The prickly marriage of convenience between Asquith’s Liberals and Ramsay MacDonald’s Labour government lasted less than a year. In the suit for divorce, bolshevism was named as correspondent. MacDonald had recognized Lenin’s regime, lent it money, and dropped charges against a Communist editor who had incited mutiny among British troops. Asquith thereupon withdrew his support, and Labour lost a vote of confidence, 364 to 198. The campaign which followed became known as the “Red Letter Election” because a few days before the polling the Foreign Office published a letter allegedly written by Grigori Zinoviev, president of the Third International, calling on British socialists to organize an armed rebellion. Labour bitterly renounced it as a fake. Churchill shed crocodile tears. Many Labour MPs, he said, were politicians “of high reputation” who “stood by their country in the war” but whose position now was “pathetic. They have been unable to keep their feet upon the slippery slopes on which they have tried to stand.” Down they slid, the way greased by the Red Letter; in October 1924 the Conservatives won 419 seats, Labour 151, and the fading Liberals a mere 40.179
Churchill in the garden at Chartwell
Among the triumphant candidates was Churchill, who became the member for Epping, a seat he was to hold for the rest of his public life, although in 1945 the constituency boundary was changed and it became the Woodford constituency. He was once more a supporter of Tory policies. In May, accompanied by Clementine, he had entrained to Liverpool and, for the first time in twenty years, addressed a Conservative party rally. Afterward he introduced his wife to their hosts. She was somewhat subdued, and he said: “She’s a Liberal, and always has been. It’s all very strange for her. But to me, of course, it’s just like coming home.” Presently the party’s chief parliamentary whip sent him congratulations “upon your brilliant speech.” He had spoken to a public meeting in Epping, coming down hard on MacDonald’s friendly overtures to Russia, “unquestionably one of the worst and meanest tyrannies in the history of the world.” Nominally he was a “Constitutionalist,” but the local Conservatives had adopted him as their nominee, and he won by nearly ten thousand, polling almost 60 percent of the votes cast, whereupon he accepted the Tory label. The Sunday Times reported that in Trafalgar Square “the great cheer of the day was reserved for Mr Winston Churchill’s victory at Epping.” T. E. Lawrence wrote him, “This isn’t congratulations, it’s just the hiss of excess delight rushing out,” and Ivor Guest, now Lord Wimborne, wrote: “I hope to goodness the Tories have the good sense to offer you high office. It will be reassuring to think of a progressive mind among their counsels, as a majority such as theirs is hardly conducive to a programme of social reforms.” But Churchill doubted there would be a ministry for him: “I think it very likely that I shall not be invited to join the Government, as owing to the size of its majority it will probably be composed only of impeccable conservatives.”180
He was wrong. Baldwin, a shrewder politician than Churchill, very much wanted him in the cabinet. Despite the size of his party’s majority, he was afraid that Churchill and Lloyd George might form a center party and persuade Birkenhead to back them in the Lords, thus pitting the prime minister against Parliament’s three most eloquent speakers. Therefore he decided to separate Winston and George. Opportunity unexpectedly presented itself when Austen Chamberlain’s half brother Neville, who had only recently entered politics at the age of forty-nine but shared old Joe’s political legacy, declined the chancellorship of the Exchequer. Tory indifference to tariff reform had soured him; he preferred the Ministry of Health. Actually, it was Neville who suggested that Winston run the Treasury. Baldwin replied that the party would “howl.” Neville said that the howl would be louder if Churchill were returned to the Admiralty. Upon reflection the prime minister agreed; summoning the Epping turncoat he asked him if he would serve as “Chancellor.” Winston asked: “Of the Duchy?” “No,” said Baldwin, “of the Exchequer.” Churchill later wrote that he had been tempted to ask: “Will the bloody duck swim?” Instead, he replied: “This fulfills my ambition. I still have my father’s robes as Chancellor. I shall be proud to serve you in this splendid office.” He also pledged his loyalty to Baldwin and said: “You have done more for me than Lloyd George ever did.”181
When Winston told Clementine, he wrote afterward, he had “the greatest difficulty in convincing my wife that I was not merely teasing her.” Convinced, she made him vow he would keep it from the press, letting the announcement come from No. 10. That was asking too much, however—it was like his pledge to keep their engagement a secret. That evening Winston dined at Beaverbrook’s home with Freddie Guest and Birkenhead, who had been appointed secretary of state for India. They all asked Churchill: “Are you in?” He said he was, but when pressed to name the ministry, he said: “I am sorry, but I would prefer not to disclose that just now.” He was obviously bursting to tell them, and they were indignant that he wouldn’t, but he didn’t want Beaverbrook to turn it into headlines. Finally he cried: “I am Chancellor of the Exchequer!” The phone rang; another source confirmed him; Beaverbrook decided to break the story. Birkenhead thought Winston had behaved badly by not sharing the tidings at once. According to Beaverbrook: “Suddenly a kind of flash of intuition came to me and I made a wild but shrewd guess. ‘I don’t believe Churchill is really to blame. He promised somebody he wouldn’t tell me before he came—yes—he promised his wife.’ Churchill said, ‘You are right. She drove me to the door of your house.’ ”182
The howl Baldwin had predicted followed. The Morning Post sourly observed that “the idea of scrapping the Conservative Party in order to make a home for lost Liberals and returning prodigals does not appear to us to promise success.” The Times agreed. At the Admiralty Sir William Bridgeman, the new first lord, wrote his wife: “I am afraid that turbulent pushing busybody Winston is going to split the party. I can’t understand how anybody can want him or put any faith in a man who changes sides, just when he thinks it is to his own personal advantage to do so.” Austen Chamberlain, unaware of Neville’s role, wrote his wife: “Beloved: S. B. is mad!… I feel that this particular appointment will be a great shock to the party.” Sir John Simon told an amused audience: “There is a new piece of jazz music now being played which has been called ‘the Winston Constitution.’ You take a step forward, two steps backward, a side step to the right, and then reverse. You can see that the piece is well named.” His faithful old Liberal ally, the Guardian, commented mournfully: “Mr Churchill for the second time has—shall we say?—quitted the sinking ship and for the second time the reward of this fine instinct has been not safety only but high promotion.”183
The Exchequer was the highest gift a prime minister could bestow. Keeping the Sussex Square house was no longer an issue; it was sold, and the family moved into No. 11 Downing Street, sharing the garden behind it with the Baldwins at No. 10. Gladstone’s famous red dispatch case was entrusted to Winston. Lord Randolph’s Exchequer robes, put away in tissue paper and camphor by Winston’s mother on Christmas Day, 1886, were aired and donned by him for his first official function, the “Pricking [selection] of the Sheriffs” on November 13, 1924. Afterward he lunched with Reginald McKenna, who wrote Beaverbrook: “He tells me he means to master the intricacies of finance and I think he will succeed, though he will find it more difficult than he imagines.” Actually, he appears to have had no concept of the challenge. Lord Boothby recalls that Churchill “soon discovered that the Treasury was not congenial to him, and that he was basically uninterested in the problems of high finance.” After a meeting with Treasury officials, economists, and bankers, Winston told Boothby: “I wish they were admirals or generals. I speak their language, and can beat them. But after a while these fellows start talking Persian. And then I am sunk.” As an MP, Boothby became Winston’s parliamentary private secretary. After it had become clear that Churchill was having difficulties in his new office, Boothby asked P. J. Grigg, a senior civil servant at the Exchequer, why that should be. Grigg re
plied: “There is only one man who has ever made the Treasury do what it didn’t want to do. That was Lloyd George. There will never be another.”184
Certainly Winston wasn’t one. Late in life he remarked: “Everyone said I was the worst Chancellor of the Exchequer that ever was, and now I am inclined to agree with them.” But that was going too far. To be sure, he had no economic convictions apart from his blind faith in Free Trade, and it was disconcerting to hear the seigneur of British finance say loftily: “The higher mind has no need to concern itself with the meticulous regimentation of figures.” He was far from being the worst chancellor, however, or even one of the worst; unlike his father, he knew what “those damned dots” meant, and he had a vision, a revival of the social strategy he and Lloyd George had conceived in the first decade of the century. Welfare legislation was very much on his mind. He envied Neville Chamberlain at the Ministry of Health, telling him: “You are in the van. You can raise a monument. You can leave a name in history.” Drafting his first budget at Chartwell, he wrote Clementine: “I have been working all day (Sunday) at pensions & am vy tired.” In a Treasury minute two days later he wrote: “It is when misfortune comes upon the household, when prolonged unemployment, or old age, or sickness, or the death of the breadwinner comes upon this household, that you see how narrow was the margin on which it was apparently living so prosperously, and in a few months the result of the thrift of years may be swept away, and the house broken up.” Addressing a skeptical audience—the British Bankers’ Association—he said that economic aid for “every class and every section… is our aim: the appeasement of class bitterness, the promotion of a spirit of cooperation, the stabilisation of our national life, the building of the financial and social plans upon a three or four years’ basis instead of a few months’ basis, an earnest effort to give the country some period of recuperation after the vicissitudes to which it has been subjected.”*185
It was Churchill’s misfortune, and Britain’s, that he came to the Treasury with the right ideas at the wrong time. The country’s economists were torn between, on the one hand, those who regarded the classical law of supply and demand as an article of absolute faith and, on the other hand, the followers, still few in numbers, of John Maynard Keynes’s concept of a managed economy. A heavy parliamentary majority believed that the budget must be balanced, whatever the cost. Given the plight of the Treasury in the mid-1920s, this was wildly unrealistic. England’s great prewar assets were gone, spent, like the blood of its youth, in the trenches and no-man’s-land across the Channel. After the brief boom in the years immediately following the Armistice, management’s prewar troubles with organized labor returned, redoubled by a huge hard core of jobless men, refugees from giant industries—coal, cotton, shipbuilding, and steel and iron—which had once thrived on exports and could no longer find markets abroad. The miners’ union, exasperated with the coalfields’ shortsighted, reactionary, incompetent proprietors, turned to the government. An official inquiry recommended nationalization of the mines, but nothing was done. In 1921 a mine lockout was followed by competition from the revived German coal industry, which led to wage cuts in the British coalfields. Unrest was growing there.
Another of Winston’s unwelcome legacies was the servicing of England’s war debt to America. Great Britain owed the United States the preposterous sum of $4,933,701,642. Interest on this exceeded £35,000,000 a year. Again and again Churchill explained to England’s former ally, now its creditor, that Britain couldn’t repay the principal until France had paid Britain its war debt. Sometimes he thought he was succeeding. On January 10, 1925, he wrote Clementine: “I have had tremendous battles with the Yanks, & have beaten them down inch by inch to a reasonable figure. In the end we are fighting over tripe like £100,000!” But agreement after agreement collapsed, President Coolidge saying inanely: “They hired the money, didn’t they?” A Chartwell guest noted in his diary: “Winston talked very freely about the U.S.A. He thinks they are arrogant, fundamentally hostile to us, and that they want to dominate world politics.”186
In the House of Commons annual calendar, Budget Day belongs to the chancellor of the Exchequer. Churchill’s first such occasion was April 28, 1925. A large crowd awaited him outside No. 11 as he emerged smiling, the dispatch case in his hand. “Let me take the box, sir,” said Detective Thompson, and Winston recoiled in horror, saying: “No, no! There’s but one person to guard this box and it’s me!” The spectators tagged along as he proceeded down Parliament Street and into the crowded House, where Clementine, Diana, and Randolph were seated in the Strangers’ Gallery. His two-and-a-half-hour speech was lucid and witty; at one point he produced a pint of whiskey, poured some in a glass, and said: “It is imperative that I should fortify the revenue and I shall now, with the permission of the Commons, proceed to do so.” Everyone cheered as he sipped except Lady Astor, who had urged Britain to follow America’s example and adopt Prohibition. Bowing to her, he noted that she was “noble” but added: “I do not think we are likely to learn much from the liquor legislation of the United States.”187
Like all budgets, this one required careful scrutiny, and those who studied it line by line realized that in many ways it was an abrupt departure from the traditional Tory approach to ways and means. Churchill believed that the key to fiscal health was productivity, that the leisure class was “but the glittering scum on the deep river of production.” He wanted to lower taxes on the poor and raise them on unearned income: “The process of the creation of new wealth is beneficial to the whole community. The process of squatting on old wealth though valuable is a far less lively agent.” At the same time, the Treasury must assume responsibility for the victims of industrial distress. His proposals included a reduction in the pensionable age from seventy to sixty-five, immediate payment of benefits to over 200,000 widows and 350,000 orphans, and abolition of what he called “restrictions, inquisitions and means tests” for welfare applicants—“it would be nobody’s business what they had or how they employed their time.” He believed that “by giving a far greater measure of security to the mass of wage-earners, their wives and children, it may promote contentment and stability, and make our Island more truly a home for all these people.” Funds would be set aside to provide health insurance for thirty million Britons; it was here, he argued, that “the State, with its long and stable finance, can march in and fill the immense gap.” A special sense of urgency, he felt, should spur the government’s obligation to help those rendered helpless by circumstances over which they had had no control, adding passionately: “It is the stragglers, the exhausted, the weak, the wounded, the veterans, the widows and orphans to whom the ambulances of State aid should be directed.”188
Winston had stolen Neville Chamberlain’s thunder, and Chamberlain resented it. The chancellor’s mandate did not include the needy. But rustling was an old Churchillian habit, and few Tories would object if he could find the funds and balance the budget without raising taxes. He could and did. He had searched the files and minds of the Treasury’s senior civil servants, and had reached two momentous decisions. The first was a return to the gold standard, of which more presently; the second, a £10,000,000 cut in the service estimates, with the Admiralty as the heavy loser. Only the RAF had emerged unshorn. His reasons were various. One, perhaps, was a tribute to his father’s failed crusade. But others were stronger. If he were to win pensions, health insurance, and help for the helpless, he had to wield his scalpel somewhere, and the public mood would support drastic reductions in expensive armaments. Clementine spoke for millions of Britons when she wrote urging him to “stand up to the Admiralty…. don’t be fascinated or flattered or cajoled by Beatty.” Now that the kaiser’s fleet lay on the bottom of the Firth of Forth, Winston reasoned, Britain was secure at sea. The only foreign fleets of any size were those of the United States, which was hardly likely to declare war on England, even over debts, and Japan, whose military establishment, despite its successes against the Bolsheviks, was co
nsidered laughable. Churchill assumed that the Germans would keep their word and refrain from building another fleet to challenge British sea power, though later he described this supposition as “the acme of gullibility.”189
The Royal Navy felt betrayed. Here was a former first lord, whose memory was still cherished in wardrooms, “committed,” as Admiral Sir William James puts it, “to fight the Admiralty inch by inch for every penny of their estimates.” His chief adversary, the first sea lord, was David Beatty, a Churchill friend since Omdurman. Winston argued that battleships had been obsolescent for some time and were now obsolete. They had been torpedoed at the Yalu River in 1894, at Port Arthur in 1904, and, repeatedly, in the Great War; the American air power evangelist Billy Mitchell had just proved that they could be sunk by Martin MB-2 twin-engined bombers. At the height of the controversy Beatty wrote his wife: “Yesterday I was vigorously engaged with Winston and I think on the whole got the better of him. I must say, although I had to say some pretty strong things, he never bears any malice and was good-humoured through the engagement.” Later he joined those who thought Winston had lost his sense of proportion, writing her heatedly: “That extraordinary fellow Winston has gone mad. Economically mad, and no sacrifice is too great to achieve what in his shortsightedness is the panacea for all evils—to take 1 S off the Income Tax. Nobody outside a lunatic asylum expects a shilling off the Income Tax this Budget…. As we at the Admiralty are the principal Spending Department, he attacks us with virulence.” And again: “I have to tackle Winston and had 2½ hours with him this evening. It takes a good deal out of me when dealing with a man of his calibre with a very quick brain. A false step, remark, or even gesture is immediately fastened upon, so I have to keep my wits about me. We of course arrived at nothing…. We are working up a case for the Prime Minister to adjudicate on the differences which exist between us.”190