CHURCHILL HAD TO explain his severe losses not only to Clementine but to his bank manager. He prepared for the encounter in November 1929 by listing the £16,500-worth of new writing commissions he had been awarded while in America. However, a sceptical William Bernau was more interested in the income that Churchill had promised would arrive in the autumn but failed to appear. As a result, he told Churchill, the bank was owed £13,700, but its security was barely worth £14,000.
Churchill was still drafting a request for increased short-term facilities when Bernau forwarded a letter from his head office, warning that the bank’s overdraft arrangement had only two days left to run and would have to be renewed at a lower, not a higher, figure.1 However, Bernau, an insurance specialist, then offered to work personally with Churchill’s lawyers to persuade an insurance company to lend more money to him, in place of Lloyds Bank. Bernau suggested that the future income flow from Churchill’s marriage settlement, which was yet not pledged elsewhere, could provide the necessary security.
A relieved Churchill deemed it wise not to tell Bernau that one of the fixtures of his income for the next few months now looked uncertain. George Blake, The Strand’s editor, had caught wind of Churchill’s American magazine deals and was threatening to cut his contract on the grounds that it would now be almost impossible to resell his own Churchill series on the other side of the Atlantic. Churchill invited the editor and his proprietor, Lord Riddell, to lunch at Chartwell, proposing that business talk should be saved until after the meal. He was confident that his relationship with Riddell would carry the day. Afterwards, however, Blake still halved the number of articles commissioned and also the magazine’s fee for each article, thereby slashing Churchill’s income from £6,000 to £1,500.2
Chartwell was ‘dust-sheeted’ for the winter. Only the study was left as it was so that Churchill could write there at weekends. Strapped for cash, he narrowly escaped the indignity of accepting an emergency loan from Lord Beaverbrook when Bernau coaxed a loan of £5,000 out of the Commercial Union. However, it came at a steep cost of more than 10 per cent a year.3
Churchill promised Bernau that part of the money, at least, would be used to reduce his overdraft, but then a message from Bernard Baruch in America made him rethink. It said, simply: ‘Financial storm definitely passed.’4 Churchill instructed that the whole £5,000 should be sent to Vickers da Costa, so that he could restart trading.5 By Christmas Churchill was buying Montgomery Ward again.6 In January and February he kept adding more Simmons shares to his list, despite the fact that its price fell to the point where Cecil Vickers, the senior partner, felt compelled to advise Churchill to stop dealing in what he called little more than a ‘gambling stock’.7 Vickers da Costa recorded Churchill’s activity in four different accounts, making it difficult to track the overall results, but by the middle of 1930 Churchill had lost an additional £7,000 on the stock market.8
No number of newspaper or magazine articles could replenish his losses. Instead Churchill tried to persuade his publishers to make cash advances for new books that he could quickly conjure up from past articles. At the same time he reassured George Harrap that Marlborough was still on course. He invited Harrap to lunch at Blenheim and gave him a tour of the archive. Still new to Churchill’s ways, Harrap may not have grasped the full meaning of the letter that followed: ‘This is a work which will gain by not being hurried,’ Churchill wrote, ‘and I do not propose in all probability to begin the actual writing until I am saturated with the subject and have formed all the large views of Marlborough’s personality and of the period.’9
In reality, he would not begin writing until several other books were complete. While writing an article for Collier’s magazine about the Battle of Tannenburg (26–30 August 1914), he realized that the story of the Eastern Front was almost unknown and worth a book in itself. He suggested it to Thornton Butterworth, dropping a broad hint that he might find time to fit it into his busy schedule if offered a generous enough advance. Keen to win back his author, Butterworth obliged with an advance of £2,500 for The Eastern Front, £1,500 of it payable on signature.10 The editor of The Times, however, was less enthusiastic and would offer only £500. ‘Churchill’s stock is not very high at the moment,’ he observed. ‘He is writing all over the place.’11
In America Charles Scribner agreed to come in on some deal, but he preferred his own idea of an abridged version of The World Crisis. His firm would edit it, he explained, therefore providing Churchill with ‘a financial return out of proportion to the time and labour that would be entailed’.12 Butterworth was sceptical, but in the end supported the idea. A third book was then conjured out of thin air when Churchill proposed adding 50,000 fresh words about his early life to the 50,000 he had already written in various articles, together making an autobiographical book worth a guinea. Butterworth and Scribner liked the idea and quickly signed up to My Early Life.13 Suddenly, Churchill’s cash flow looked rosier: stock exchange losses aside, he now expected to generate a surplus in 1930.14
However, Churchill was now obliged to do almost nothing but write, and his remorseless schedule took its toll, forcing him to restrict his political activity. He had committed himself to the completion of three books and and would write more than forty articles for newspapers and magazines, many of them American, before 1930 was finished.
The challenge of juggling so many commitments without the help of a researcher proved formidable. William Chenery wanted changes to both of Churchill’s first two articles for Collier’s; the Bell Syndicate threatened to cut short its series because, it alleged, Churchill kept recycling the same material in different columns; then the Saturday Evening Post cancelled his final four articles (worth $10,000) when it saw that Churchill was writing for Collier’s, although neither Churchill nor his agent had realized the two publications were rivals. Finally Collier’s rubbed salt into the wound by refusing to renew Churchill’s commission for 1931; as a result he was forced to accept a much lower fee from the only real alternative, Hearst Newspapers.
Only the arrival of proofs for My Early Life in April relieved the gloom. The publishers’ enthusiasm prompted its promotion from third to second in the order of publication, once Butterworth agreed that he would not reclaim Churchill’s signing advance for The Eastern Front as a result. By June it had jumped to the top of the list with publication in October. The abridged World Crisis would follow in February 1931, then The Eastern Front in September. Whatever the order, it was clear that Marlborough: His Life and Times had been sidelined.
All of these extra book deals did not immediately improve Churchill’s dire finances after his investment losses. In March 1930 Cecil Vickers had asked for an extra £2,000 cash,15 but Churchill had only been able to find half of the money, so that Jack had to write a cheque for the balance until funds arrived from a New York royalty account.16 By mid-summer 1930 Churchill faced a series of what he called ‘inescapable payments’, together adding up to £4,300. His secretaries’ list of unpaid bills at Chartwell ran to two pages, interest was due to the bank at the end of June and large life insurance payments loomed in September.17
Churchill drafted a letter to Bernau setting out his difficulties, but in the end decided on a face-to-face meeting, using his draft as an aide-memoire. It lists more than £5,000-worth of fees due for articles already written, plus an additional £12,000 now contracted for ‘no fewer than three books’ over the coming months. Finally it reminds Bernau of a separate £14,000 due for Marlborough in 1932. His difficulties were therefore temporary, Churchill stressed, although he did need to borrow another £2,000 as a result of timing problems and would need to delay the reduction in his overdraft until the end of the year.18
Before Lloyds Bank would agree to come to his aid, Churchill had to promise to reduce his borrowings by £3,000 before the end of the year. His cousin Captain Guest also had to guarantee the temporary new loan of £2,000, while Sir Abe Bailey was asked to reconfirm his personal guarantee of the value of Churchill’s Sherwood Starr shareholding. Churchill’s lawyers found a puzzled Sir Abe in Harrogate, where he was on holiday. ‘I thought I paid you off £2,000,’ he told Churchill. ‘At any rate whatever you wish me to do I will gladly do for you.’19 Yet another crisis had been averted.
Throughout his summer holiday in France, Churchill’s writing commitments had to vie for attention with the world’s stock markets. He asked Cecil Vickers to send him a daily cable of prices, led by three American railway companies whose shares Churchill had sold short. He cut the first position too soon after losing his nerve, but managed to hold on and sell the other two at a profit, when Bernard Baruch cabled from America to forecast a turn for the better in the market.20 Even on holiday, Churchill’s journalistic instincts remained alert and he took advantage of Lloyd George’s illness and then of the crash of a British airship to win commissions for two special articles. A third followed when the Sunday Chronicle bashfully asked whether he would lead on a new series it was planning about biblical figures; it all came down to price, he told the paper.21 It was on this holiday, too, that Churchill first suggested to Butterworth that ‘the fifteen or twenty articles I have already written on eminent personages could be easily harnessed’ into a book, the idea that was to turn into Great Contemporaries.22
On Churchill’s return, extracts from My Early Life started appearing in the Daily News23 before the full edition was published in October. ‘I am hopeful that the book will do more than it was originally written to do, namely, to pay the Tax collector,’ Churchill told Stanley Baldwin. ‘There may even be a small surplus to nourish the author and his family.’24 It was not to be: the 9,000 copies sold in Britain left royalties still short of Churchill’s advance at the end of the year and the picture was similar in America.25 Churchill realized that writing alone would not be sufficient to pay off his debts.
Obligingly, Lord Inchcape was happy to resuscitate the plan for two of his private subsidiaries to appoint Churchill a director at a fee of £500 each. Churchill remained a director of both Mann George Depots and R. & J. H. Rea until 1939; neither turned out to hold many meetings of their directors, and, when they did, the meetings were often arranged at too short notice for Churchill to attend. The other plan that Churchill had considered and now put into action was a lecture tour of America. Possible promoters were asked to guarantee payment of $50,000 net of expenses and penalty-free cancellation if Churchill regained office or faced a general election. Louis Alber’s Affiliated Lecture & Concert Association accepted the terms and dispatched a contract, but Churchill had not yet signed it when he was distracted in December by a second call for extra cash from Cecil Vickers: Churchill’s investment account had suffered fresh losses and Vickers wanted him to inject £2,000 into it.26 Churchill was supposed to be reducing his bank loans, not increasing them, so he arranged to borrow the extra £2,000 from the Commercial Union, a more expensive source. The move took his combined loans from bank and insurance companies up to £22,000; he was also paying market rates of interest on loans of only a little less from his family trusts.27
Worse was to come in the following month, January 1931, when Churchill lost a further £3,000 trading in and out of Montgomery Ward’s shares.28 To cover the loss, he tried to borrow from his daughter Mary’s Settlement, only for the lawyers to rule that he could offer insufficient security; as a result, Churchill asked his friend Sir Howard Frank*1 to put Chartwell on the market. The estate agent was unconvinced about the price Churchill wanted: ‘I do not think anyone will ever give you £30,000, but, of course, if you are quite happy to continue living there on the chance of the right person coming along one day and giving you a fancy price, all well and good.’29
Churchill’s only other option in the short term was a second appeal to his brother. Jack could hardly refuse, given that he was a partner in the firm to which money was owed. Just before the stock exchange closed its fortnightly account on 14 January, Jack produced a cheque for £2,000,30 whereupon the senior partner Cecil Vickers suggested Churchill take a rest from the market. ‘I think your policy should be, at the present time, one of masterly inaction, waiting for the rise which will come,’ he advised.31
There was no New Year holiday on the French Riviera for Churchill at the start of 1931. He remained at home, making what he described to George Harrap as ‘good headway with Marlborough’, before he turned his attention back to The Eastern Front and his list of unwritten articles which he valued at £7,500.32
A decade earlier Churchill’s journalism had found easy targets in Lenin, Bolshevism and the trade unions: he enjoyed good support on each subject among both his political peers and press proprietors. Now, however, his strong opposition to Indian independence and his emerging concern at the rise in Germany of National Socialism (the Nazi Party led by Adolf Hitler had won six million votes in the country’s most recent election) proved more isolated pre-occupations. Indian self-government threatened the security of Britain’s eastern Empire, Churchill believed, but each of Britain’s main political parties had supported the call by Britain’s viceroy in India, Lord Irwin, for a conference to discuss the country’s possible dominion status. Isolated and short of time for all the writing required to keep his finances afloat, Churchill resigned from the Conservative Business Committee in the House of Commons (which would now be known as the shadow cabinet).
Little was going Churchill’s way in the early part of 1931: the Indian constitutional conference had endorsed the principle of self-government; the abridged World Crisis was selling very slowly;33 and for his annual article previewing the Budget, he reluctantly accepted a lower rate of £200, rather than his usual £500.34 Moreover his American lecture contract had raised numerous tax complications. Louis Alber had agreed to pay any US charges, but it was the possibility of being charged tax in Britain that worried Churchill. Unconvinced by the cautious assurances of experts that he should be safe,35 he resorted to his usual tactic of consulting directly the chairman of the Inland Revenue, P. J. Grigg, who had been Churchill’s private secretary at the Treasury. Agreeing to refer to his former minister only by the initials ‘A.B.’ throughout their correspondence, Grigg consulted his ‘alguazils’,*2 as Churchill called them, and then confirmed his fears: lecturing was too similar to his profession as an author for him to escape taxation: ‘[A.B.] is merely addressing hearers orally instead of delivering his message by means of the printed word.’ Churchill contested their conclusion:
The art of delivering a lecture is not literary but histrionic in its character. It is a physical and psychic exertion of which most literary men or journalists would be incapable, a certain standard of quality being essential... In the circumstances I think A.B. would be ill advised to undertake the lectures as... he would receive little more than two-fifths himself.36
Churchill left the contract for his lecture tour unsigned while he continued to search for projects that might generate immediate cash but did not require immediate work. He came back to an idea he had discussed with Charles Scribner at a Yale football match two years earlier: a book about the history of the relationship between Britain and America’s ‘English-speaking peoples’. Scribner heard no more until June 1931, when a cable suddenly arrived out of the blue from the London publisher Eyre & Spottiswoode, asking for best bids and claiming to hold exclusive ‘world rights’.37 Scribner was still waiting for the first chapter of Marlborough, for which he had paid a substantial advance, so he asked his London office to investigate. Marlborough being virtually finished, their report ran, Eyre & Spottiswoode was merely reacting to Churchill’s request for bids of at least £30,000 for a subsequent book.
Scribner wrote Churchill a long letter, reminding his author that he had forecast that the English-speaking peoples book would require at least ‘three or four years after the Marlborough’ when they first discussed it; his only possible conclusion therefore was that Churchill must be short of money, but Scribner would rather lend him cash than bid for another book.38 Churchill quietly put the project on ice.
Similar complications were inevitable as Churchill continued to pitch articles and book extracts to magazines and newspapers, usually dispensing with the services of an agent in order to save commission. In June 1931 The Strand sold to Liberty the American rights to one of Churchill’s articles, with Churchill’s blessing but without William Hearst’s permission, as was contractually required. To avoid litigation Churchill had to fall back on his personal relationship with Hearst. He won few friends at Hearst’s headquarters, however, and his attempts to renew his column for the following year went ignored. Then the sale to The Sunday Times of newspaper rights for The Eastern Front fell through, because Churchill could not get the newspaper to agree dates with the book publishers. To top it all, Curtis Brown had to cancel its European sale of the newspaper rights when Brendan Bracken announced out of the blue that he had sold the world rights to the London General Press Agency, a contract reached in haste and later to cause a lengthy lawsuit.39 Curtis Brown advised Churchill to let him take charge of everything to avoid similar problems in the future; he offered to do it for half the normal agency’s rate, but Churchill could not afford the luxury.
He had been writing non-stop, yet during the first half of 1931 Churchill had brought in to his bank account £5,000 less than he had spent.40 Undaunted, he left for his usual August holiday with the duke of Westminster, as soon as he had handed over the finished The Eastern Front to his publishers. ‘Thank God it is finished,’ he told Eddie Marsh. ‘I am longing to get on to Marlborough.’
At Mimizan Churchill found his fellow guests pre-occupied by the global markets. ‘Everybody I meet seems vaguely alarmed that something terrible is going to happen financially’,41 he confided to Marsh. Austria’s Creditanstalt bank had sparked a run on its deposits after announcing a large loss in May, and the contagion had spread through Eastern Europe after Austria’s severance of its currency’s link with gold.
Warnings from Bernard Baruch had prompted Churchill to cut back his stock exchange positions during June and July. Once he had finished his book in August, however, he returned to trading. He incurred more losses when the shock waves reached London: the Bank of England was forced into borrowing from the US Federal Reserve Bank and from the Banque de France to stop gold leaving the City. Just as Vickers da Costa asked Churchill for another £3,000 of cash to meet his fresh losses on the share markets, the crisis produced an unlikely insurance windfall.
Because of his money worries, Churchill had decided during the summer that he would have to go ahead with his American lecture tour, whatever the tax position. However, he had insured himself against the cost of having to cancel for political or medical reasons and having to pay a cancellation penalty. Quotes had been as high as 40 per cent of the sum assured, until Thornton Butterworth produced a contact at the Excess Insurance Company, who were prepared to quote only 5 per cent.42 Churchill immediately took out a policy for £5,000, for which he paid on 13 August,43 a week before the Labour government announced an emergency package of measures to save sterling’s link to gold. This package combined spending cuts and higher taxes in equal measure, but Conservative leaders told Prime Minister Ramsay MacDonald that they would support only one quarter of the total coming from taxes; several Labour ministers resigned in sympathy with the trade unions, which opposed any spending cuts.
MacDonald handed in his resignation as prime minister on 23 August 1931, but was asked by the king to stay on to lead a National Government to meet the immediate economic emergency. MacDonald invited four senior Conservatives to join his new cabinet, but Churchill was not one of them, so no claim was triggered on his insurance policy. However, an autumn election now looked a distinct possibility and this would trigger a full payout of the policy. Merrick-Taylor, Excess Insurance’s managing director, decided to cut his likely losses and to unwind his company’s policy at almost any cost less than the £5,000 covered. Bernau, an insurance specialist, led Churchill’s side of the negotiations, Churchill appearing only at the end of the talks to seal the ‘highly confidential’ deal under which the insurer would pay him £3,75044 in return for a promised Churchill oil painting. The windfall was all the more valuable because it was untaxed, and because Churchill faced no corresponding penalty to pay Alber, whose lecturing contract lay still unsigned on his desk. Only once the insurance cheque had been safely banked did Churchill cable the promoter with the news that he was postponing his lecture tour.45
Churchill used £2,000 of the windfall money to repay his brother’s loan from earlier in the year. He returned to Mimizan increasingly optimistic that he could earn enough to meet the following year’s expenditure, which he estimated at £12,000.46 That forecast was still based on his standard figure for household bills of £500 a month, although a look at Churchill’s bank account would have revealed the real cost to be running at almost double that amount. Nor did Churchill’s estimates ever include his losses at casinos, which became a regular feature of his holidays in France during the 1930s.47 In 1931 the poor summer weather in southern France helped drive Churchill towards the casinos in both Biarritz and Cannes, where he withdrew 72,000 francs in cash. On return to London, he deposited only 10,000 francs, a loss of approximately £500.48
More happily, Brendan Bracken rang Churchill during his holiday with some good news: Esmond Harmsworth,*3 son of Lord Rothermere, was taking a more prominent role at the ailing Daily Mail and on Bracken’s suggestion he had decided to liven up the newspaper by carrying a weekly column from Churchill at £150 a column; the contract would be worth up to £7,800 a year. Churchill was delighted, but then began to impose conditions from afar, despite Bracken’s warning that some old hands at the Daily Mail were resistant to the idea. In the end, Harmsworth scaled back his offer to thirteen columns a year, worth a much reduced £1,950.
A disappointed Churchill returned to England just as the new National Government prepared for Britain’s final break with gold. He told Harrap that he was at last about to turn his attention towards Marlborough.49 In truth, he was still distracted by the need for immediate cash. He sent Butterworth twenty old articles on ‘eminent personages’, which he planned to put together into two fresh books, one to be called Great Contemporaries and the other Thoughts and Adventures.50 Butterworth and Scribner quickly signed up.51 Then, in October 1931 a general election was announced and Marlborough was shelved once more.
The election campaign produced an unexpected family complication. Earlier that year Churchill’s son Randolph, now twenty years old, had returned from his own American lecture tour saddled with debts of $2,000.52 Work as a journalist on both Rothermere and Beaverbrook newspapers had done little to ease the situation. Recklessly, Randolph then bet just under £400 that the National Government would win the general election by a majority of fewer than 150 seats; on the other hand, the higher the National Government’s majority climbed above that number, the more he would lose.
By the middle of the campaign period, the National Government appeared to be heading for a landslide victory and an exasperated Churchill had to call in his brother Jack to deal with a serious threat (the National Government’s final victory by a majority of 493 seats would have cost Randolph approximately £600 in addition to the loss of his initial stake). Coolly deploying £1,000 from Churchill’s account at Vickers da Costa, Jack closed off Randolph’s bets and took out a much larger bet on a high majority in his father’s name. The tactic proved so successful that Churchill emerged with a profit of almost £900, once he had reallocated just enough of his winnings to limit Randolph’s loss to £100.53 Churchill’s letter to his son carries echoes of those his father had sent him at Sandhurst forty years earlier:
If you feel yourself able to keep a magnificent motor car & chauffeur at a rate which must be £700 or £800 a year, you are surely able to pay yr debts of honour yrself. Unless & until you give proof of yr need by ridding yrself of this gross extravagance you have no right to look for aid from me: nor I to bestow it.54
While the election results were still emerging, The Eastern Front hit London’s and New York’s bookshelves. Sales were disappointing. Butterworth attributed this to the general economic malaise, but Churchill’s own researcher, Maurice Ashley,*4 had a different explanation: ‘I received the impression that The Eastern Front was written primarily to earn money,’ he wrote years later.55 Financially, the book was a disappointment: more than half of Churchill’s final £1,000 advance had been eaten up by bills for author’s corrections and for the inclusion of sixty-nine maps.56
Ramsay MacDonald remained at the head of the National Government, although the number of Labour Party seats had collapsed from 288 to just 52 after the election. Meanwhile, Churchill had doubled his personal majority at Epping. His victory was part of a strong national showing by the Conservatives, whose leader Stanley Baldwin emerged as the new government’s real master. Baldwin asked eleven Conservatives to take up the majority of cabinet positions, but Churchill was again overlooked. An isolated objector to Indian self-government, Churchill remained outside the Party’s mainstream and was reconciled to yet another period on the backbenches. At least this meant he could tell Alber that he was now free to lecture in the United States between December and February. Chartwell’s ground floor was dust-sheeted and Churchill sailed in early December for New York, accompanied by Clementine, their daughter Diana and a bodyguard.
On the evening of their arrival in New York Churchill gave the first of forty lectures, before the family spent a quiet weekend. On the Sunday evening Bernard Baruch invited Churchill to meet two old colleagues from the War Industries Board at his apartment. Dispensing with his bodyguard, Churchill hailed a cab, but forgot to take with him Baruch’s address. After a fruitless hour trying to find the building, he climbed out of the cab to examine the street from the other side of the road and was promptly hit by a car.
*1 Howard Frank (1871–1932), senior partner Knight Frank & Rutley & Co (London), Walton & Lee (Edinburgh); president, the Institute of Estate Agents 1912-14; adviser, Ministry of Munitions 1916–22; knighted 1914, baronet 1922.
*2 In Spain, an ‘inferior officer of justice’.
*3 Esmond Harmsworth (1898–1978), MP 1919–29; chairman, Associated Newspapers 1932–71; chairman, Daily Mail & General Trust 1932–78; 2nd Viscount Rothermere 1940.
*4 Maurice Ashley (1907–94), literary assistant to Churchill 1929–33; leader writer Manchester Guardian 1933–7; sub-editor The Times 1937–9; editor Britain Today 1939–40; Intelligence Corps 1940–5; deputy editor, editor (from 1958) The Listener 1945–68; author Churchill as Historian 1968.