CHURCHILL’S NEW Evening Standard contract had been in operation for only a matter of weeks at the start of 1937 when he was put in touch with Cooperation Press Service. A press agency founded by Dr Imre Revesz, a Hungarian Jew, it specialized in distributing articles written by European politicians across a network of 400 newspapers in seventy countries on the Continent. Cooperation had started in Berlin before Hitler’s rise to power, then moved to Paris just before a raid on its offices by the Gestapo.
Cooperation wanted to do business with Churchill, but he ignored the agency’s overtures until another client, Sir Austen Chamberlain, provided a positive endorsement. Revesz received an invitation to discuss matters at Morpeth Mansions, where he was greeted in the doorway by a naked Churchill, still drying himself after a bath. As best he could, Revesz explained how he could transform Churchill’s European readership and influence, while at the same time beating the syndication fees of only £25 per article, which he understood Churchill earned from his four existing outlets in the region.
Churchill objected strongly to Cooperation’s standard agency fee of 40 per cent, but nevertheless he picked up the telephone to check Revesz’s figures with Lord Beaverbrook. In the owner’s absence, the Evening Standard’s syndication manager, William Robertson, not only confirmed the figures, but told Churchill that none of his first three articles under the new arrangements had yet earned the break-even syndication fees of £70.1
Revesz then happened to let slip that Sir Austen Chamberlain was already easily out-earning him by using Cooperation. This settled the matter. Churchill agreed in principle with Revesz that the agency should take over his existing European contracts without any commission, and that it would earn 50 per cent on any new deals.2 First, however, they had to sort out the problem of Dr Meyer, Curtis Brown’s sub-agent in smaller European countries, whose contract had just been extended for six months.3 Dr Meyer threatened to sue, but in the end Churchill ran out of patience with him and offered Revesz a three-month deal. Revesz, who had left on a sales trip to Scandinavia, changed the term to six months, while drafting the contract on a boat between Bergen and Trondheim.4
Churchill’s new agent proved a hard taskmaster. Revesz first demanded the termination of a rival agent’s*1 appointment to sell Churchill’s less valuable articles for the News of the World. He then insisted upon changes in Churchill’s writing schedule to allow almost simultaneous publication in London and Europe. Provided his articles reached Paris on a Wednesday evening, Cooperation staff would work throughout the night to translate and copy them, before dispatching them across Europe at dawn on Thursday. They would reach even the furthest-away cities in Europe by Saturday morning, only twelve hours behind the Evening Standard in London.
Twenty-one European newspapers bought Churchill’s first Cooperation article in July, netting him £57, more than double his previous European fee.5 His fourth article, ‘Anglo-German Relations’, proved too controversial for editors in Vienna and Belgrade to carry,6 but nevertheless Cooperation’s numbers kept climbing, until journey times were disrupted by the arrival of winter snow.
In France over Easter, and before resuming work on Marlborough, Churchill looked over his finances for the rest of 1937. He still expected to earn £15,500, which he predicted would outstrip his spending by some £3,000 and lower his overdraft by the end of the year.7
He had, as usual, omitted to forecast any casino losses, which over Easter amounted to no more than a fairly modest £200.8 However, a more serious flaw in his calculations became apparent on his return to Britain. His estimated income included £3,500 for Marlborough, but if the book was to catch the Christmas trade its proofs had to be ready by the end of May. Churchill realized that this was now impossible and left a sizeable gap in his finances.
Churchill decided to call in the reserve that he had established four years previously for just such an eventuality. He had contracted with Thornton Butterworth as long ago as September 1931 to publish his articles on ‘eminent personages’ in book form (now to be called Great Contemporaries). The book had been set in type in 1932 but Churchill had resisted several attempts by Butterworth to publish it in the intervening years, preferring to keep it in reserve in case ‘ill-health or some other cause’ left a gap in his publication schedule.9 He now wrote to Butterworth: ‘If you are still interested in it, I should be glad if you would make me a proposal.’10
Butterworth reminded Churchill that they already had a contract, signed six years earlier, which did not include a fixed advance. Instead, Churchill would earn an amount that would depend on orders at the publication date.11
Churchill waited another month before breaking the bad news to Harrap that Marlborough would not be ready in time for Christmas. Harrap knew Churchill well enough by now not to resist. However, he sounded a warning: ‘Many booksellers have commented unfavourably on what they call “the long-drawn-out procession of the volumes”, and the considerably diminished number of copies which we sold of Vol. III bear witness to the fact that readers do lose interest.’12
Churchill’s postponement of Marlborough until the spring of 1938 required a parallel ‘easement’, as he called it, in the timetable for his A History of the English-Speaking Peoples, which was due to be finished only a year later in April 1939. Newman Flower and his publishing partners conceded an eight-month delay until 31 December, ‘but not beyond it’.13 Having rearranged his publishing commitments, Churchill dropped Marlborough again and turned all hands at Chartwell to working on Great Contemporaries.
The new book might ease Churchill’s cash flow temporarily, but it could not repair the fatal flaw in his finances: his level of indebtedness. Unfortunately, his only valuable asset, Chartwell, had failed to find a buyer. There was a glimmer of hope, however. His Irish agent suggested that he might be able to sell the remaining ground rents on the Garron Tower estate for as much as £12,000, although there was no certainty and the process could take as long as a year.14 Churchill enthusiastically gave it the go-ahead.
It was rumoured that Stanley Baldwin might step down as prime minister after George VI’s coronation in May and if this were the case, Churchill reasoned, a new prime minister might conceivably recall him to office. Becoming a minister again had the added attraction of tax advantages: he could retire as an author for tax purposes, just as in 1925, and this would reduce his tax bills.
‘It occurs to me that if a change should occur in my affairs in the near future (which I have no reason to expect),’ he confided to his tax adviser at Lloyds Bank, Geoffrey Mason, ‘it might be proper for me to change back to the basis of the current year, and if this change were proposed as a bona fide step in consequence of unforeseeable public events, the Treasury would raise no objection.’15
Stanley Baldwin did resign two weeks after the Coronation, but his successor Neville Chamberlain did not include Churchill in his cabinet. There was more bad news: Mason informed Churchill that he had not paid all of the tax due for the tax year that had just ended in April 1936, and he already owed more tax for 1937. Altogether he would have to pay £7,500 of tax in the next few months, two-thirds of which was already late.16
Chartwell went back on the market at a lower price of £25,00017 and Churchill returned to his books and articles. He held back on publicly criticizing the new government’s policy towards German rearmament, but he had gleaned enough information from private briefings by military experts to understand the threat posed by Hitler’s government’s rearmament. He made his feelings known in speeches, articles and private memoranda to ministers.
While the international scene darkened further following Japan’s invasion of China in July 1937, Churchill told Clementine he was ‘working night & day’ at Marlborough and his columns.18 By August he still had twelve Marlborough chapters to write, but he could not resist the promise of quick cash. For example, John Waddington offered 100 guineas for short written summaries of four battles, images of which were to feature on their jigsaw puzzles. Churchill accepted on condition that he could choose the battles.*2 Kathleen Hill, a new secretary, offers an insight into that summer’s routine at Chartwell: ‘When he was bricklaying we used to take our notebooks and mount the ladder – even there he would dictate but not at length. If it was a long letter he would come down.’19
Churchill avoided any difficulties with Lloyds Bank until April 1937, when the death of Freddie Guest removed the guarantor to one of his loans. Anxious that Lloyds might require a replacement guarantor or even a repayment, Churchill rather rashly mentioned the sale of his Irish ground rents. His bank manager immediately extracted a promise that he would use enough of the proceeds to halve his loans from the bank by the end of the year.20 Two days later, Churchill heard that only a single buyer had shown interest in the rents so far and that his surveyor had valued them at just £7,500.21
Meanwhile, Chartwell was attracting no interest, even at a reduced price of £20,000, and the pile of unpaid bills had risen above £3,000.22 The storm clouds were gathering.
Churchill borrowed £1,700 – as much as his lawyers would let him – from Mary’s trust (the only trust as yet untouched), before setting off for his August holiday in France.23 There he convinced himself that he could get through to the end of the year if the bank took account of the £6,000 that he was expecting early in 1938 from his annual series of articles for the News of the World and on the publication of Great Contemporaries. However, as a precaution he began compiling monthly forecasts of his cash flow.24
The problem was that these forecasts took no account of his losses on the American stock market, which started to fall again in the middle of August. ‘Grateful your opinion American prices now on basis no major war this year,’25 he asked Bernard Baruch on 10 September, by which time prices had fallen by an average of one-sixth. Baruch replied only that he was not yet buying, but Churchill’s problem was whether or not to sell to prevent further losses. ‘Have small holdings and indisposed quit,’ he cabled again a month later, puzzled at further falls in the market, which by now had doubled to an average fall of a third since August.*3 ‘We cannot here conceive reason your collapse. No war Europe this year and immense production including armaments.’26
By now Churchill’s losses had become serious enough for Vickers da Costa to demand regular repayments of the money he owed to them, but all he could offer was a legal commitment to pay them the proceeds from any sale of his Garron Tower rents, which he had already promised (less formally) to the bank.
Churchill cut costs more drastically at Chartwell, which had become the millstone around their necks that Clementine had feared it would fifteen years ago. The staff needed to run the place still included three gardeners and secretaries, a valet, lady’s maid, chauffeur, housekeeper and other domestic staff.27 A new ‘Winter Scale’, the fourth of Chartwell’s economy regimes, was devised to halve monthly household running costs to £127:28 secretaries were reduced to two, domestic staff to three. Champagne was restricted to a personal allowance for Churchill of five half-bottles a week, although cigars were declared exempt.29 Clementine was less than wholly committed to the ‘Winter Scale’. The £90 she spent re-draping her bedroom may just have pre-dated the new regime, but her purchase of gold kid shoes and an ermine coat, another expensive skiing holiday and a new brown whipped-stitch driving suit, alpaca coat, matching cap and cockade for the chauffeur certainly did not.30
Clementine’s preferred remedy for their difficulties was to sell both Chartwell and Morpeth Mansions and to consolidate their property costs in a single, larger London home. She had found a suitable eight-bedroomed Victorian property on Porchester Terrace in Kensington,31 which the Paddington Estate was ready to lease for £350 a year, provided the new tenants undertook to modernize the building.
An architect estimated the cost of repairs at £3,00032 and Churchill warmed to the idea, but he lost heart when the estate’s managers sent a seven-page list of mandatory repairs and the estimated cost of repairs almost doubled. ‘I feel it would be imprudent to commit ourselves to so large an expenditure as £5,000 while we have the other two properties on our hands,’ he told Clementine at Christmas, and that was effectively the end of the Porchester Terrace option.33
Churchill preferred to look for new sources of income, letting it be known discreetly that he was open to taking on more company directorships. There was only one tentative approach, on behalf of the Grosvenor House Hotel, and it came to nothing.34 The film world beckoned briefly when London Films asked him to help with a project on Lawrence of Arabia, but Churchill overplayed his hand. He asked for a percentage of the profits and Alexander Korda’s assistant had to explain that they had merely been thinking of three or four days work at a ‘nominal’ fee of £250.35
Louis Levy, his Chicago lawyer, suggested a paid speech to a conference of American manufacturers, but was told that a package of lectures and broadcasts netting at least $25,000 would be required if Churchill was to be tempted away from Britain. Nothing came of it.
One bright spot was the publication of Great Contemporaries in October. Sales were strong, reaching almost 20,000 copies by Christmas. Churchill received a steady stream of royalty cheques from both British and American publishers that eventually reached £7,000.36
In November Churchill delivered eight articles (on time and largely ghostwritten by Adam Marshall Diston) for the 1938 News of the World series. He hoped for a new contract for the following year: ‘I have to try to parcel my work out as well as possible in the year and as you know it might in certain circumstances be a help to me to say “the contract is already made”,’37 he told the newspaper’s general manager. Colonel Percy Davies took the hint and signed him up for 1939. He also invited the Churchills to watch the newspapers coming off the presses on a Saturday evening three weeks later. At a dinner that followed, Churchill floated the idea of extending his contract to cover 1940 and 1941 to help him in his relations with his bank. Again, Davies obliged.38
Since the change of prime minister in the middle of 1937, Churchill had kept a lower profile in the House of Commons. At the year’s close, however, he signalled a return to more active opposition. In the wake of the foreign secretary Lord Halifax’s controversial meeting with Hitler in Germany, Churchill drew attention just before Christmas to the Nazis’ persecution of German Jews and warned the British government against ‘making terms’ with Germany at the expense of the smaller European countries surrounding it – a prophetic reference to the fate that would befall Czechoslovakia within a year.
For the Christmas holiday, Churchill took the fourth volume of Marlborough with him to Blenheim. The text had already reached almost 800 pages and he told George Harrap that they had two options. Either he could cut 200 pages or he could write a bit more and they could split it again to produce a fifth volume.39 This time, even Harrap had had enough: Churchill was going to have to prune his manuscript.
In the New Year, Churchill conducted his usual survey of his finances. With the help of the ‘Winter Scale’, he had managed to pay off his five-year-old wine bill, and he had kept 1937’s spending to the same level as 1936, at just below £20,000.40 He forecast that it could be cut further to £15,000 in 1938, but this was a case of hope triumphing over experience. For one thing, Churchill omitted all mention of tax; yet he needed to pay another £4,700 by March 1938, some of it already overdue.41
Churchill reluctantly concluded that another American lecture tour was inevitable. He received a visit from Harold Peat, who wanted to recruit more British lecturers after a successful tour by H. G. Wells. Late in December at Blenheim Palace the two men outlined a deal guaranteeing Churchill $23,500 net of expenses for twenty-five lectures to be delivered in autumn 1938.42
After that, Churchill left with Marlborough for a New Year holiday at Maxine Elliott’s home in France. ‘I am longing to get this book finished,’ he told Clementine. ‘I do not get up till luncheon time but work in bed and have a masseur.’43 A week later he had still hardly left the house and told his wife that he had discovered a cheaper entertainment than the casino: ‘I have not played bezique or been to the Rooms.*4 M[ah] J[ong] has been amusing and very inexpensive. I have lost about £2 after all these hours of harmless amusement.’44
While on holiday, Churchill authorized a large tax payment. However, he found on his return to Britain that he still owed £4,500.45 Lloyds Bank had also sent him a formal letter recording its ‘disappointment’ at his failure to cut back his borrowings by the end of 1937 as promised. It now asked for a legal charge over the Irish ground rents until they were sold. This was impossible, because (without telling the bank) Churchill had already pledged them formally to his stockbrokers. He made some quick calculations and suggested instead that he repay the bank £2,000 the moment his next royalties arrived.46
He won a temporary reprieve, but the noose was tightening. In a private letter to Bernard Baruch sent while he was still in Cannes, Churchill had candidly set out his precarious position and asked Baruch again whether he should cut his losses on his American shares. But Baruch did not reply and Churchill began to lose hope. It coincided with Anthony Eden’s resignation as foreign secretary in protest at Prime Minister Neville Chamberlain’s frustration of Eden’s attempts to take a firmer policy against Mussolini. ‘My heart sank and for a while the dark waters of despair overwhelmed me,’ Churchill wrote in his memoirs. ‘I watched the daylight creep slowly in through the windows, and saw before me in mental gaze the vision of Death’.47 This pessimism seeped into his personal affairs: he was not only unable to pay his tax bill but Vickers da Costa was pressing him to put up more cash against his American share losses.
Turning aside from preparing a speech to the House of Commons during a debate on British air defences, Churchill asked his solicitors at Nicholl, Manisty to raise an emergency loan of at least £5,000, which he would back by taking out a new life insurance policy. Nicholl, Manisty pointed out that his insurance company borrowings alone would rise to £13,000, costing him £1,650 a year, but Churchill had nowhere else to turn.48
The next day, as Hitler ordered his troops to cross into Austria, Churchill made what the diarist and politician Harold Nicolson described as ‘the speech of his life’ to the House of Commons. He warned that Britain would soon have to choose between resisting Hitler’s campaign of aggression or submitting to it.
Meanwhile there was still no reply from Baruch. It was too late anyway. Although the Commercial Union provided Churchill with emergency funds of £5,000 on 18 March,49 a further fall in US share prices (which tumbled by a quarter in March)*5 caused Vickers da Costa to demand some immediate cash to plug the gap between the cost of Churchill’s shares and their current value. This gap stood at £12,000 on 21 March,50 but Churchill could only afford to write a cheque for £2,000. No buyer had come forward for Chartwell or Morpeth Mansions; he was already borrowing £35,000 from Lloyds Bank, from insurance companies and from his family trusts; and he had used up every scrap of security available. Churchill had simply come to the end of the road.51
Above all he wanted to avoid bankruptcy and be free enough to concentrate on Europe’s worsening crisis. On the day that the cabinet’s foreign policy committee decided that Britain must accommodate Hitler rather than fight over Czechoslovakia, Churchill gave his friend Brendan Bracken a handful of his stock market accounts. He asked him to mount a discreet rescue that could keep him afloat for a little longer. Bracken went straight to his co-owner at The Economist, Sir Henry Strakosch, one of the small group of experts who had been feeding Churchill confidential information about Germany’s armaments expenditure.
Sir Henry, who was unmarried and had made his wealth at the helm of South Africa’s Union Corporation, had been ill in Cannes just two months earlier when Bracken had asked Churchill to visit him on his sickbed, describing the sixty-eight-year-old as a ‘lonely old bird’.52 Sir Henry, for his part, regarded Churchill as the one politician in Europe with the vision, energy and courage required to resist the Nazi threat. He had no hesitation in agreeing to help out financially.
That evening of 18 March 1938, Bracken met Churchill to sketch out a face-saving plan: Sir Henry would meet Vickers da Costa’s demand for cash, and for a period he would take over responsibility for any further gains or losses on Churchill’s shares; no one else need know. He asked Churchill to produce a letter that he could show Sir Henry the following day, with a note setting out the figures. Churchill dictated both the next morning:
I was profoundly touched and relieved by what you told me last night of the kindness of our friend. If it were not for public affairs and my evident duty I shd be able to manage all right. But it is unsuitable as well as harassing to have to watch an account from day to day when one’s mind ought to be concentrated upon the great world issues now at stake. I shd indeed be grateful if I cd be liberated during those next few critical years from this particular worry, wh[ich] descended upon me so unexpectedly; to the chance of which I shall certainly never expose myself again. I cannot tell you what a relief it would be if I could put it out of my mind; and take the large decisions wh[ich] perhaps may be required of me without this distraction and anxiety. I send you a short note which explains the position; and perhaps you will show this to our friend.53
Churchill’s note omits to mention his loans or tax liabilities and it puts an optimistic gloss on the liquidity of some of his assets:
The following assets can, if desired, be immediately produced: Irish ground rents, not readily marketable, but valued at £7,500; Cash £2,500; Life policy for £6,000... In addition the present holder, apart from the regular literary contracts on which he lives, has a contract for a book*6 on which some progress has been made, deliverable on December 31, 1939 for £15,000. He could accomplish this task within the specified time by laying everything aside; but how is he to do this while events run at this pitch, still less if he should be required to devote his whole energies to public work.
Churchill suggested that his rescuer should take over the shareholdings for the following three years ‘with full discretion to sell or vary holdings at any time, but on the basis that no risk of greater liability to the present holder arises, thus removing altogether the speculative element’.54 In the meantime, he expected to pay Sir Henry interest of £800 a year.
For Bracken’s eyes only, he added an extra note: ‘My dear B Enclosed is a letter wh[ich] you can show our friend. This is only to tell you that as Hitler said to Mussolini, on a recent and less worthy occasion, “I shall never forget this inestimable service.”’
To save Churchill the cost of interest, Sir Henry paid Vickers da Costa the full original cost of the shares, £18,000. He chose to remain silent on what he expected to happen three years later,55 although he added a legacy of £20,000 for Churchill to his will. Ironically, the shares almost doubled in value over the next seven months, cutting the ‘cost’ of Sir Henry’s intervention to £8,500.56
Neither man ever spoke publicly about the rescue. Churchill kept knowledge of it to a very tight circle that did not include his bank or his lawyers. ‘Owing to various arrangements’, he told Nicholl, Manisty, he no longer needed all the recent Commercial Union loan money.57 Realizing that he had found a new source of funds, Nicholl, Manisty asked for payment of its outstanding old bills amounting to £331. Churchill sent £81.58
On 1 April the Daily Express ran a headline: ‘WINSTON PUTS HIS MANSION UP FOR SALE’. Churchill took Chartwell off the market and the next day The Times carried a clarification: the Churchills simply planned to retire to a cottage in the grounds.59
Sir Henry carried on providing Churchill with private briefing notes and within a week he was warning the House of Commons against a future crisis in Czechoslovakia, urging that a formal Anglo-French defence pact should be agreed. The following year, 1939, Churchill’s dining society The Other Club elected Sir Henry Strakosch as a member, signifying this first-generation immigrant’s reception into the bosom of the British establishment.60 There was no other reward.
*1 Opera Mundi.
*2 Churchill selected the Battle of Blenheim (1704), the Battle of the Nile (1798), the Battle of Rorke’s Drift (1879) and the Battle of Jutland (1916). He recognized the claims of the Battle of Waterloo (1815), but considered that the selection of both Blenheim and Waterloo would result in too much red, whereas Rorke’s Drift offered a contrast in black. 25 May, 24 Jun 1937, CHAR 8/547/40, 61.
*3 The Dow Jones Industrial Average share index stood at 190 on 14 August 1937; by 10 September (the date of Churchill’s first letter to Baruch), it had fallen to 177; by 18 October (the date of Churchill’s second letter) it had fallen to 125. www.measuringworth.com.
*4 A casino.
*5 The Dow Jones Industrial Average share index stood at 130 on 1 March 1938; at 99 on 31 March. www.measuringworth.com
*6A History of the English-Speaking Peoples.