Price Indexes 1774-2003, Bilateral Exchange Rates in Europe 1913-99; 2006).
Prelude
CHURCHILL TOOK OFFICE as prime minister on 10 May 1940, the same day that German forces invaded Holland, Belgium and Luxembourg. Within a week his French counterpart Paul Reynaud told him that France’s battle was lost, while Britain’s professional army faced encirclement on the country’s northeast coast. Shuttling back and forth across the Channel in an attempt to persuade the French to fight on, Churchill had to confront another unpleasant truth closer to home: he was running out of money to pay his household bills or his tax or the interest on his large overdraft, which was due at the end of the month.
He asked Lloyds Bank for a special statement of his account and gave it to the young magazine publisher Brendan Bracken, asking his fixer to arrange a rescue as discreet as the one he had managed two years earlier, just as Hitler had launched his Anschluss against Austria. Bracken took it to the same man who had helped then, the Austrian-born banker and businessman Sir Henry Strakosch, who had asked for nothin
g in return and had kept the secret. On 18 June, the day after 4,000 British troops lost their lives when their ship sank off the French coast in the worst maritime loss in British history, Sir Henry wrote out a cheque for £5,000 (equivalent to £250,000 today). He disguised the trail by entering Brendan Bracken’s name as the payee, but Bracken endorsed it on to Britain’s embattled prime minister.
The amount reached Churchill’s account on 21 June. Thus fortified, he paid a clutch of overdue bills from shirt-makers, watch-repairers and wine merchants before he turned his attention back to the war.
1
‘Very little money on either side’
The Churchills and Jeromes
Exchange rate: $5 = £1
Inflation multiples (1850): US x 30; UK x 100
IT WAS IN August 1873, at an afternoon ball on board the HMS Ariadne, then at anchor off the Isle of Wight for Cowes Week, that two families from very different worlds collided. Lord Randolph Churchill, the younger son of the 7th duke of Marlborough, had been a natural choice on the guest list of the prince and princess of Wales to meet Grand Duke Cesarevitch of Russia and his duchess. More surprising was the inclusion of Mrs Clara Jerome, the American wife of a colourful Wall Street entrepreneur. It was true that she had featured at the Parisian court of Napoleon III, until the self-styled emperor had been driven from the capital three years earlier, but Mrs Jerome’s place on the royal guest list probably owed more to a shortage of suitable young females. Staying with her for the season in a rented house at Cowes were her three daughters Clarita, Jeannette and Leonie, the first two over eighteen and therefore eligible to attend.
It was Jeannette, better known as Jennie, who caught the eye of Lord Randolph Churchill across the ship’s wardroom that afternoon. She was slim and dark, hinting at her mother’s Indian background; he was slight and narrow-shouldered with the pale, almost translucent skin of a typical Churchill male. After one dance together they spent the rest of the afternoon deep in conversation, which came easily to Jennie, who had been educated in New York and Paris, but which startled Lord Randolph, whose six sisters’ education had been limited to the attentions of a governess inside the confines of the ducal home at Blenheim Palace, although he himself had read history and law at Oxford.