THE CHURCHILLS JOURNEYED in style for six weeks – breaching ministerial travel guidelines by booking a luxury cabin for the sea journey – before returning in the spring of 1921 to find that the transfer of the Garron Tower estate had made little progress during their absence. The estate’s value had turned out to be £64,000, reduced by estate duty to £56,000,1 which was lower than hoped. Nevertheless, Churchill increased Clementine’s monthly housekeeping allowance by a third. Proudly handing his bank manager a two-page list of investments he had inherited, Churchill invited William Bernau to select those he wished to use as security for a new consolidated loan of £30,000, which Churchill would use to replace all his old borrowing facilities.2 He was going to use the windfall to enlarge his investment portfolio, rather than reduce his borrowings.
The reorganization of Churchill’s finances was interrupted by two family tragedies in quick succession. First, Clementine’s thirty-three-year-old brother Bill committed suicide in a French hotel room, unable to overcome his addiction to gambling. Just two months earlier Churchill had used £750 of his new funds to clear Bill Hozier’s debts, and his brother-in-law had made a written undertaking ‘not to engage in any form of gambling at cards, racing or game of chance’.3
Weeks later, Churchill’s mother fell down some stairs and broke her ankle. Jennie had divorced George Cornwallis-West in 1914 and had married for the third time in 1918, once again a man younger than her son. Montagu Porch, a member of the British civil service in Nigeria, had not been dissuaded from marrying her by Churchill’s warnings of murky financial trouble ahead4 or by Jennie’s refusal to move to Nigeria. The couple enjoyed a honeymoon in Europe that lasted for almost a year, until their money ran out and Porch returned to Nigeria.
Jennie then achieved the one real financial coup of her life. She borrowed money from Porch’s family trusts to buy a property in Berkeley Square, London; she modernized it and sold it early in 1921 for a clear profit of £15,000.5 After paying off five of her most insistent moneylenders, Jennie made a celebratory shopping trip to Florence, Rome and Naples, spending £1,000 on Italian antiques.6 ‘We ransacked all the curiosity shops and Jennie bought profusely,’ recalled her companion Vittoria Colonna, duchess of Sermoneta. ‘Her zest in spending money was one of her charms.’7
Now, however, Jennie’s broken ankle had badly infected her leg, which had to be amputated above the knee. Churchill cabled reassuring messages to Porch in Nigeria, insisting that she was out of danger, but Jennie died of a sudden haemorrhage on 29 June 1921. She was sixty-seven and technically intestate, having failed to remake a will after remarrying. It made little difference: after several of society’s most fashionable moneylenders had lodged their claims, Jennie’s debts easily outstripped her assets.8
Churchill mourned his mother’s loss, but her death completed the transformation of his finances. His half share of both his parents’ trusts could be added to the money that he had recently inherited from his great-grandmother. Extracting the lump sum of $250,000 due from his grandfather Leonard Jerome’s ‘American settlement’ proved difficult: New York’s Manhattan Club had taken over the liability to make the payment after buying the Jerome mansion in 1913, but it did not have the funds available. Churchill was anxious to receive payment while the dollar’s exchange rate to sterling remained strong, but the club took time to find a lender, who then insisted on seeing a copy of Jerome’s original 1874 deed, which had gone missing.
The Churchill brothers hired an American lawyer to force the pace, but almost inevitably the sterling value of the dollar fell by 10 per cent during the time it all took.9 When the dust had settled, Churchill’s own share of all his parents’ trusts produced another £54,000 of capital,10 but its one big disadvantage compared to the Garron Tower inheritance was that it remained tied up in trusts to protect the next generation. He would earn investment income each year from the trusts, but could only touch their capital if the transaction was treated as a loan and he paid the trustees a market rate of interest.
The family tragedies made it difficult for Churchill to complete the reordering of his finances on which he had embarked during the spring. To complicate matters, his relationship with Lloyd George had reached a new low. The prime minister had appointed the less-experienced Robert Horne to replace Austen Chamberlain as chancellor of the exchequer, a position in which Churchill aspired to follow his father. Three days after his mother’s funeral, amid press reports that he was plotting to unseat the prime minister, Churchill met Sir Reginald Cox, the senior partner of Cox & Co., to promise that he would produce a more detailed blueprint of his future financial arrangements once Parliament rose for its summer recess.11
‘Dealing in round figures,’ he wrote confidently to Sir Reginald in August, ‘I owe the bank £15,000 on promissory notes, £7,000 on 4% loan against a life policy of £10,000, £11,000 overdraft on current account, & £2,000 overpaid on the Investment a/c, total £35,000.’12
In place of all these different facilities he suggested a single loan of £35,000 to be repaid slowly over eleven years. Sir Reginald baulked at this. ‘Told him that an annual repayment, as it implies renewal from year to year, is not acceptable,’ Bernau noted after a second meeting, held on the same day that the cabinet met to discuss Churchill’s proposals for Britain’s administration of its new mandates in Iraq and Palestine. Churchill’s loan was restricted to £30,000, to be reduced ‘substantially’ in 1922, plus an overdraft of £3,000.13
During the parliamentary recess the Churchills decided to acquire some of the trappings associated with their new station in life: a country house, a smart car and a trust for their children. Churchill inspected Chartwell, a west Kent manor large enough for a family of nine children and with a domestic staff of thirteen, its seventy acres of land looked after by an outdoor team of twenty.14
Clementine preferred the idea of a house on its own: ‘Personally “farming” rather frightens me after our experience at Lullenden which is now costing the Hamiltons dear,’ she explained from the nearby estate of Fairlawne, where she was staying.15 Her message was even clearer the next day: ‘I want to lie in the sun & blink & wake up now & then to eat a mouse caught by some one else, & drink a little cream and doze off*1... Darling let us beware of risking our newly come fortune in operations which we do not understand & have not the time to learn & to practise what we have learnt’.16
However, she did agree to inspect Chartwell on her way home and this seems to have changed her mind: ‘My darling, I can think of nothing but that heavenly tree-crowned Hill. It is rather like a view from an aeroplane up there.’ The house was due to be auctioned and Clementine set out her ideas for change beforehand:
Don’t you think if the Estate would pay for it it would be wise to add at once a corresponding wing on the left side of the house.*2 My reasons for this are as follows: 1) We need a minimum of 12 bedrooms to accommodate the whole family & the servants [. . .] If we put in 4 bathrooms that will leave 13 bedrooms if we do not add a Wing, i.e. room for 1 guest only – I think you would like to be able to put up 2 or 3 guests at least with 1 or 2 visiting servants.17
The caption at the foot of the letter, below her familiar drawing of a cat, reads: ‘Whiskers have grown 2 inches at the thought of our castle in the Air.’ A few days later, Chartwell failed to sell at auction, but there is no record of whether the Churchills submitted a bid.18
The couple’s decision to transfer £10,000 of their inheritance to a new settlement for their children was not entirely altruistic.19 As trustees, they would still control how the money was spent and the trust’s own set of allowances would reduce the family’s overall tax burden, now that much higher rates for the better-off were clearly to remain a permanent feature of the post-war tax landscape. Churchill planned to borrow the full £10,000 straight back from the trust for his own purposes. The cost of interest on the loan was allowed to be subtracted from his own taxable income, thus reducing his own tax rate as well – a double tax benefit. Churchill held off signing the legal papers, knowing it was a sensitive move. A recent royal commission had recommended closing down abuses of the trust system, but he went ahead early in 1922 when well-organized lobbying resulted in many of the loopholes remaining open.20
The last item on Churchill’s summer shopping list was a Rolls-Royce Silver Ghost Cabriolet, costing £2,593, which he planned to christen during a September motoring holiday around Scotland.21 Impatient for its arrival painted in the Marlborough blue, Churchill persuaded the coachbuilders Barker & Co. to lend him a car of the same model in London. Meanwhile, Clementine travelled to Cheshire to play in the duke of Westminster’s annual tennis tournament, leaving their children with a young French governess to spend August by the sea in Kent.
What followed was yet another family tragedy. At the seaside Marigold, their youngest child, who was not quite three years old, developed a cold and a sore throat. It turned into tonsillitis. Alarmed at the child’s deteriorating condition, an anxious landlady persuaded the young governess to summon Clementine, who rushed down to Kent from Cheshire. Her first letter to Churchill, written on 18 August, gave no hint of concern, but instead recorded her delight at the imminent arrival of the Rolls-Royce.22 Four days later, Marigold died of septicaemia. Churchill arrived before the end came. ‘She said: “So tired” and closed her eyes. And I thought that Clemmie would die in the violence of her grief. She screamed like an animal under torture,’ Churchill told his private secretary almost forty years later.23
Churchill paid £146 for Marigold’s small, satin-lined coffin and its sad journey to Kensal Green Cemetery.24 After the funeral the family travelled by train to the duke of Westminster’s Scottish home, where the Rolls-Royce awaited them. Clementine and the children returned to London a fortnight later for the new school year, leaving Churchill to drive the car northwards to a cabinet meeting in Inverness. On the way, near the Cromarty Firth, he collided with a car carrying a disabled man, to whom he sent an extra cheque for £500 along with £30 for repairs.25 It was the end of the Rolls-Royce’s short, ill-starred life with the Churchill family. The ever-obliging Aunt Cornelia took it over at a price only £150 less than its cost and Churchill hired a Daimler.
Churchill spent much of the autumn dealing with the future governance of Iraq and Ireland and negotiating his plans through the House of Commons. Shortly before Christmas he finally sat down at home to examine his finances. It had been an extraordinary year.
His own assets, he estimated, amounted to £65,000, but a net £30,000 after deducting his bank loans. His family trusts contained another £54,000 of assets, while Clementine’s portion of their marriage settlement held £14,000, taking the family’s entire net worth close to £100,000 (a level which it would not regain until the final stages of the Second World War). The annual balance between income and expenditure was not so healthy: income had stayed steady at £9,000–10,000 a year, but ‘normal’ family spending was still out-stripping it by at least £3,000 a year.
For the sake of his finances, Churchill would have to press on with The World Crisis, his book about the Great War.26 In order to make progress on it during the parliamentary recess, he joined an exodus of British politicians to the French Riviera. He arrived on Boxing Day and planned to write by day and spend the evenings in the company of his colleagues. ‘LG [Lloyd George] read two of my chapters in the train & was well content with the references to himself... And the pelf *3 will make us feel very comfortable,’27 he wrote to Clementine. Back home, however, first Diana, then Randolph, then two maids and finally Clementine herself fell victim to a virulent strain of flu that was to kill more than 13,000 people in Britain.28 Fortunately, everyone in the Churchill home recovered.
Churchill’s next letter rather tactlessly let slip that he planned to meet Clementine’s mother at a Monte Carlo casino: ‘The Sporting Club people mentioned her name to me with the utmost appreciation & granted me my ticket of admission “sans phrase”. Evidently she has taken possession of this gambling resort.’29 It was not the sort of news that Clementine – ill and terrified by the damage gambling had done to her family – wanted to hear; she wrote an anguished reply, but followed it up with a cable asking Churchill not to open it. He received the letter the next day, as news of street violence in Ireland filtered down to the south of France, and he admitted to opening it: ‘In law it was my property once it was delivered to me,’ he explained, before sympathizing with her and then breaking his own news which concerned the casino: ‘I must confess to you that I have lost some money here; though nothing like so much as last year.’
Churchill withdrew almost £700-worth of French francs in cash during his two-week stay, according to his bank statement.30 On the most generous of estimates, a week’s hotel bills (Churchill was the guest of the countess of Essex and Lord Beaverbrook*4 for the second week), car hire and tips would not have cost more than £200, leaving his probable gambling losses at some £500. ‘It excites me so much to play – foolish moth,’ he explained to Clementine. ‘But I have earned many times what I have lost by the work that I have done here at my book; and also our shares at home have gone well. I am vexed with myself. Max highly disapproved on every ground. As I was punished by the Cat when I was not at fault, you must now pardon me when I am.’31
After Churchill returned home on 8 January he sanctioned a new flurry of stock exchange transactions over the next four months, despite his immersion in Parliament in the politics of Egypt and Ireland. Worth more than £250,000, these transactions were all conducted through Vickers da Costa, where his brother Jack was about to become a junior partner. They concentrated on fixed-interest stocks, which not only raised fewer conflicts of interest for ministers than company shares, but were also thriving as interest rates fell in the face of Britain’s struggling post-war economy.32
After recording dealing profits of £2,850 in the year since his inheritance,33 Churchill felt confident enough to send more money to Clementine, who was pregnant again and staying in southern France. ‘I know what an economical cat it is,’ he explained. ‘But the Riviera is a frightfully expensive place.’34
Busier than ever at Westminster, Churchill now trusted Clementine with more of the housekeeping budget, although he still paid all their doctors’ bills and for cars, trains, clubs, wine, cigars and his holidays. Clementine’s monthly allowance was supposed to cover clothes, domestic staff, school fees, food, flowers, furnishings and her own holidays, but nevertheless during 1922 the ‘economical cat’ required transfers of an extra £10,000. By April 1922 Churchill’s bank borrowings were already £6,000 higher than the sum he had agreed six months earlier and he had to take on an extra loan, raising his borrowings to £39,000.35
Confined to bed for a week after a nasty fall from a horse at the start of the new polo season, Churchill realized that The World Crisis was so far behind schedule he could not meet Thornton Butterworth’s publication timetable. He had learned that the art of dealing with publishers is to break the bad news at the start of the letter, but to provide a morsel of good news towards the end. Butterworth was supposed to be cheered on this occasion by the cabinet’s recent decision to allow ministers to quote from official documents in their memoirs, where they were defending their conduct in office, the so-called ‘vindicator clause’. Churchill, who had been involved in so many of the war’s controversies, foresaw considerable new source material; Butterworth, however, saw only the extra costs of paper, ink and binding which would fall on the publisher.36
There was a whiff of decay around the Coalition government during the summer of 1922, as ageing men of differing political persuasions, some having been in office for almost two decades, struggled to find common solutions to the problems of post-war Europe.
Should his political fortunes decline, Churchill felt financially strong enough to withstand the consequences. At the first signs of economic recovery in June he had sold his entire bond portfolio and repaid all his bank loans with the £46,500 raised. His current account at the bank was in surplus for the first time in nearly twenty years. It didn’t last, however, for in a matter of days he had reborrowed £15,000 and sent Vickers da Costa £25,000 to buy more shares.37 Clementine was allowed to spend a little of the proceeds at Sussex Square: ‘I think we are justified in making the new bath room you wished for and I put in a plea for my parquet [flooring for Churchill’s study].’38
The governing Coalition’s demise came a step closer when the Ulster Unionists protested at the names included in June’s official honours list. There was nothing new about selling titles to fund Britain’s political parties, but Lloyd George had taken the art to a new level by including on the list individuals convicted of tax evasion, fraud and trading with the enemy during wartime.*5
Recognizing that his ministerial salary might soon come to an end, Churchill raised the subject of the timetable for The World Crisis with his agent Curtis Brown before he set off on his summer holiday. He could still finish the first volume by the end of the year, as required by his contract, but he would be able to improve the final result greatly, he told his agent, after leaving office. Churchill asked Curtis Brown to find out whether he might postpone publication for a year without triggering the need to return his advances. Churchill thought The Times would object, but it was the first to agree, allowing him to set off in good heart for a rendezvous with his friend Lord Beaverbrook at Deauville.
They spent time at the casino, as Clementine feared, but Churchill restricted his own losses by watching, fascinated, as the Shah of Persia gambled away his subjects’ money, fed to him by his prime minister, packet by packet.39 Clementine was more nervous of the casino at Biarritz, near to the duke of Westminster’s hunting lodge, where Churchill was due to stay next. ‘I hope my own Darling you are being wise & wary & not singeing your pork whiskers at the Tables,’ she wrote from the English seaside at Frinton-on-Sea, where she had taken the children. ‘Just think last year in one night you lost nearly the rent of this lovely house.’40 Churchill lost £40 at the start of his visit, but recouped it all before leaving: ‘So I said goodnight to Mephistopheles & came away, having neither lost nor won,’41 he reported home proudly.
Clementine was enjoying the seaside home at Frinton (‘I am so comfortable here – it’s so comfortable and delicious,’ she wrote), but Churchill had not given up hope of buying Chartwell and its land. When the estate agents Knight Frank & Rutley warned that the property was likely to return to auction in the autumn, he kept using his bank passbook to work out what he could afford to bid. A heavily pregnant Clementine had convinced herself that the house faced the wrong way and was too close to the road, and pushed the case for a seaside home: ‘If you do let me buy a little house here (there is one with 10 bed-rooms & 2 baths on which I have cast covetous eyes which I think could be had for £4000),’ she wrote from Frinton in mid-August, ‘I would like to sell the gold pots and contribute. I could also sell my shares & then that would be more than half.’42
Churchill spent ten days with the family at Frinton towards the end of the month, but he remained unconvinced of its merits. On his return to London he learned that a rebel Turkish army was advancing on the demilitarized Dardanelles straits and Constantinople;*6 he was so engrossed at work that he ignored the two other house possibilities that Clementine suggested. Then, just as events in the Near East threatened to develop into a full-scale political crisis, Knight Frank & Rutley offered Churchill ten days in which to buy Chartwell at a pre-auction price of £5,500;43 the letter arrived on the same day that he argued in cabinet for an extra division to reinforce Britain’s army at Constantinople. It was also the day on which Clementine went into labour with their fifth child.
Without waiting to consult her, Churchill carried out some quick sums before replying with a lower offer of £4,800. ‘The house will have to be very largely rebuilt and the presence of dry rot in the northern wing is I am advised a very serious adverse factor,’ he explained.44 Representing both buyer and seller, Knight Frank & Rutley’s agent Norman Harding found himself summoned to the Colonial Office. He recalled that Churchill ‘strode up and down, using every argument he could think of to lower the price... Eventually, with a very bad grace, he gave way.’45 In fact, Churchill only raised his price to £5,000. That weekend he looked after the elder children, while Clementine recovered from the birth of another daughter, Mary. Sarah Churchill later recalled:
We clambered into an old Wolsey and with my father at the wheel off we went. He told us on the way that the purpose of this journey was to inspect a house that he thought of buying in Kent, and he wanted our opinion... Chartwell was wildly overgrown and untidy, and contained all the mystery of houses that had not been lived in for many years... ‘Do you like it?’ Did we like it? We were delirious. ‘Oh, do buy it!’ we exclaimed. ‘Well, I’m not sure...’ He kept us in anxious suspense... Not until we reached Parliament Square did he divulge that he had already bought it.46
Still pre-occupied by the Turkish crisis, Churchill asked his brother Jack to help arrange funding for the purchase and modernization of Chartwell until royalties started to arrive for The World Crisis. On 22 September, having decided to borrow £11,500 from a mixture of the bank and the marriage settlement, Churchill turned aside from a series of emergency ministerial meetings – called to discuss the encirclement of a small Anglo-French-Italian force at Chanak, south of the Dardanelles – to write to his bank manager. ‘I shall have to rebuild to a large extent the house which is quite unworthy of the beautiful situation, and this is estimated to cost about £8,000,’ he told William Bernau. He would borrow £3,500 from his marriage settlement trustees and asked for a loan of £8,000 from the bank, just until the arrival of his royalties, which he expected to amount to at least £25,000. ‘It is from this fund that I propose to defray the bulk of the expense on Chartwell,’ he concluded.47
Churchill told the bank that he expected ‘no difficulty’48 from his marriage settlement trustees, but he had reckoned without the duke of Marlborough. Against a background of falling property values, the duke insisted that the trustees could not lend more than half the property’s cost. Churchill countered by claiming that, with its cottages, timber and land, Chartwell would be worth at least £15,000 by the time he had spent ‘£7,000 or £8,000’ on it, to create ‘a first-class medium size perfectly appointed modern house standing in its own park and grounds within 25 miles of London’.49 Unwisely, he added that house price deflation was confined to the very largest houses (he stopped short of mentioning Blenheim), but his cousin stood his ground. ‘The bottom has not yet been reached,’ he insisted. ‘You know that vast portions of the land of England are to-day unsaleable.’50
There was no time to make other plans before Churchill suffered what The Times reported as ‘acute gastro-enteritis’,51 but which turned into full-scale appendicitis. Surgeons operated on 18 November, the day on which the Liberals lost an important by-election, in large part due to public disquiet at the apparent willingness of Lloyd George and Churchill to wage war over disputes in far-off lands. The Liberals’ Coalition partners were unnerved. The Conservatives became convinced they should fight the next general election on their own. There was a meeting at the Carlton Club, during which the party’s MPs and peers backed Stanley Baldwin and Andrew Bonar Law’s calls for an immediate withdrawal from government.
Churchill was still in hospital when Lloyd George resigned and Bonar Law formed a minority Conservative government, before calling a general election. Churchill dictated his campaign manifesto from bed in a London nursing home. He sent Clementine north to Dundee with their six-week-old daughter to start campaigning until he was well enough to join her; meanwhile he tried to revise his funding plans for Chartwell.
The plan to borrow from the marriage settlement and to use book royalties was dropped. Instead, he would sell some investments and borrow a larger amount from his father’s trust, where he expected that Jack would prove a more compliant trustee than his cousin. ‘I propose to purchase it out of the Trust Fund under Lord Randolph Churchill’s Will, but up to the present I have not been, through illness and other preoccupations, [able] to make the arrangements I desired,’ he explained to Bernau, asking the bank for a smaller, bridging loan of £4,500.52
Churchill’s doctor allowed him to join Clementine for the last days of the general election campaign, but in disadvantaged Dundee the political ground had shifted to the left and they faced noisy crowds. A 15,000 majority evaporated in the face of co-operation between his Labour and Prohibitionist opponents, who defeated both Churchill and his fellow Liberal candidate in the two-member constituency – Churchill came fourth in the poll. Nationally, the Conservatives won a clear majority and the Labour Party increased its vote to four million. Churchill found himself with a new country home, but ‘without an office, without a seat, without a party and without an appendix’.53
*1 In the Churchills’ private correspondence, Clementine often took on the persona of a cat (Churchill of a pig).
*2 The estate to which Clementine referred was the Garron Tower. She included a drawing corresponding closely to the west wing that the Churchills would add to Chartwell, at great cost, when they finally bought it.
*3 Pelfre is an Old French word for money of questionable source.
*4 Formerly Sir Max Aitken.
*5 William Vestey, Joseph Robinson and John Drughorn, respectively. The honours tariff was supposed to stand at £10,000 for a knighthood, £30,000 for a baronetcy and from £50,000 upwards for a peerage. The Order of the British Empire was introduced to fill a gap below £5,000.
*6 The post-war treaty of Sèvres had reduced Turkey’s size and established a ‘Neutral Zone of the Straits’ on each side of the Dardanelles and Bosphorus straits and of the sea of Marmaris. The Allies dealt with a puppet government under the sultan in Constantinople; however, Mustafa Kemal, the hero of Gallipoli, set up a rival Turkish national government whose forces soon threatened the limited Allied forces policing the neutral zone.