BY THE END of their honeymoon (or earlier) the Churchills were expecting their first child. Before its arrival, they used the money given to them by the duke of Marlborough to buy a four-storey London home in Charles Street, near Berkeley Square, where they settled down to live off their joint income of more than £3,000 a year. This should have proved sufficient in mid-Victorian Britain, at a time when average earnings barely exceeded £50 a year, but difficulties soon emerged. Lord Randolph could not throw off the Churchill penchant for gambling, whether at cards, on the horses or in casinos around the coast of France.
Still less could his wife wean herself off Parisian couturiers when preparing her wardrobe for a summer season at London’s dinner parties and country house weekends. To make certain they could entertain in the style expected of an ambitious politician, the Churchills employed a butler, French cook, footman, valet, lady’s maid and a housemaid.
Once the season was over, Jennie withdrew to Blenheim where she gave birth to her first child unexpectedly early at the end of November 1874. He was christened Winston Leonard. Writing his father’s biography some thirty years later, Churchill described how his parents soon resumed their life in London ‘on a somewhat more generous scale than their income warranted’.1 The problem was compounded by the fact that Leonard Jerome’s allowance from New York sometimes arrived late or not at all. In 1876 they had to borrow £2,400 from Standard Insurance; early the following year, the Charles Street house was put on the market and Lady Randolph moved to Paris as an ‘economy’ measure, while her husband negotiated a further loan in London. ‘I shall get 5000£,’ he wrote to her. ‘There is also a balance of 682£ out of the valuation & house money. This latter I shall bring with me to Paris to pay your bills and keep us until March.’2
The next blow was social rather than financial. Lord Randolph had rashly backed his elder brother in a dispute with the prince of Wales over a married woman and in retaliation the prince refused to visit any London home that still welcomed the Churchills. Prudently, they removed themselves to New York, where they stayed with a demoralized Leonard Jerome. The situation appeared to be intractable, until the duke of Marlborough agreed to the prime minister’s suggestion that it would be best for all concerned if he became Queen Victoria’s viceroy in Ireland and took Lord Randolph to Dublin as his private secretary. Officially Lord Randolph remained unpaid by the crown, so he could retain his seat as an MP at Westminster, but £800 a year of his father’s £21,000 a year viceregal expense allowance found its way to his bank account.3
The family remained in Ireland for almost three years until William Gladstone and his Liberal colleagues replaced Disraeli’s Tory administration in April 1880. It was long enough for Jennie to produce a second son, christened John (but always known as Jack), and for the couple to require a third loan. Lord Randolph warned her it was ‘positively the last we shall be able to make’.4 Having witnessed Irish poverty and famine, Lord Randolph’s politics carried a keen edge that turned him into a leading advocate for ‘Tory Democracy’, a more progressive policy that encouraged Conservatives to adopt reforms popular with newly enfranchised voters instead of allowing the Liberal Party to pose as their sole champions. At the same time, however, a shortage of funds continued to restrain the couple’s social life. ‘I haven’t been to many balls, as I simply cannot afford to get dresses and one can’t wear always the same thing,’ Lady Randolph reported to her mother. ‘Money is such a hateful subject to me just now don’t let us talk about it.’5
For all his growing political success, Lord Randolph was troubled by mounting health problems*1 which forced a leave of absence from Westminster. The Churchills returned to New York. Leonard Jerome could still not pay their allowance regularly, but after remortgaging his Manhattan mansion he handed over a capital sum which allowed them to buy a new London home on the northern, less fashionable side of Hyde Park.
Another change in Lord Randolph’s fortunes arrived in July 1883 when the duke of Marlborough died suddenly of a heart attack. His eldest son George automatically became the 8th duke, inheriting Blenheim and its immediate estate, but the 7th duke’s will awarded his personal estate, valued at £146,000, to his second son Lord Randolph after the dowager duchess’s eventual death and after it had paid dowries of £10,000 on the marriage of each surviving daughter.6 His inheritance prospects thus clarified, Lord Randolph was able to repay the loans he had accumulated from unofficial moneylenders and to borrow £31,000 in their place from Scottish Widows Insurance Company, at a lower rate.
He was powerless, however, to prevent his elder brother from raising much larger sums by selling off more of Blenheim’s treasures. Lord Randolph’s father the 7th duke had persuaded his political friends that the only way to save Blenheim was to amend the protective Act of Parliament and allow the sale of the 1st duke’s possessions. The 7th duke had limited himself to selling off one of Europe’s greatest private libraries for £57,000,7 but the 8th duke now consigned Blenheim’s collection of Old Masters paintings – including works by Raphael, Titian, Rubens, Van Dyck, Stubbs and Gainsborough8 – to the National Gallery or auction rooms, where they fetched more than £400,000.*2
Lord Randolph consoled himself by escaping to winter sunshine in India, a visit that paved the way for his appointment as secretary of state for the colony when the Conservative Party displaced Gladstone’s Liberal government in the middle of 1885. The post brought a welcome ministerial salary of £5,000, the standard reward at the time for a secretary of state (and considerably higher in real terms than their salary today). However it lasted just six months because Gladstone temporarily recaptured power early in 1886. Within another six months the Liberals had been driven out of power again by a decisive Conservative campaign against home rule for Ireland, masterminded by Lord Randolph.
The new Tory prime minister Lord Salisbury rewarded the thirty-six-year-old Lord Randolph with the twin posts of chancellor of the exchequer and leader of the House of Commons. This time the salary would have lasted longer had Lord Randolph not overestimated the strength of his political capital: he tried to force cuts in military expenditure on colleagues who already resented his forays into their ministerial territory. The situation worsened and the prime minister calmly accepted Lord Randolph’s impulsive letter of resignation.
This sudden loss of both position and salary came as a shock to Lord Randolph, but neither he nor Jennie made any serious attempt to curb their spending. Their marriage was under strain, and an increasingly ill Lord Randolph spent long periods abroad each winter, while for three successive summers they economized by renting out their London home and spending the season in a house rented by the dowager duchess near Newmarket racecourse. Here their young sons Winston and Jack would sell hens’ eggs to supplement their pocket money, which was always in short supply.9
Racing produced one of Lord Randolph’s rare financial successes: his mare L’Abbesse de Jouarre cost only £300 but during her career won prize money of more than £6,000.10 More often, however, the Churchills’ finances remained chaotic. ‘I regained at baccarat all I lost at racing,’ Lord Randolph told his wife in 1890. ‘I am sorry your money affairs are in such confusion & have told Hemmerde [of the London and Westminister Bank] to put £500 in your account. In June you had £400 & £1500, but you only account for £1,477 leaving £400 + £300 overdrawn unaccounted for... You had better send me Rouff’s [a French publisher] bills.’11
That autumn Lord Randolph turned down a salary of £2,000 a year to chair an American mining company; he was confident that he could find better-paid work in the City of London if he needed to. Since his schooldays he had remained a close friend of Nathaniel Rothschild, now Lord Rothschild and the head of a family that had led the City’s move into funding the trade of luxury goods and precious metals.12 Through The Exploration Company13 the Rothschilds provided logistical and financial support to expeditions designed to expand gold-mining in southern Africa, a new frontier; the region accounted for only 1 per cent of the world’s gold production in 1890, but would reach 15 per cent just two years later.14 Alfred Beit, a mining expert close to the Rothschilds, was convinced they could mine down to deeper levels and he had already bought several properties in the Central Rand area to back his hunch.*3
Leading such an expedition presented one of the few socially acceptable ways for the younger son of a duke to replenish the family coffers and by the spring of 1891 Lord Randolph had decided that this had become necessary.15 He agreed to lead a party to explore further north in Mashonaland (a region which later became Rhodesia and is now in Zimbabwe), guided by a mining engineer and logistics expert found by the Rothschilds. Lord Randolph’s bank lent him £1,000 of the £5,000 that he was to put into his syndicate; the remainder, which arrived late, came from a mysterious Mr Saunders. It was Lord Randolph, rather than the Rothschilds, who raised another £11,000 for the syndicate from ‘family and friends’,16 while he secured a personal fee of £2,000 from his friends, the Borthwicks, to report on progress for their newspaper The Morning Post.17
By the time Lord Randolph had paid the Rothschilds’ experts, £10,000 remained to meet the party’s costs in Africa. Unfortunately, local supplies turned out to be twice as expensive as he had expected. ‘The business affairs of my amalgamated syndicates out here are not altogether satisfactory,’ Lord Randolph reported home. ‘Very much more money has been spent than I or the people in London had any idea of and if their claims already acquired are not very valuable I shall have made a poor bargain.’18
After merging with two other expeditions to save money, the enlarged party made its way to Kimberley’s diamond mines, its wagons pulled by ninety oxen, twelve mules, twelve donkeys and eight horses.19 From there, they moved on to the recently discovered gold deposits near Johannesburg, where Lord Randolph asked his friend Oliver Borthwick to buy some ‘Transvaal Silvers’ and ‘Nigels’ shares in London,20 while he invested the syndicate’s temporarily surplus funds on the local stock exchange.21
The expedition’s supplies for the six-week trek to Fort Salisbury became the talk of the town: ‘The wonderful thing was that they could never buy enough,’ wrote the experienced African traveller Percy Fitzpatrick. ‘They put in some supplementaries at Cape Town, and some “after-thoughts” at Kimberley, and etceteras at Johannesburg, and extras at Pretoria, and replenishments at Pietersburg, till they looked like the commissariat of a continental army.’22
On reaching Mashonaland, £5,000 remained for buying mining concessions, but the engineers found only one shaft that showed any promise. They bought it for £2,000.23 After two weeks of excavation Lord Randolph wrote to tell Jennie that ‘The Matchless’, as they called it, looked good enough to be worth ‘from quarter to half a million’. It then filled with water and had to be abandoned.24
Back at home, money remained an acute problem. Jennie had sold the Hyde Park home in order to economize, taking refuge with the children at the dowager duchess of Marlborough’s house in Grosvenor Square.25 ‘How I long for you to be back with sacks of gold,’ she wrote,26 but her husband confessed that the expedition’s only real success had been a £1,000 profit on the shares he had bought in Johannesburg; when final accounts were compiled, investors found they had lost their entire capital. (The Rothschilds debited the final shortfall of £370 to Lord Randolph’s estate.)
‘I shall cut politics & try to make a little money for the boys and ourselves,’ Lord Randolph told Jennie as he set off for home, but he had, as it turned out, already taken the first vital steps to doing so.27 The expedition had provided him with valuable intelligence about the gold fields of the Transvaal’s Witwatersrand district, to which he had diverted his mining experts on their return journey. It was their favourable report that convinced him to spend £1,250 of his own money to take up an offer from Alfred Beit of 5,000 shares in his new private mining company Deep Levels, at five shillings per share, before he floated it publicly on a stock exchange. The rapidly rising value of these shares was to fund Lord Randolph’s family for the remainder of his life and to form the cornerstone of his legacy.28
Winston Churchill made his first plea for more cash on his first day at school, when he lost his pocket money. The requests soon became more frequent. ‘You do get through it in the most rapid manner,’29 his mother told him.
It was the one subject on which he fell out with his nanny Mrs Everest, who once complained that Winston had asked for a second loan before even acknowledging the first: ‘I am extremely sorry my dear Boy I cannot oblige you this time it is utterly impossible unless you wish me to starve,’ she wrote. ‘I do think you are awfully extravagant to have spent 15/- in a week. Some familys [sic] of 6 or 7 people have to live upon 12/- a week. You squander it away & the more you have the more you want to spend.’30
Jennie opened a bank account for Winston when he was fourteen, instructing the London & Westminster’s manager to transfer twenty shillings into it each month from her own account. She tried her best to install a sense of financial discipline in him: ‘The only thing you must avoid on all accounts is not to overdraw the money due to you.’ Her credentials for offering such advice are dubious; in any event he ignored it.31
Winston was seventeen when Lord Randolph returned from Africa. When Winston won a fencing competition at his school, Harrow, Lord Randolph gave him two pounds to buy a present for his instructor. He lost his temper when Winston overspent and asked for more. ‘If you were a millionaire you could not be more extravagant,’ Lord Randolph wrote. ‘I think you have got through about £10 this term. This cannot last & if you are not more careful should you get into the army six months of it will see you in the Bankruptcy Court.’32
Winston turned to female relations for help: Aunt Cornelia, one his father’s sisters who had married into the wealthy Guest steel family, and Duchess Lily, the wealthy American heiress who had married the 8th duke of Marlborough, were special favourites. His mother could also be relied on to help, albeit only after a ritual dressing-down. ‘Yr wants are many – & you seem a perfect sieve as regard money,’ she wrote in answer to one such plea; nevertheless, she enclosed a thirty-shilling postal order.33
When Winston failed to pass the Royal Military Academy’s entrance exam for his intended career as an army officer his increasingly unwell father was exasperated and threatened his son with a career ‘in business’ if he failed again. (‘I could get him something very good with Natty [Nathaniel, Lord Rothschild] or Horace [Farquharson] or Cassel,’*4 Lord Randolph told the dowager duchess.)34 Winston did fail a second time, but his improved placing (203rd out of 664 candidates) led to a rapid transfer into a London crammer that specialized in the entrance exam. Back at Harrow, Jack was left to settle his older brother’s debts to fellow pupils. At his third attempt, Winston passed the exam, but he came too far down the list to qualify for the less expensive infantry and would therefore have to enter the cavalry. His increasingly irascible father was scathing:
By accomplishing the astonishing feat of getting into the Cavalry, you imposed on me an extra charge of some £200 a year... Make this position indelibly impressed on your mind, that if your conduct and action at Sandhurst is similar to what it has been in the other establishments in which it has [been] sought vainly to impart to you some education, then that part of my responsibility for you is over. I shall leave you to depend on yourself giving you merely such assistance as may be necessary to permit of a respectable life.35
However, when he arrived at Sandhurst Winston was immediately elevated to the infantry. Admitting to some ‘past extravagance’, he appealed to his father for a fresh start to his finances: ‘I should so much like to have an annual allowance – payable quarterly. Out of it, I would get my clothes, pay for my amusements – railway journeys – and sundries (cigarettes etc): in fact everything... I will promise to keep accounts of what I spend and send them to you regularly.’36
Lord Randolph, however, was not yet ready to cut the purse strings, as he explained to the dowager duchess: ‘I thought he was somewhat precipitate in his ideas about an allowance & that his figures were too summary. I told him I would give him £10 a month out of which he would have to pay for small articles of clothing, & for other small necessities but that I will continue to pay his tailor and haberdasher.’37
His health deteriorating, Lord Randolph often forgot to send a cheque or sent it late, making his son late in paying his mess bills. ‘It is no use me trying to explain to Papa,’ Winston complained to his mother. ‘I suppose I shall go on being treated as “that boy” until I am 50 years old.’38 After a rare visit to Sandhurst in November, however, Lord Randolph was impressed by the change in his son. Flush after a recent share sale, he explained to the dowager duchess that he had relented:39 ‘I paid his mess bill for him £6 so that his next allowance might not be “empiété” upon.’40
Early in 1894 the thaw between father and son came to an abrupt end when the 7th duke’s gold watch ended up at the bottom of a Sandhurst lake; the local fire brigade had to pump the lake dry to recover it. After being repaired, the watch was handed to Jack and Winston was told to buy his own replacement.41 ‘Oh! Winny, what a harum scarum fellow you are,’ his mother commiserated the next day. ‘I am sending you £2 with my love.’42
In April Lord Randolph’s doctors advised him to retire completely from politics and to take a trip around the world, accompanied by his wife and a specialist. To fund the voyage he sold L’Abbesse de Jouarre for £8,00043 and borrowed £3,000 against his remaining gold shares,44 but he made no special provision to keep up his son’s allowance at Sandhurst. A worried Winston used a new typewriter to ask his father for an increased sum of £15 to be sent each month to a new account that he had opened with the army’s bankers, Cox & Co.*5
Lord Randolph’s cool reply – the last letter he would write to his son – dissected Winston’s request, sentence by sentence:
You write stupidly on what you call the ‘subject of finance’. ‘Since I had my allowance you have given me a little extra without which I should have been terribly hard up (elegant). If therefore (logical!) you could make a deposit!! of say (commercial & banking expression) £15 which I was to draw upon (rather frail security) without real necessity (very difficult to define) & which I was to account to you for as I drew it out (perhaps you would, you have to send your letter 10,000 miles) it would make things so much easier.’ Would it? Perhaps. I do not comment on this letter so delicately expressed except to observe that Jack would have cut off his fingers rather than write such a very free-spoken letter to his father... Finally if you are going to write letters to me when I am travelling, type-written & so ridiculously expressed I would rather not receive them.45
Winston wrote to his parents while they travelled, but there was no reply. ‘I never saw him again, except as a swiftly-fading shadow,’ he later recalled.46 His father’s health declined so sharply after they reached Asia in November that Jennie and the doctor decided on an immediate return home. ‘He is quite unfit for society,’ she told her sister.47 They reached London just in time for Christmas, but Lord Randolph had less than a month to live. He fell into a coma and died on 24 January 1895 aged forty-five.
Writing almost forty years later, Winston Churchill claimed that his father had ‘died at the moment when his new fortune almost exactly equalled his debts’.48 This judgement has since been accepted by most historians: the gross value of Lord Randolph’s estate was published as £75,971,49 but he is said to have owed the Rothschilds’ bank anything between £66,000 and £72,000, leaving almost no net balance. In reality, the Rothschild ledgers reveal that Lord Randolph owed the bank only £12,758 on 31 December 1894, less than a month before he died and after settling all the bills for his last voyage.50 So, after deducting the amount still owed them, the Rothschilds sent Lord Randolph’s executors two cheques totalling £54,237.51
A boom in southern African mining shares had made this result possible. The boom continued throughout 1894 and the early part of 1895, with the result that at least one firm of stockbrokers had been forced to employ separate shifts of day and night staff to cope with the volume of transactions. ‘In clubs and trains, in drawing rooms and boudoirs, people are discussing “Rands” and “Modders”,’ one financial journalist reported.52
The boom was still under way in March 1895, but Lord Randolph’s executors decided that they must sell his remaining 2,300 shares. It was believed that ‘Rands’ were too risky as a share to be owned by a trust for a widow with young children. The Rothschilds sold the remaining shares in two batches at an average price of over £28 each, more than 100 times what Lord Randolph had originally paid. Years later, Winston Churchill ruminated on what might have happened if the executors had held on for longer: ‘Soon afterwards they rose to nearly fifty or sixty times this price; and had he lived another year he would have been possessed of a substantial fortune,’ he claimed, but in fact prices quickly subsided six months later in October, after heavy sales from Paris.53
Drafted after the 7th duke’s sudden death in 1883, Lord Randolph’s will closely followed the paternal template. It left his widow a small cash legacy to meet immediate bills, then settled the rest into a trust, to be known as Lord Randolph Churchill’s will trust. Although Jennie was not entitled to any capital, all the income earned by the trust’s investments was to go to her; the children would take over the income after her death, but the capital was to remain protected in the trust.
There was, however, a twist: if Jennie remarried, Lord Randolph’s trustees would be allowed to divert half of the trust’s income to Winston and Jack, an important provision given the social code of the day, which linked their marriage prospects to their financial ‘expectations’.54 When Jennie did remarry six years later, nobody remembered this clause.
*1 These may or may not have been related to the onset of syphilis, the latent period of which can continue for ten or twenty years before the final phase. Modern medical opinion suggests that syphilis may not have been the problem: Dr John Mather has suggested that Lord Randolph may have been suffering from a left-sided brain tumour; others have advanced the possibility of a genetic bipolar disorder. However, the illness was certainly treated as syphilis.
*2 The 8th duke required more money to modernize Blenheim. He enlisted help in finding a rich American bride from Leonard Jerome, who suggested a thirty-three-year-old widow, Lily Hammersley. A native of Troy in the state of New York, Lily had inherited $5 million on the death of her first husband. After the wedding in 1888, she was affectionately known as ‘Lily of Troy’. Leonard died in 1891; his wife Clara paid off his debts just before she died in 1895.
*3 Beit would float Deep Levels (his holding company for the individual deep-level mines in the Witwatersrand district) as the renamed Rand Mines in 1893. He allowed his friends, such as the Rothschilds, Sir Ernest Cassel and Randolph Churchill, to buy shares privately before the flotation.
*4 Ernest Cassel (1852–1921), born to a Jewish family in Germany; arrived in Liverpool 1869; started his own banking business in London 1870; a City leader investing in railroad companies, sugar, diamond and gold mines by 1900; financial adviser to the prince of Wales (later Edward VII); retired following the king’s death 1910. Knighted 1899.
*5 Cox & Co. had served British army officers since 1758, when Richard Cox became secretary to Lord Ligonier, Colonel of the Grenadier Guards. Among the tasks Ligonier delegated to Cox was the disbursement of pay to his officers and men. Cox was so efficient that by 1815 he had been asked to perform the same task for the Household Brigade, Royal Artillery and almost all cavalry and infantry regiments.