by David Lough
The new investment policy lasted a month before Churchill abandoned it: he sold three of his new shares for gains of up to 50 per cent, then bought and sold Western Union shares four times within a fortnight. Meanwhile, Vickers da Costa had swung its market view behind Churchill’s, suggesting to all of its clients in a mid-August letter that the market had reached a major turning point: ‘The establishment of British credit,’ it argued, ‘and the reliquefication of the American banking position, due to the activities of the Federal Reserve Board, have re-established confidence in the survival power of the capitalist system.’21
Churchill accelerated his switch towards the North American market, spending another $30,000 on buying shares in Otis Elevators, Texas Gulf and his old favourite Montgomery Ward, which he traded sixteen times within four days. Dealing commission alone cost £300 and most of the money was borrowed,22 but Cecil Vickers was moved to describe his client’s investment style as ‘very cosmopolitan’ when he enclosed separate accounts for London, American and Canadian holdings.23
Churchill’s surge of interest in trading and investment that summer did not slow down his literary progress. Looking through his old articles convinced him there was enough material for three short books, rather than two: ‘The first Thoughts and Adventures requires no new writing at all,’ he told Butterworth. ‘The second American Impressions (or some better title) still wants four articles I have to do for Collier’s this year. The third, Notable Contemporaries, will require anything from 16,000 to 20,000 words of new composition.’24 The recently retired Eddie Marsh agreed to edit each book for the same £20 honorarium that he had just earned for drafting Churchill’s Daily Mail article about the Royal Academy’s Summer Exhibition:25 a literary ghost was in the making.
Churchill managed to settle two important newspaper contracts for 1933. His mention to Esmond Harmsworth of ‘approaches’ from other newspapers had the intended effect of producing a longer contract with the Daily Mail.26 Harmsworth was relieved that Churchill had begun to turn the column’s focus from India to Germany, in particular the new German chancellor’s call for reduced war reparations, which his columnist had described as nothing more than ‘mush, slush and gush’.27
Churchill’s Daily Mail contract ruled out writing a political column for any other British newspaper, but his old friend George Riddell (now Lord Riddell) overcame this problem by suggesting a non-political series for the News of the World, which boasted 3.5 million readers on each Sunday. Riddell invited Churchill to name his own price if he would retell popular stories, such as Ben-Hur and Uncle Tom’s Cabin, in his own words.28 Naming as high a price as he dared, of £2,000 for six stories, Churchill also proposed an ‘unlet space’ in his programme during the spring of 1933. To his delight, Riddell not only accepted the fee but offered an extra £500 if Churchill delivered the stories before the end of 1932.29 Churchill accepted Riddell’s terms, but only after he had secured Eddie Marsh’s agreement to produce a ‘foundation’ of each story at £25 a time. ‘If you would like writing more on any of them, all the better,’ Churchill added.30
Meanwhile, Curtis Brown’s Nancy Pearn*2 had managed to resurrect interest in the plan for a ‘history of the English-speaking peoples’. It came from Newman Flower,*3 chairman and now the main owner of publishers Cassell & Co., which he aimed to reposition from its niche in publishing reference works to the industry’s mainstream. Flower had heard from Charles Scribner of Churchill’s high asking price, but he felt that Churchill would be a worthy prize for Cassell and merited a premium price. Instead of the traditional licence and royalty, Flower proposed an outright purchase of the copyright, which would provide Churchill with tax advantages: it would be treated as a capital transaction and the British government did not tax capital sums. As the main publisher, Cassell would bear the risks of selling on the newspaper and book rights to its counterparts overseas. Churchill provisionally agreed to Pearn’s suggested price of £20,000 late in July, but he wanted a face-to-face meeting with Flower to settle the final details.
First, however, came a long-planned research trip to Marlborough’s battlefields.31 When he and his team left on 27 August, Churchill took along the proofs of the first four Marlborough chapters, printed in his favoured format of three pages alongside each other on a single sheet. ‘This enables the structure to be much more easily shaped,’ he told his new publisher. ‘You must not however suppose that I attach any finality to the proofs because they are printed. I always knock them about a great deal and incorporate the criticisms of many who read them.’32 It was an expensive method, but Churchill was prepared to pay the author’s usual contribution towards the cost of corrections.
While they were away, Churchill had arranged for his stockbrokers to send a daily cable of New York share prices in a pre-ordained sequence, but otherwise he left the journey’s logistics to his researcher, Colonel Pakenham-Walsh. The party crossed the Channel on an ‘autocarrier boat’, so that Churchill could continue to Brussels in a Rolls-Royce belonging to his friend Frederick Lindemann,*4 a professor of physics at Oxford University. Churchill had given Pakenham-Walsh prior guidance on the accommodation standards he expected in Brussels: ‘My wife and I, two rooms and two bathrooms adjoining and a sitting room, my daughter, Sarah, one room and a bathroom preferred. Professor Lindemann a good room and a bathroom, not necessarily en suite, but as near as possible.’33
As the party toured Ramillies, Oudenarde and Blenheim, Marlborough’s heroics had to vie for Churchill’s attention with contemporary events in Germany and on the American stock market. In recent elections, Adolf Hitler’s National Socialist Party had attracted 13.5 million votes and 230 Reichstag seats, just short of a majority. Initially excluded from government, Hitler stepped up attacks on his political opponents and on Jewish property until he was offered the vice-chancellorship – he turned it down. Churchill followed these developments from each staging point of his battlefield tour, during which Cecil Vickers also sent two warnings that share prices in New York had reached levels that were ‘impossible to justify’. By the time the second message reached Churchill, he was unable to reply: he had contracted typhoid, which required ten days’ of expensive treatment at a Salzburg sanatorium.34
Churchill’s illness delayed the launch of Thoughts and Adventures, which was ready at the printers but missing an author’s preface. Eddie Marsh was persuaded to ghost one which Churchill described as ‘delightful’ and Marsh himself thought ‘rather a good pastiche!’35 Churchill next suffered a relapse in his recovery at Chartwell and moved for several weeks to a London nursing home which was conveniently close to Buck’s Club, allowing the regular delivery of oysters and champagne at lunchtime. Churchill’s unaccustomed leisure allowed him to advance Marlborough by 20,000 words, but his ancestor’s progress through his career failed to keep pace. As a result Churchill suggested to Harrap that they should split the book into two volumes: since the author had not asked for any extra money, Harrap readily agreed.
Churchill’s illness twice delayed the meeting with Newman Flower to discuss A History of the English-Speaking Peoples, but his series of stories for the News of the World series made good progress once Eddie Marsh had mastered the technique of storytelling. Churchill had to return Marsh’s first effort at The Count of Monte Cristo: ‘We are not writing great stories summarized,’ he explained from his bed, ‘but great stories retold.’36 Unusually, three tales were delivered to the newspaper at the end of October, ahead of schedule. The decision by the News of the World to start using them straightaway then caused a problem: Churchill had sold the series for $1,000 per tale to the Chicago Tribune, which expected to publish simultaneously with the News of the World. Accordingly the Chicago Tribune had cleared a space in its schedule for January 1933 and was unwilling to move. Churchill had to intervene personally with Riddell, first to secure a postponement by the News of the World and then to persuade him to yield the Canadian rights that the Chicago Tribune insisted must be theirs.
Nevertheless, each tale earned Churchill almost £700 worldwide, before Marsh collected his £25 honorarium. ‘I trust that we may continue in the field of journalism, or shall we say literature, that collaboration which has become so famous in politics,’ a delighted Churchill wrote to Marsh.37 Three weeks later the News of the World offered a second series: ‘They like them so much that they have ordered another half-dozen,’38 Churchill told Marsh, asking him at the same time to edit the latest batch of his drafts for Collier’s. ‘They are awful stuff I fear, but it is what they like and what they pay for,’ he added, enclosing a draft of Land of Corn and Lobsters. ‘They help to pay the American debt – with a vengeance.’39
It was the end of October 1932 before Newman Flower visited Chartwell and the two men met face to face. Churchill had recovered sufficiently to run rings around the publisher. While he was ready to accept Cassell & Co.’s offer of £20,000 ‘in broad principle’, he wrote to Flower afterwards, some last-minute details still needed settling. He would ‘require three years from April 1934 to complete the work, together with a right if substantial progress should be made of a further two years’ – in other words almost seven years in total. Nor did he feel that he should have to pay Curtis Brown’s commission of £2,000. Although it was true that Nancy Pearn had introduced them, ‘the plan of this book and various negotiations were very far advanced before Curtis Brown came into it in any way’, a point that Churchill drove home by enclosing a copy of Eyre & Spottiswoode’s first offer. He was in no hurry and was quite prepared to take longer to make his own arrangements. ‘Nevertheless,’ he continued, ‘I should be willing to discuss the contract in detail with you upon the basis that I received a net £20,000 as a lump sum... and that you arrange with Curtis Brown what commission they are to receive and defray it, relieving me of all charge.’40
Flower asked for a second meeting before he put final terms to his board of directors, but he was told that that was not the way Churchill did business. Churchill would make a decision only when he had a firm offer and then it would be a quick one. Predictably, the battle of wills went Churchill’s way: Cassell absorbed all of Curtis Brown’s commission, extended the book’s deadline to April 1939 and agreed to pay Churchill £1,000 on signature with another £1,000 a year later. Another £3,000 would follow ‘during the writing of the work’ and a final £15,000 would be split between delivery of the manuscript and publication.
Churchill’s illness did not put a halt to his stock market activity. Ignoring Cecil Vickers’ warning, he made more purchases in September 1932, beating a retreat only on advice from Bernard Baruch a month later. ‘Got completely out of market just below top. Am now waiting for re-entry. How good your judgement was,’ he cabled from his nursing home.41
For much of his convalescence, Churchill was keen to reinvest in shares in order to back his hunch that the American presidential election would prove a turning point for the country’s sick economy. When Baruch advised him to stay clear he turned to the currency markets instead. Agreeing the codename ‘Winch’ with his American bankers, he bought $20,000 forward for delivery in January 1933, then took modest profits a fortnight later.42
Once he was able to leave the nursing home, the Churchills moved into Morpeth Mansions, a four-bedroomed flat in Westminster, which they had leased the previous winter.43 Enlarging Morpeth Mansions’ entertaining room and creating a large study on the top floor had taken almost a year. The full cost of running two households had yet to emerge when the couple began to consider how best to provide a dowry for the wedding of their eldest daughter Diana. She was to marry the son of one of Churchill’s benefactors, the South African mining financier Sir Abe Bailey. Unfortunately, years of economic depression had left him only able – or willing – to contribute assets providing an income of £600 a year to the marriage settlement.
‘I am going thro’ the worst time of my life,’ Sir Abe explained to Churchill. ‘However I expect with ordinary luck to get through without having to sell valuable assets – I hear on all sides of very rich people losing everything.’44
Churchill managed to contribute £200 a year by transferring to his daughter a one-fifth share of his father’s will trust; at the same time advancing two-fifths to Randolph earlier than planned to help him clear fresh debts. Churchill’s own income did not drop, because the lawyers had presciently worded the Elder Children’s Trust in 1921 so that he would be able to claw back money from it if he used his parents’ trusts to pass money to the children.45
The dowry was neatly negotiated, but 1932 had proved a difficult year: Churchill’s bank overdraft had now swollen to £7,000. It was not that his earnings were low: at over £15,000 gross during the tax year that had ended in April 1932, he remained placed among the country’s top 10,000 income earners, just as he had been before the Great War. The problem was that his spending during the year had reached a record £30,000, including £6,000 needed to cover investment losses.46
Churchill escaped to the south of France as the New Year guest of the duke of Westminster. The duke had rented a chateau, partly for its hunting and partly for the modest journey required to reach the nearby Casino G. Du Chaulier. There Churchill withdrew 75,000 francs in cash, but returned home with only 3,250 francs. It was not the best prelude to his first meeting with his new bank manager at Lloyds.47
An ailing William Bernau had been replaced by Stanley Williams, who came from a different school of banking. He formally requested ‘the favour of early attention’ to Churchill’s overdraft, which had already exceeded its limit before the casino losses. Churchill asked Williams to be patient and to wait until Cassell’s first advance for A History of the English-Speaking Peoples arrived. However, the advance failed to come before the February housekeeping allowance was due to be sent to Clementine. Anxious not to have to explain the reasons for its non-appearance, Churchill pleaded with Williams for a few days’ grace. It was granted, but the scare did trigger a third Chartwell economy drive.48
Franklin D. Roosevelt, the new American president, had been elected in November 1932 on a platform of economic reform to fight the Depression. Churchill watched America anxiously, convinced that the stock markets were about to reverse four years of falling prices and help him break the cycle of debt that he could not escape through writing alone.
Reshuffling his holdings during January and early February of 1933, Churchill left his brokers instructions to take profits once each holding had reached the expected gains of 10 per cent. But prices continued to fall. Halfway through February Churchill finally admitted defeat. He sold all his shares in New York and repatriated the proceeds of £2,500 to bring his London overdraft back under its limit.49 Just two weeks later, on the announcement of Anglo-American monetary talks, Vickers da Costa predicted that the markets were about to turn – and this time it was right. In no mood to listen, Churchill missed out on March’s strong share rally.
On 5 April 1933 Roosevelt announced the end of the US dollar’s link to gold. He gave American citizens four weeks to surrender all but nominal quantities of their gold to the US Treasury at a discount of more than 40 per cent to the new price set by the government.*5 Roosevelt had ‘drawn a coach and horses through the sanctity of contract’, Brendan Bracken complained,50 but Churchill was quick to appreciate the significance of the moment which he had long been predicting: for good or ill, it would now be politicians rather than central bankers who called the tune on economic policy.
Churchill turned first to the currency futures market, which required no capital in order to participate. He sold dollars in the expectation that the currency would weaken against sterling, which had broken its own link to gold three years earlier. Adding a bet against the French franc for good measure, Churchill carried on selling dollars as the exchange rate weakened from $3.52 to each £ to $4.20 in June.51 Having made profits of more than £800 from his early contracts, he added a bet against the Canadian dollar, so that by July he was ‘short’ of three different currencies against the p
ound.52
In May Churchill managed to make arrangements to return to trading shares: Vicker da Costa’s associate Frazier Jelke would lend three-quarters of each purchase in New York while Vickers would make up the balance of one-quarter in London: every dollar that Churchill invested was borrowed. His loan from Frazier Jelke peaked at $52,000 in mid-June, before falling back by the end of the month to $16,000.53 Wholly dependent on borrowed money, Churchill did not dare expose himself to the markets for long, so he traded in and out of a few selected shares, where he thought he understood the usual price ranges. It was an investment approach ill-suited to a time when many share prices doubled within six weeks.
In any case, Churchill found it difficult to keep track of his results. To help him, Vickers prepared a loose-leaf book with a page for each share; ‘closed’ positions were indicated in black or red ink and ‘open’ holdings in pencil. This book reveals that Churchill earned profits of only £935 during the stock market’s main recovery between April and July 1933, and that was before taking into account the cost of borrowing from his brokers.54 In August both shares and currencies reversed direction, so Vickers da Costa had to ask Churchill for a fresh cash injection of £1,850.55 Churchill’s remaining shares in London and New York combined were worth only £625.56
Churchill had been trying to minimize the distractions of journalism all summer so that he could finish the first volume of Marlborough in time for its autumn launch. The most effective method, he discovered, was to set himself a tariff of £100 per 1,000 words for any fresh assignments, although the need for cash sometimes took precedence. He accepted, for example, The Strand’s offer of only £200 to retell a Shakespeare play in 4,000 words – on the express condition that he was allowed to choose Julius Caesar, because he knew it well.57
