CHURCHILL HAD SIGNED the most recent version of his will in 1961, adding two short codicils before he died. It formed only a portion of the financial legacy which he left to his family since the Chartwell Literary Trust had already funnelled the major part of the income from The Second World War to his children and grandchildren and was contracted to do the same again with most of the revenue from the rights to his official biography.
The will itself left all Churchill’s literary works and recordings to Clementine, together with his ‘State and private’ papers, which he hoped she would give on her death to the trust that owned his pre-war papers, if she had not ‘disposed’ of them beforehand. However, he was at pains to state that she should not ‘feel in any way hindered or discouraged’ from making up her own mind about their final destination.
He also gave her all of his many paintings at Chartwell, enjoining her once more ‘to feel no reluctance or hesitation’ about selling them. In contrast, he did not want his ‘heirlooms’ sold: on Clementine’s death the medals, trophies and souvenirs were to pass to each successive generation’s male heir ‘according to seniority in tail male’. The remainder of the estate, after cash gifts for employees (including £10,000 for Anthony Montague Browne and £2,000 for Anthony Moir) was to be divided into two parts: one-third for Clementine and two-thirds for his children in equal shares, without any larger portion now for Randolph.1
Within a month of his death the provisional value of Churchill’s estate was published as £304,044 before tax.2 During the four years that it took to settle all its affairs, the value must have risen appreciably, because even after all Churchill’s papers and most of his paintings had been exempted from estate duty, the final amount of tax paid at a rate of 65 per cent reached £260,000.3
Churchill’s late difficulty with the United States’ Inland Revenue Service (IRS) fell to his executors – Clementine, her daughter Mary and the former private secretary Jock Colville – to resolve. Led by Colville, they tried to enlist the support of the British government, but were politely rebuffed and had to settle with the IRS. They used the more liquid funds in his estate to pay what was owed and to meet the first instalment of estate duty in Britain. However, they needed to find another £150,000 to pay the remaining duty owed.4
Rather than stay in Chartwell, Clementine chose to hand over the house to the National Trust straight after her husband’s death. She was keen for it to be open to the public as soon as possible, with the appearance of the family home it had been during the 1930s. The paintings and furniture that had made it so had never formed part of Churchill’s gift to the National Trust, so Clementine decided with her fellow executors to offer to sell these now to the National Land Fund. The Fund was a government body established to accept items of historic interest in lieu of estate duty, before it passed them to bodies such as the National Trust for public display. It operated by negotiating a market value with the executors of estates; it then deducted the estate duty theoretically due from the price it would pay, but added a douceur, or inducement, equivalent to one-quarter of the tax.5 In Churchill’s case, the Fund easily accepted the valuation of the executors’ expert, just over £100,000, not least because the paintings included a work by Claude Monet, Pont de Londres. The Fund employed its usual formula to pay £56,000 of Churchill’s estate duty bill, leaving the executors to find a final £95,000.6
To raise this sum, they decided to offer the same National Land Fund scheme thirty-three of Churchill’s own paintings – which Clementine and the National Trust were keen to hang also at Chartwell. The expert employed by the executors proposed a valuation of £229,000, basing his case on the prices which the few Churchill canvasses coming on the art market were achieving at auction; if his figure had been accepted, the estate would have not only have met all its estate duty bill, but would have been due a small refund. However, Ronald Alley, the Keeper of the Modern Collection at the Tate Gallery and the expert employed by the National Land Fund, took a very different line. He recommended that only half the number of paintings should be hung in the space available and advised a discount of 60 per cent against the executors’ valuation of each picture, because prices for Churchill’s paintings were already falling as more found their way on to the art market.
As a result, the National Land Fund offered to pay only £35,000.7 The executors were so taken aback that Jock Colville took their case directly to Roy Jenkins, the Labour chancellor of the exchequer, calling the sum ‘derisory’. Although the Fund’s officials revised their sums, they would not offer more than £44,000. Jenkins guessed correctly that the executors were unlikely to accept a sum far below their remaining estate duty bill and ordered a rethink. Eight Churchill paintings were added to the list and the valuation discount was narrowed to 40 per cent, to produce an offer of £90,000, just £5,000 short of the tax bill remaining.8 Colville and his co-executors readily accepted the new offer. Filled with furniture and paintings, Chartwell duly opened to the public in the middle of 1966. It attracted 150,000 visitors during its first five months and, almost fifty years later, continues to draw more than 200,000 visitors each year.9
Clementine sold both houses at Hyde Park Gate and bought herself a flat half a mile away in Kensington. She seemed financially secure until 1977, when her increased need for nursing care and the severe inflation of the 1970s prompted her to auction five of the paintings that her husband had left her, including two of his own. The auction house Christie’s forecast that they would raise £12,000: Churchill’s own paintings led the way as the sale raised £52,000.10
Clementine died later in the year aged ninety-three, but instead of leaving her husband’s post-war papers to his direct male heirs, as he wished, she donated them directly to Churchill College, Cambridge, which built a special archive centre to house the papers with money Colville raised from American donors. Churchill’s pre-war papers were eventually to reach the same destination, but by a more protracted and controversial route.
In 1952, when the Cabinet Office had discovered some 500 extra files of Churchill’s wartime papers in its basement, Sir Norman Brook, the cabinet secretary, suggested to Jock Colville, Churchill’s principal private secretary, that a single, permanent collection of all Churchill’s papers should be established. In the discussions which followed, Sir Norman surprised Churchill’s solicitor Anthony Moir by suggesting that on Churchill’s death the government could reclaim its ‘state’ papers. Sir Norman then offered a deal: the government would not press for the return of these papers, provided Churchill’s trustees made it impossible for his heirs to sell them without the consent of the government of the day.11 The trustees gave the necessary assurances, which they renewed in 1964.
In 1968, Randolph’s son Winston, a twenty-eight-year-old MP, became the main beneficiary of the trust, now called the Archive Trust, on Randolph’s death. Once again the government exempted Churchill’s papers from estate duty in return for the standard conditions that they should remain permanently in the United Kingdom, properly preserved and open to research by those ‘authorized by the Treasury’. This last condition was suspended until the completion of Churchill’s biography, as a concession to its publishers.
Three years later, in 1971, Jock Colville, by then a trustee, approached the cabinet secretary of the day, Sir Burke Trend, about a possible sale of the papers. Colville explained that young Winston was keen for the papers to end up at Churchill College, but that he had little money of his own as a result of his father’s extravagant spending.12 Colville had tried but failed to find a wealthy American prepared to buy the papers, then to deposit them in Cambridge; he therefore asked the government to step in and pay ‘say £100,000 or perhaps £120,000’. He went on:
Sotheby’s, as very rough estimate, say that they might very well fetch something in the neighbourhood of £2 million, and even if one assumes that half of them, being state papers, could never be sold, the remaining half might well on this basis be worth £1 million.13
In reply, Sir Burke explained that – ‘aside from any question of who actually “owns” the papers’ – no public funds were available. The decision might lead to an eventual sale, Colville warned.14
There matters rested until seventeen years later in 1988 when Martin Gilbert finished writing the eighth and last volume of Churchill’s official biography. The head of the Cabinet Office’s Historical Section, Patricia Andrews, decided that the papers must be opened up to authorized access, as stipulated in the original estate duty exemption. However, she was shocked by the response received from Peregrine Churchill, the son of Churchill’s brother Jack and by then a trustee. He explained that he had ordered the pre-war papers to be moved to Churchill College to improve their care on becoming a trustee in 1980, but he went on to register his concerns about the funding of both the college and its archive centre. As a result he hinted that the trustees were considering other plans for the papers’ future.
The government’s impression that a sale might be in the offing again was reinforced when young Winston stepped down as a trustee, to be replaced by a London solicitor, Ian Montrose, whose correspondence Andrews of the Cabinet Office soon described as ‘hostile’. In 1989 the new trustees asked Sotheby’s to conduct a fresh valuation of the Churchill papers and the Cabinet Office heard unofficially before the end of the year that the trustees hoped to sell to a public body such as the British Library to avoid estate duty; by May 1990 the government heard that the asking price could be as high as £15 million.15
There was a lull in 1990 while the trustees reorganized the trust to complete their tax preparations for a sale: young Winston now relinquished his direct interest in favour of a series of family discretionary trusts. In March 1991, when the trustees finally broke their cover, they did so from an unexpected quarter: they chose a recently retired senior minister, Norman Tebbit, to forward a memorandum to the prime minister of the day, John Major. It based their case for a sale on the trustees’ concerns about the ‘modest’ scale of Churchill College’s funding. It followed that, if they followed Clementine’s lead in simply gifting the papers to the college, the college might one day sell them.
It would be better, they argued, if the government bought the papers and gifted them permanently to either the British Library or Churchill College. Norman Tebbit’s covering letter told the prime minister that he understood the price would not be ‘huge’.16 However, at an unofficial lunch with the trustees soon afterwards, the cabinet secretary Sir Robin Butler heard that they were looking for a price of £12.5 million, based on Sotheby’s valuation of the entire set at £20 million (less a deduction for estate duty, plus the addition of a douceur). They told Sir Robin that their preference was to sell to the government or to a private buyer, who would redeposit the papers with Churchill College, but if both possibilities failed they planned to auction the papers at Sotheby’s.17
The government wished to keep all Churchill’s papers together, whether pre- or post-war, public or private, but it remained unwilling to spend public money on buying the ‘state’ papers without testing the trustees’ claim to ownership in the courts. It commissioned a legal opinion from two senior counsel which made uncomfortable reading: the disputed documents had certainly started life as ‘state’ papers, they said, and should never have been transferred by Churchill to the Chartwell Trust in 1946. However, the government had not lodged any objection then or since, so the case for starting now, some forty-five years later, was ‘but weakly arguable’.18
In 1993 hopes briefly rose that Conrad Black, the owner of The Daily Telegraph, would step in as a private buyer, but this plan fell through. The government steeled itself to start legal proceedings, while at the same time it encouraged private negotiations between the trustees, Cambridge University and the National Heritage Memorial Fund. The Major government was introducing a new National Lottery from which the Fund was due to receive some of the money raised. By the end of 1994, after negotiations lasting almost a year, all parties agreed a provisional price of £12.5 million, expressed as covering Churchill’s private papers only, while the ‘state’ papers were gifted separately without payment.
Officially, Cambridge University acquired the collection with the help of lottery money. It then passed the papers to a new Sir Winston Churchill Archives Trust, which reunited them with the post-war papers at Churchill College, Cambridge. There they remain in perpetuity, freely available to researchers. Churchill’s contribution to his family’s fortunes continues, however: the purchase price of £12.5 million did not include ownership of the copyright of the papers, which will continue to reward his heirs until it finally expires on 1 January 2039.
I have told the story of Churchill and his money without judgement. Clearly some of his actions or omissions would not survive scrutiny by the standards of transparency expected of today’s politicians. During his early years as a minister, for example, Churchill accepted gifts of cash and kind from Sir Ernest Cassel; while responsible for South Africa’s government as colonial secretary after the First World War, he held on to his South African mining shareholdings; and within a year of losing office in 1922 he earned a substantial fee from two oil companies in return for lobbying his former ministerial colleagues. After the Second World War, while leader of the Opposition and then prime minister, he accepted interest-free loans from a national newspaper, The Daily Telegraph.
A more interesting question is whether Churchill would have survived scrutiny by the standards of his own day if the details of his finances had become more public. Before the First World War, cartoonists lampooned Churchill for supporting the Liberal government’s attacks through taxation on the wealth of the landed aristocracy, while he repaired regularly to Blenheim Palace for weekends of luxury. However, the press largely exempted Churchill from the charges of ‘money corruption’ which it pursued vigorously against other government members, notably Lloyd George.
The way in which Churchill dealt with the large, personal cheques sent to him before the First World War by his constituent James Caird tends to vindicate this judgement of the press. There is no sign, either, that Churchill ever lined his own pocket while controlling large amounts of public expenditure as First Lord of the Admiralty or minister of munitions, at the beginning or end of the First World War. The evidence of Churchill’s bank accounts is that he did not take money from Jewish groups in return for his anti-Nazi campaigning during the 1930s, although there have been claims to the contrary. What might have caused him political trouble, had it been better known at the time, was his tax-paying record.
Until he was thirty years old Churchill was content to subscribe to the prevailing Victorian view that the recently introduced income tax was fairly set and collected: even for those at the top of the tree, the combined rates of direct and indirect taxation seldom exceeded 20 per cent until 1906, when the Liberal government came to power. Furthermore, Churchill fully supported its introduction in 1908 of a ‘super-tax’ for higher earners, possibly because it only added 2.5 per cent on top of income tax rates of less than 5 per cent – and he was not earning enough to fall within its bracket at the time.
His attitude to taxation changed when income and super-tax rates rose above 50 per cent during the First World War and, more importantly, when they stayed there afterwards. This coincided with a period when Churchill did not have the funds to pay his tax bills as they fell due, because he had already spent the money: it was during the 1920s that Churchill began a battle of wits with Britain’s tax authorities that was to last for the rest of his life.
Most of his wealthy contemporaries played a similar game, but Churchill subtly added the power of his public position. Twice while chancellor of the exchequer, for example, Churchill summoned to his personal aid the chairman of the Inland Revenue, a government agency for which chancellor he was politically responsible. During the Second World War, Churchill was certainly economical with the truth when he declared to the Inland Revenue the date of his retirement as an author and the nature of his Sunday newspaper deals.
After the war, when taxes on income reached an eye-watering 97.5 per cent, Churchill rarely considered any business proposition unless his advisers assured him that he could present it to the Inland Revenue as a capital receipt, which would escape tax, rather than as income. The Inland Revenue had learned by experience during the war that, if Churchill exercised his right as a taxpayer to challenge its ruling in private before a tribunal of lay commissioners, he was likely to win the benefit of any doubt. It therefore tended to shy away from a direct challenge to the tax treatment which Churchill and his advisers submitted. Its real weapon was to threaten to appeal if it lost at the tribunal, because then the next stage of proceedings would be open to the public. On the one occasion after the war when the Inland Revenue threatened to take this step, Churchill retreated immediately, under protest, and paid the disputed amount of tax.
It was a rare victory. That Churchill emerged the winner from almost every other skirmish with the taxman over forty years is ruefully attested by a thick Inland Revenue file at the National Archives, which contains the records of its dealings with the greatest British leader of the twentieth century. The file was recently declassified; intriguingly, a second remains closed until 2040.
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