by David Lough
Three years later, in 1971, Jock Colville, by then a trustee, approached the cabinet secretary of the day, Sir Burke Trend, about a possible sale of the papers. Colville explained that young Winston was keen for the papers to end up at Churchill College, but that he had little money of his own as a result of his father’s extravagant spending.12 Colville had tried but failed to find a wealthy American prepared to buy the papers, then to deposit them in Cambridge; he therefore asked the government to step in and pay ‘say £100,000 or perhaps £120,000’. He went on:
Sotheby’s, as very rough estimate, say that they might very well fetch something in the neighbourhood of £2 million, and even if one assumes that half of them, being state papers, could never be sold, the remaining half might well on this basis be worth £1 million.13
In reply, Sir Burke explained that – ‘aside from any question of who actually “owns” the papers’ – no public funds were available. The decision might lead to an eventual sale, Colville warned.14
There matters rested until seventeen years later in 1988 when Martin Gilbert finished writing the eighth and last volume of Churchill’s official biography. The head of the Cabinet Office’s Historical Section, Patricia Andrews, decided that the papers must be opened up to authorized access, as stipulated in the original estate duty exemption. However, she was shocked by the response received from Peregrine Churchill, the son of Churchill’s brother Jack and by then a trustee. He explained that he had ordered the pre-war papers to be moved to Churchill College to improve their care on becoming a trustee in 1980, but he went on to register his concerns about the funding of both the college and its archive centre. As a result he hinted that the trustees were considering other plans for the papers’ future.
The government’s impression that a sale might be in the offing again was reinforced when young Winston stepped down as a trustee, to be replaced by a London solicitor, Ian Montrose, whose correspondence Andrews of the Cabinet Office soon described as ‘hostile’. In 1989 the new trustees asked Sotheby’s to conduct a fresh valuation of the Churchill papers and the Cabinet Office heard unofficially before the end of the year that the trustees hoped to sell to a public body such as the British Library to avoid estate duty; by May 1990 the government heard that the asking price could be as high as £15 million.15
There was a lull in 1990 while the trustees reorganized the trust to complete their tax preparations for a sale: young Winston now relinquished his direct interest in favour of a series of family discretionary trusts. In March 1991, when the trustees finally broke their cover, they did so from an unexpected quarter: they chose a recently retired senior minister, Norman Tebbit, to forward a memorandum to the prime minister of the day, John Major. It based their case for a sale on the trustees’ concerns about the ‘modest’ scale of Churchill College’s funding. It followed that, if they followed Clementine’s lead in simply gifting the papers to the college, the college might one day sell them.
It would be better, they argued, if the government bought the papers and gifted them permanently to either the British Library or Churchill College. Norman Tebbit’s covering letter told the prime minister that he understood the price would not be ‘huge’.16 However, at an unofficial lunch with the trustees soon afterwards, the cabinet secretary Sir Robin Butler heard that they were looking for a price of £12.5 million, based on Sotheby’s valuation of the entire set at £20 million (less a deduction for estate duty, plus the addition of a douceur). They told Sir Robin that their preference was to sell to the government or to a private buyer, who would redeposit the papers with Churchill College, but if both possibilities failed they planned to auction the papers at Sotheby’s.17
The government wished to keep all Churchill’s papers together, whether pre- or post-war, public or private, but it remained unwilling to spend public money on buying the ‘state’ papers without testing the trustees’ claim to ownership in the courts. It commissioned a legal opinion from two senior counsel which made uncomfortable reading: the disputed documents had certainly started life as ‘state’ papers, they said, and should never have been transferred by Churchill to the Chartwell Trust in 1946. However, the government had not lodged any objection then or since, so the case for starting now, some forty-five years later, was ‘but weakly arguable’.18
In 1993 hopes briefly rose that Conrad Black, the owner of The Daily Telegraph, would step in as a private buyer, but this plan fell through. The government steeled itself to start legal proceedings, while at the same time it encouraged private negotiations between the trustees, Cambridge University and the National Heritage Memorial Fund. The Major government was introducing a new National Lottery from which the Fund was due to receive some of the money raised. By the end of 1994, after negotiations lasting almost a year, all parties agreed a provisional price of £12.5 million, expressed as covering Churchill’s private papers only, while the ‘state’ papers were gifted separately without payment.
Officially, Cambridge University acquired the collection with the help of lottery money. It then passed the papers to a new Sir Winston Churchill Archives Trust, which reunited them with the post-war papers at Churchill College, Cambridge. There they remain in perpetuity, freely available to researchers. Churchill’s contribution to his family’s fortunes continues, however: the purchase price of £12.5 million did not include ownership of the copyright of the papers, which will continue to reward his heirs until it finally expires on 1 January 2039.
I have told the story of Churchill and his money without judgement. Clearly some of his actions or omissions would not survive scrutiny by the standards of transparency expected of today’s politicians. During his early years as a minister, for example, Churchill accepted gifts of cash and kind from Sir Ernest Cassel; while responsible for South Africa’s government as colonial secretary after the First World War, he held on to his South African mining shareholdings; and within a year of losing office in 1922 he earned a substantial fee from two oil companies in return for lobbying his former ministerial colleagues. After the Second World War, while leader of the Opposition and then prime minister, he accepted interest-free loans from a national newspaper, The Daily Telegraph.
A more interesting question is whether Churchill would have survived scrutiny by the standards of his own day if the details of his finances had become more public. Before the First World War, cartoonists lampooned Churchill for supporting the Liberal government’s attacks through taxation on the wealth of the landed aristocracy, while he repaired regularly to Blenheim Palace for weekends of luxury. However, the press largely exempted Churchill from the charges of ‘money corruption’ which it pursued vigorously against other government members, notably Lloyd George.
The way in which Churchill dealt with the large, personal cheques sent to him before the First World War by his constituent James Caird tends to vindicate this judgement of the press. There is no sign, either, that Churchill ever lined his own pocket while controlling large amounts of public expenditure as First Lord of the Admiralty or minister of munitions, at the beginning or end of the First World War. The evidence of Churchill’s bank accounts is that he did not take money from Jewish groups in return for his anti-Nazi campaigning during the 1930s, although there have been claims to the contrary. What might have caused him political trouble, had it been better known at the time, was his tax-paying record.
Until he was thirty years old Churchill was content to subscribe to the prevailing Victorian view that the recently introduced income tax was fairly set and collected: even for those at the top of the tree, the combined rates of direct and indirect taxation seldom exceeded 20 per cent until 1906, when the Liberal government came to power. Furthermore, Churchill fully supported its introduction in 1908 of a ‘super-tax’ for higher earners, possibly because it only added 2.5 per cent on top of income tax rates of less than 5 per cent – and he was not earning enough to fall within its bracket at the time.
His attitude to taxation changed when income and super-tax
rates rose above 50 per cent during the First World War and, more importantly, when they stayed there afterwards. This coincided with a period when Churchill did not have the funds to pay his tax bills as they fell due, because he had already spent the money: it was during the 1920s that Churchill began a battle of wits with Britain’s tax authorities that was to last for the rest of his life.
Most of his wealthy contemporaries played a similar game, but Churchill subtly added the power of his public position. Twice while chancellor of the exchequer, for example, Churchill summoned to his personal aid the chairman of the Inland Revenue, a government agency for which chancellor he was politically responsible. During the Second World War, Churchill was certainly economical with the truth when he declared to the Inland Revenue the date of his retirement as an author and the nature of his Sunday newspaper deals.
After the war, when taxes on income reached an eye-watering 97.5 per cent, Churchill rarely considered any business proposition unless his advisers assured him that he could present it to the Inland Revenue as a capital receipt, which would escape tax, rather than as income. The Inland Revenue had learned by experience during the war that, if Churchill exercised his right as a taxpayer to challenge its ruling in private before a tribunal of lay commissioners, he was likely to win the benefit of any doubt. It therefore tended to shy away from a direct challenge to the tax treatment which Churchill and his advisers submitted. Its real weapon was to threaten to appeal if it lost at the tribunal, because then the next stage of proceedings would be open to the public. On the one occasion after the war when the Inland Revenue threatened to take this step, Churchill retreated immediately, under protest, and paid the disputed amount of tax.
It was a rare victory. That Churchill emerged the winner from almost every other skirmish with the taxman over forty years is ruefully attested by a thick Inland Revenue file at the National Archives, which contains the records of its dealings with the greatest British leader of the twentieth century. The file was recently declassified; intriguingly, a second remains closed until 2040.
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Picture Section
Picture credits
Endpapers
Acknowledgements
Sources and Bibliography
Biographical Notes
Reference Notes
Index
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About David Lough
An invitation from the publisher
Picture Section
1. Frances Vane, marchioness of Londonderry and Churchill’s paternal great-grandmother, whose Garron Tower estate in Ireland he unexpectedly inherited in January 1921, almost sixty years after her death.
2. The ‘fabulous’ Leonard Jerome, Churchill’s maternal grandfather and an early Wall Street adventurer, late in his life, circa 1880.
3. The Jerome family mansion on the corner of Madison Avenue and 23rd Street, New York. It provided the security for Leonard Jerome’s contribution to the marriage settlement of Churchill’s parents.
4. Lord Randolph Churchill and Jennie Jerome, Churchill’s parents, shortly before or after their wedding, 1874.
5. Winston (left, aged fifteen) and Jack Churchill (right, aged twelve) at Canford House, the home of their generous aunt Cornelia Spencer Churchill, Lady Wimborne, 1892.
6. Churchill outside The Morning Post’s tent, reporting for the newspaper on the Boer War while ‘embedded’ with the South African Light Horse, 1900.
7. Sir Ernest Cassel in 1906. An immigrant from Germany, next-door neighbour of the Churchills and leading City of London banker, Cassel acted as a financial adviser (and benefactor) to Edward VII and Churchill.
8. Edward Marsh, Churchill’s long-serving private secretary, occasional literary ghost and frequent copy-editor. In his own right Marsh was a patron of artists and published anthologies of the ‘Georgian poets’.
9. Churchill, home secretary, riding to George V’s coronation with his mother, Jennie, June 1911. Clementine was spared the coach journey because she had given birth to Randolph a month earlier.
10. Churchill and his fiancée, Clementine Hozier, shortly before their wedding, September 1908.
11. Churchill, president of the board of trade, with David Lloyd George, chancellor of the exchequer, at the height of their political intimacy, circa 1910.
12. Churchill, First Lord of the Admiralty, inspecting bare-footed trainee sailors, 1912.
13. Churchill, colonel of the 6th battalion of the Royal Scots Fusiliers, with his second-in-command, Major Sir Archibald Sinclair at Armentières on the Western Front, 1916.
14. Churchill’s principle literary and film patrons: Thornton Butterworth, London, 1938
15. Churchill’s principle literary and film patrons: Charles Scribner III of Charles Scribner’s Sons, New York
16. Churchill’s principle literary and film patrons: Newman Flower of Cassell & Co.
17. Churchill’s principle literary and film patrons: Alexander Korda, founding owner of London Film Productions.
18. An extract from Churchill’s bank statement, showing repeated cash withdrawals from the Casino de Cannes in France, January 1923.
19. A characteristic Churchill ‘forecast’ of his income, expenditure and bank balance, covering the last quarter of 1923 and first half of 1924.
20. The Prince of Wales, later Edward VIII (left) with one of Churchill’s financial mentors and benefactors, the mining financier Sir Abe Bailey (right), 1925.
21. Churchill boar-hunting in Normandy as a guest of the duke of Westminster, accompanied by his son Randolph (left) and Coco Chanel (centre), the duke’s girlfriend at the time.
22. Churchill with his son Randolph (left), nephew John (centre left) and brother Jack (right) during the family visit to Canada and the US, 1929.
23. During the same journey, Churchill with his nephew John (far left), son Randolph (second left), the earl of Feversham (centre) and Bernard Baruch, at Chicago, bound for New York, shortly before the Wall Street crash, October 1929.
24. Maxine Elliott, American actress and frequent hostess of Churchill at her château in the south of France, circa 1920.
25. Sir Henry Strakosch, mining company chairman, part-owner of the Economist, a Churchill informant on German rearmament – and twice Churchill’s financial saviour, 1931.
26. Churchill leaving for the House of Commons with Brendan Bracken (right), Churchill’s ‘honorary man of business’, in which capacity he twice arranged Churchill’s financial rescue, April 1939.
27. Map of Churchill’s Chartwell farming empire (after the purchase of Chartwell and Bardogs farms, but before the purchase of Parkside), 1947. Chartwell itself stands at the centre left.
28. Emery Reves, Churchill’s pre-war press agent and post-war negotiator for the sale of his war memoirs; with his partner Wendy, later his wife, Venice, circa 1950.
29. An analysis by Churchill’s secretaries of his households’ consumption of champagne, wine and spirits during April and May, 1949.
30. Churchill at Chartwell with Joyce Hall (standing, right) of Hallmark Cards, Mrs Hall (seated, left), their son (standing, left) and Anthony Moir (standing, centre), Churchill’s solicitor and tax adviser, July 1950.
31. Churchill helped off of Aristotle Onassis’ yacht Christina by Onassis (left) and Churchill’s bodyguard, Edmond Murray (right), August 1959.
32. Churchill surveying his Chartwell domain, as captured by photographer Phillippe Halsman, 1947.
Picture credits
1. Frances Vane, marchioness of Londonderry, Churchill’s great-grandmother (National Portrait Gallery).
2. Leonard Jerome, Churchill’s maternal grandfather (The Granger Collection/Topfoto).
3. The Jerome family mansion on Madison Avenue in Manhattan, New York (Library of Congress).
4. Lord and Lady Randolph Churchill, 1874 (Churchill Archives Centre, The Papers of Sir Winston Churchi
ll).
5. Winston and Jack Churchill as teenagers, 1892 (BNPS).
6. Churchill reporting on the Boer War in southern Africa, 1900 (Library of Congress).
7. Sir Ernest Cassel, banker and financial adviser, 1906 (Timea/Wiki).
8. Edward Marsh, Churchill’s private secretary and literary assistant (Topfoto).
9. Churchill and his fiancée, Clementine Hozier, 1908 (Getty Images).
10. Churchill, as home secretary, on his way to the coronation of George V, 1911 (Ullstein bild/Getty Images).
11. Churchill and David Lloyd George, political allies, circa 1910 (Buyenlarge/Getty Images).
12. Churchill, First Lord of the Admiralty, inspecting trainee sailors, 1912 (Hulton Archive/Getty Images).
13. Colonel Churchill and his second-in-command Major Sir Archibald Sinclair, Armentières, 1916 (Keystone/Getty Images).
14. Thornton Butterworth, London publisher, 1938 (Churchill Archives Centre, The Papers of Sir Winston Churchill).
15. Charles Scribner III, New York publisher (Princeton University Archive).
16. Newman Flower, chairman of London publishers Cassell & Co. (Alamy).
17. Alexander Korda, film producer and director, circa 1935 (John Kobal Foundation/Getty Images).
