THE AFTERMATH OF the Great War proved disorientating for many members of the Edwardian élite. ‘Ladies who came to lunch with my mother deplored Modern Times,’ Loelia, duchess of Westminster remembered. ‘They said how crippling the taxes were, how dreadful the housing shortage, how expensive the shops, how high the wages, how spoilt the children.’ Above all, they complained about the cost of servants: ‘Cooks were offered £35 to £65 a year; Nannies round about £50. Actually we all continued to live with what now seems a vast quantity of servants. If one had a servant at all one did not even pull a curtain or open the front door when the bell rang.’1
Taxes had risen, but the Government had financed three-quarters of the cost of the war by borrowing.*1 The City lobbied for government spending cuts to balance the books and to allow for a return to the pre-war fixed parity between sterling and gold. However, politicians, including Churchill, worried more about deflation and its social consequences, ever conscious of the spread of Bolshevism to Britain’s workers. Commitments to social welfare spending could not easily be cut; meanwhile several million servicemen had to be fed and paid until they were demobilized, and a million had been kept under arms to occupy the parts of Europe, the Middle East and Africa that Britain had agreed to police in the aftermath of war.
Demobilizing the army became Churchill’s primary challenge when in January 1919 he was appointed to the combined posts of secretary of state for war and air – ‘of course there will be but one salary!’ Lloyd George had enjoyed adding to his letter when he made the appointment.2 Neither post carried a London residence, so Churchill sold £400-worth of shares to furnish a house which he leased close to the Houses of Parliament in Dean Trench Street. Despite the burden of more than £20,000 borrowed from family trusts and the bank, he resisted selling any more of his remaining £10,000-worth of shares while the stock markets enjoyed a post-war boom.3
Although restored to its pre-war level of £5,000, Churchill’s ministerial salary still fell at least £300 short of his spending each month.4 As a result he found himself in breach of his £3,000 bank overdraft limit by March 1919. He had to argue for an increase on the strength of higher share prices. ‘He is about to sell his Cassels shares*2 to reduce overdraft but will wait for them to rise further,’ his bank manager William Bernau noted. ‘Mr A. C. C[ox] agrees and has marked yellow strip for £500.’5
Lullenden remained at the heart of Churchill’s difficulties, as he confessed to weekend visitors to the house, his old army friend General Sir Ian Hamilton and his independently wealthy wife Jean. At the time the Hamiltons were frustrated in their own search for a country seat; a few days after their visit Sir Ian wrote to suggest that they could rent the main house of Lullenden from Churchill for a year, leaving the lodge and farm to the current owners. Churchill suggested a rent of £500 a year for three years, adding that he would complete the En-Tout-Cas tennis court (at a cost of £200) provided the Hamiltons rented the court for an additional £10 a year.6 ‘I love it and want it for my own, and would like to plunge in and buy it,’ Lady Jean Hamilton recorded in her diary during April. ‘It’s the sort of romantic place I long to have – it’s a snuggy place with rocks, pools, trees and streams such as my childish soul loved and still loves.’7
Churchill was busy at the time trying to persuade his cabinet colleagues to recognize the White Russian movement of General Kolchak,*3 but he realized that the scheme to split up the house from the lodge and the farm in this way was too complicated. Reluctantly, he decided that he would have to sell Lullenden in its entirety. The Hamiltons eased the pain of the decision by allowing the Churchills and their young family to enjoy one final summer at the property.
‘The great pleasure Jean and I do feel at the idea of possessing Lullenden is very much tempered by our regret that you should have to leave it,’ Sir Ian wrote. ‘I simply hate the idea that you should loose [sic] this pleasure and Diana and Randolph, I am afraid, will never forgive us.’8
Churchill was lucky. Sir Ian left his wife to settle on a price for Lullenden and he was astonished to discover that she paid £10,000, adding a further £1,885 for what Churchill called ‘commodities’.9 ‘The purchase of Lullenden by my wife from Mr Winston Churchill was entirely unbusinesslike and had no relation to any real value,’ he wrote four years later. ‘Had Lullenden belonged to anyone else but Mr Churchill or some of the two or three equally great friends I have, I would have waited for the auction and bought it, very likely, for £3,000.’10
Nicholl, Manisty & Co. relieved the pressure on Churchill’s finances further by ruling that Lord Randolph’s trust’s £3,000 profit on the Lullenden sale could go to him, as he had carried out many of the improvements.11 They also agreed that the Churchills could look for a new London home using the £7,000 returned to the trust, while they ‘perched’ for the time being in another Guest family property near Richmond Park.
A London architect and developer, Frederick Foster, showed Churchill a four-storey house at Hyde Park Gate leased by the duke of Wellington’s younger son Lord Gerald Wellesley. The lease was on offer for £2,300, a low price that might have given a more cautious buyer pause for thought. Churchill agreed to buy it on the spot, without asking for a survey or mentioning that his father’s trust would be the buyer rather than himself. When the trust’s lawyers insisted on a survey it revealed that expensive repairs were needed. Churchill immediately withdrew his bid, offering to reimburse any costs incurred by Lord Wellesley.
Lord Wellesley’s lawyers wrote to Churchill to say that his lordship had been ‘taken by surprise when he heard that Mr Winston Churchill was inclined to repudiate arrangements made by the correspondence which we are advised contains all the essential terms of an enforceable Contract’.12 Churchill commissioned an expensive legal opinion as to whether the contract was binding, but it was not clear-cut in his favour. When Lord Wellesley signalled that he intended to press his point by switching to expensive London lawyers, Churchill made as graceful a retreat as possible to protect his reputation: he altered the draft of his lawyers’ letter to remove a reference to ‘financial reasons’ as the motive for his original withdrawal.13
Lord Wellesley raised no objection to Churchill re-advertising the property before his purchase was due to complete at Christmas. Meanwhile, he still needed a suitable home. Foster suggested another tall house overlooking Hyde Park, this time on the less expensive north side. The architect had already bought 2 Sussex Square for development, but offered to sell it on to the Churchill trust for £4,750 on condition that his business carried out the modernization. Nicholl, Manisty also agreed that the trust could fund the renovation up to a limit of £2,250.14
By early October, post-war inflation had helped to increase the value of Churchill’s South African shares by £4,500.15 However, his overdraft had risen to £5,500, taking the total he owed his bank to more than £22,000. Anxious, nevertheless, not to miss out on the boom, Churchill asked Cox & Co. for another £2,000 to buy more shares. Bernau relayed three conditions from the bank: (1) that Churchill transfer all his share certificates to Cox & Co., (2) that he use the Lullenden money to reduce his overdraft, and (3) that he renew his promise to reduce his loan balance by the end of the year.16 Churchill agreed, but two weeks later17 when he produced the Lullenden money he diverted it to invest in more shares recommended by Sir Abe Bailey and his brother’s new firm of London stockbrokers, Vickers da Costa.18
Halfway through December Churchill’s solicitors suddenly reminded him that he had to pay Lord Gerald Wellesley £2,300 on Christmas Eve, because no replacement buyer for his house had come forward.19 Churchill could not approach either his bank or his father’s trust, having exhausted his credit with both of them. Still anxious not to sell any investments while the market was booming, he visited Sir Ernest Cassel at his Park Lane home. The ailing financier produced a cheque made out to Churchill, accompanied by a carefully worded note: ‘My dear Winston: I enclose my cheque for £2,300 in payment for the lease of 2, Hyde Park Street, secured by you on my behalf.’ Churchill was equally precise when he sent the cheque to his bank manager: ‘Sir Ernest Cassel has now paid me the £2,300 I disbursed on his account for 2 Hyde Park Street.’20
The prime minister Lloyd George summoned Churchill and other British ministers in January 1920 to Versailles, where he was taking part in negotiations to establish a peace treaty between the Allied powers and Germany. As Lloyd George convened a series of emergency cabinet meetings to discuss a response to the military reverses suffered by White Russian forces at the hands of the Bolshevik army, share prices began to fall. Early in February Churchill worked out that his own portfolio of some £20,00021 had dropped in value by 5 per cent, but he was too caught up in the Russian crisis to heed Bernau’s warning about the dangers of remaining so fully invested on borrowed money.
Churchill remained pre-occupied for most of the summer with cabinet battles over policy towards Russia, Poland, Egypt and Ulster. He did get away for three weeks’ holiday at the duke of Westminster’s hunting lodge in France, but on his return to London in September he found a summons from Bernau. Further falls in share prices had left the bank distinctly unhappy with its security on his loans of £22,000.22
Churchill had to meet his bank manager twice on consecutive days. He had no more shares that he could offer to transfer into the bank’s name, so Bernau asked him to take out additional life insurance. ‘WSC seen 20/9/20 & 21/9/20... No more securities to come at present,’ Bernau noted. He also recorded Churchill’s insistence that more money was about to arrive in his account: ‘£1500 expected from trustees for Current a/c but £400 to be pd. for In. Tax + various other cheques say £1500 in all, leaving a/c about £2000 Dr [overdrawn].’23
Churchill had to change his tune the next day after reminding himself that the trustees would not be contributing so much as he expected towards the building works at Sussex Square, which had exceeded the trust’s budget as early as April. Churchill had originally offered to fund the excess himself, but had taken fright in August after paying an extra £1,750 during June and July. He had asked Nicholl, Manisty whether the trust could cover all remaining bills, but the solicitors insisted on obtaining a professional opinion from a firm of surveyors. It recommended that the trust pay no more than an extra £500, leaving Churchill seriously short of the contribution which he had told the bank to expect.24
Unabashed, he suggested a different solution to Bernau: ‘I expect now to receive from £400–600 for the reproduction of my articles in a book form, wh[ich] sh’d be received in a month or two,’25 he wrote two days after their second meeting. ‘If in these circumstances you wish to take up one of the £2000 policies please let me know, but I daresay you will not consider this necessary.’26 Bernau went to the top for a decision. ‘Advise him we will leave it for now,’ Reginald Cox decided, still not keen on a confrontation between his weakened bank and a senior politician.27
More falls in mining shares followed in November 1920. However, Churchill was able to turn to his friend Sir Abe Bailey to save him from further embarrassment. Sir Abe offered a personal guarantee ‘against any loss on all shares purchased on my advice’; this was immediately accepted by the bank.
Churchill recognized that he had to find a way of supplementing his ministerial earnings if he was to reduce his debts. Inspired by a conversation with General Rawlinson, his fellow veteran at Omdurman who had commanded British forces on the Somme, Churchill had started to think seriously of writing his own account of the Dardanelles campaign. In March he visited Sir Frederick Macmillan, the publisher of Lord Randolph Churchill. ‘We shall be very pleased to put into type the Memoranda and Minutes written while you were away at the Admiralty which you wish to have ready for publication at some future time,’ Sir Frederick wrote to him. ‘I will see that it is printed in a satisfactory form and with all proper regard to secrecy.’28
By October 1920 a short book about the Dardanelles had grown into an ambitious history of the First World War that would be called The World Crisis. Rather than publish through Macmillan, Churchill decided to employ a literary agent. Frank Harris was now living in America, so Churchill drove a hard bargain with a new agency set up during the war by an American journalist in London called Albert Curtis Brown.*4 It was agreed that Curtis Brown would earn his 10 per cent commission only if royalties exceeded £15,000. Churchill, for his part, undertook to produce the first volume of The World Crisis by the end of 1922 and the second a year later, while still holding down his position as secretary of state for war.29
Prompted by a review Churchill had written of one of its books, the publisher Thornton Butterworth*5 offered to publish any book that Churchill might care to write.30 Curtis Brown immediately obtained a guaranteed advance of £5,000 for the British Empire rights, with £2,000 paid in cash on signature.31 Newspaper serial rights seemed to sell just as easily.32 The Times offered another £5,000, but before accepting Churchill wanted a commitment from H. Wickham Steed, the editor, that there would be no damaging Dardanelles editorial. ‘I think you are entitled to assume that consideration for our own consistency, quite apart from the ingrained admiration we have always felt and have sometimes expressed for you, will be a guarantee that we shall not wilfully foul your and our nest,’ Wickham Steed replied carefully.
Churchill wanted an absolute assurance and Wickham Steed had to write again: ‘You may regard my letter as an undertaking that we shall not criticize you for having written the book... this without prejudice to our freedom of criticism in regard to the political aspects of any policies or political or military enterprises for which you may have been responsible.’ Churchill filed away this second letter, marking it ‘Keep secret’. He signed a contract with The Times four days later.33
When he met Cox & Co. for a promised ‘end of year’ review, Churchill first flourished his new contracts with Butterworth and The Times, then went on to mention more: ‘American agents $50,000 (probably) for whole rights, South Asia and Continental rights about £2000,’ Bernau noted afterwards.34 The $50,000 figure came from a conversational aside by Butterworth rather than a forecast by Curtis Brown, who had always been more cautious about Churchill’s prospects across the Atlantic.
When no offers had arrived by December, Butterworth approached Charles Scribner’s Sons, the firm that had turned down Lord Randolph Churchill fifteen years earlier. The Scribners’ London representative remained sceptical of Churchill, warning head office that he was ‘frankly out for all the traffic will bear’.35 However, before joining the family firm Charles Scribner II’s son had fought on the Western Front and he was keen. ‘Unlike Lloyd George, Churchill has the power – and the very great power of writing,’ Butterworth urged. ‘Do please, and here I place the greatest stress, make your royalty as high as you can’.36
The Scribners held their fire until the last minute, waiting while Curtis Brown recommended offers of $17,500 from a monthly magazine Metropolitan for the serial rights and $10,000 for the book from Duran & Co.; then they cabled Butterworth at the end of January: ‘Offer for Churchill 20 per cent royalty, tax free, with $16,000 dollars advance.’37 ‘No better or more dignified publisher could have been found for the work in America,’ enthused Curtis Brown.38 (These generous sums were dwarfed by the £90,000 announced the following year for Lloyd George’s memoirs, although that deal caused such controversy that the prime minister first declared he would give the money to charity and then had to abandon the project.)39 Churchill went on to earn £25,000 from The World Crisis, but he avoided any public censure for profiting personally from his public position because his earnings expanded gradually as the book grew from first one to two, and eventually three volumes.40
Throughout 1920 relations between the prime minister and his secretary of state for war had been strained by policy differences over Russia. While they were both in the south of France in January 1921 for a New Year holiday, Lloyd George suggested that Churchill be transferred to the Colonial Office. The new post would keep Churchill clear of Russia or Eastern Europe, but it had just added responsibility for Britain’s two post-war Middle Eastern mandates, Iraq and Palestine, to the rest of the empire.41
In the absence of formal government guidance on conflicts of interest for ministers, Churchill took it upon himself to ask Austen Chamberlain, the new chancellor of the exchequer, whether he should keep his mining shares, now that so much of Africa, including the south, was part of his new ministerial bailiwick. ‘I chose this South African theatre for my investments as it seemed one of the very few into which Admiralty, Munitions or War Office business was unlikely to enter,’ he claimed, with an element of hindsight.
Now that I have undertaken to go to the Colonial Office, I must disclose my interest, and I should be glad to have your opinion as to whether I am bound to sell the Securities at their present low value. I do not myself think so, but no man is a good judge in his own case and you, as Chancellor of the Exchequer, seem to be in a special position to pronounce on such questions of Ministerial propriety.’42
Chamberlain consulted the prime minister before replying:
It is not easy for a man in public life, even with the most scrupulous care, so to invest his money that no one of his investments shall ever be affected or be capable of being affected by action of the British Government. There is, as far as I can see, no probability, or even possibility, that the holding of these investments in a Self-Governing Dominion can in any way conflict with your duty as a Minister of the Crown or embarrass you in the discharge of it.
Chamberlain added a rider that Churchill had not expected, but had to accept: ‘I think that apart from any unforeseen change in political conditions or any over-riding private necessity, we ought to leave the investment unaltered during our tenure of Office.’43
‘We must try to live within our income’, Churchill urged Clementine on 27 January 1921, although he offered no advice on how to do this.44 His usual strategy was to increase his income rather than to cut spending. True to form, he told her that he had accepted an invitation from The Strand Magazine to write two articles on his new hobby of painting for a fee of £1,000.45
Churchill sat down to write, unaware that his fortunes were about to change. On 26 January 1921 two trains collided on a length of single track between Welshpool and Newtown in Wales.46 Among the victims was a fifty-one-year-old railway company director, Lord Herbert Vane-Tempest, Churchill’s Londonderry cousin and the current beneficiary of the Garron Tower estate. Since Lord Herbert was unmarried and without an heir, his grandmother’s will ordained that the whole estate should jump across to the eldest surviving Churchill male.
Winston had been next in line for more than a decade, but only occasionally concerned himself with the estate’s affairs. In 1909 his solicitors had told him that its income amounted to £3,700 a year. In 1919 its capital value had stood at almost £90,000, the majority safely invested in Irish government bonds and stocks, following the trustees’ sale of most of the estate’s houses and the fire-damaged Garron Tower Hotel. The only remaining property was the local Carnlough Lime Works, its harbour and nearby tenements, whose rent hardly matched the costs of their collection.47
On the day after the accident Lord Herbert’s lawyer visited Churchill’s solicitor to notify him. He mentioned a likely annual income from the estate of £4,200 a year, but could not say how much estate duty would be owed. Whatever its level, the remainder would be sufficient to transform Churchill’s finances.48
Churchill’s first step on hearing the news was to arrange an immediate meeting to soothe the fears of his bank manager William Bernau, with whom a crisis had been brewing since his loans and overdraft had now reached almost £28,000.49 Clementine’s priority was to attack their pile of unpaid bills. ‘What would you really wish done about the Bills?’ she asked her husband. ‘In the first flush of the rosy news, you suggested paying them off & you said I was to send them all to you to have dealt with – it would be heavenly if this could be done, but I don’t know if you really mean it.’50
The following day she was still absorbing the news. ‘I can’t describe the blessed feeling of relief that we need never never be worried about money again (except thro’ our own fault of course!),’ she told Churchill. ‘It is like floating in a bath of cream.’51 In her excitement, Clementine wrote daily for four days. ‘We will have to pay our bills more regularly now that we are substantial people, shan’t we?’ she mused, before asking for an infusion of funds. ‘Please may I have a little money now that you are what the French call a “rentier”?’*6 As regards his articles on painting for The Strand Magazine, she wondered if he could now afford to drop them as she felt they were bad for his image.
I have a sort of feeling that the ‘All Highest’ [George Curzon, then foreign secretary] rejoices every time you write an Article & thinks it brings him nearer the Premiership, tho’ I think that a man who has had to bolster himself up with two rich wives*7 to keep himself going is not so likely to keep the Empire going as you, who for 12 years have been a Cabinet Minister & have besides kept a fortuneless Cat and four hungry kittens.52
Clementine’s only regret was that the jewels were no longer part of the Garron Tower estate. Sensing her disappointment, Churchill briefly considered an effort to recover them, but he told the marquess of Londonderry that he accepted their earlier arrangement. ‘I am sorry you regret the jewels but I am not sure you need to do that,’ his cousin responded, dispatching his butler to Sussex Square with what could be found of his great-grandmother’s silver. ‘The emeralds are nice, but now no one likes anything but the Cartier setting.’53
Churchill and Bernau hoped that most of the estate’s investments could be transferred to Cox & Co. before the colonial secretary left for Cairo, where he was to chair an imperial conference on the Middle East. They had decided that Churchill should repay the £4,000 of his bank loans that his cousin had guaranteed, but keep the rest until the final size of his inheritance was known. ‘I had a blow yesterday when I found that the Estate is about £7,000 less than I thought,’ Churchill told Clementine. ‘It now seems likely to work out at about £57,000 after duty. This would have been £85,000 pre-war. It will produce nearly 4000 a year from its present trustee securities: & I am being carefully advised as to rather more fruitful investments.’54 Clementine was philosophical:
I am so sorry my Dearest that you have had a deception as to the amount of the inheritance. It is certainly very disappointing after you had worked it out so carefully & thought about how to lay it out to the best advantage; but don’t let a ‘crumpled rose leaf’ like this spoil the really glorious fact which rushed on us so suddenly a little time ago – that haunting care had vanished for ever from our lives... It’s so delicious to be easy – I hope I shall never take it for granted but always feel like a cork bobbing on a sunny sea.
Could he not, she asked, ‘take me in your waistcoat pocket to Egypt’?55 Churchill said she could come, prompting a further question as to whether Bessie, Clementine’s lady’s maid, could travel too? Bessie made the journey – the Churchills’ spending had moved up another step.*8
*1 Britain’s debt stood at 130 per cent of its pre-war gross national product, below its level at the end of the Napoleonic Wars, but far above the level in the United States (30 per cent), which took over Britain’s mantle as the world’s leading financial power.
*2 These were 500 Cassel Coal Collieries shares worth £872 at the end of February 1919.
*3 Alexander Kolchak (1874–1920), Russian naval commander, Black Sea fleet 1916; ordered to leave Russia following 1917 Revolution; returned to establish Siberian Regional Government 1918; after initial success in 1919, captured and shot February 1920.
*4 Albert Curtis Brown (1866–1945), born in United States; joined Buffalo Express 1884–94; New York Press Sunday editor 1894–8, London correspondent 1898–1910; founder and managing director International Publishing Bureau 1900–16; founder and managing director Curtis Brown Ltd. 1916–45.
*5 Thornton Butterworth publisher (of G. K. Chesterton and Margot Asquith among others); his business went into receivership in September 1940.
*6 A person living on a financial return from property or investments.
*7 Curzon’s two wives were Mary Leiter, daughter of Levi Leiter, co-founder of the Chicago department store Field & Leiter (later Marshall Field), whom he married in 1895. She died in 1906. After a long affair with the novelist Elinor Glyn, Curzon next married Grace Hands, a wealthy American widow, in 1917.
*8 ‘With such elaborate clothes a lady’s maid was really a necessity. Skirts that trailed on the floor needed constant cleaning and mending. Zips were still in the distant future and bodices had intricate fastenings.’ Loelia, duchess of Westminster, Grace and Favour, pp. 40–1.