Churchill's secret war – his battle to stay solvent

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David Lough in the London Library Times room. Catch his interview on how he unearthed the perilous state of Churchill's finances

David Lough in the London Library Times room. Catch his interview on how he unearthed the perilous state of Churchill’s finances

Churchill's bank statements provide a detailed record of a lifetime of overspending and financial risk taking

Churchill’s bank statements provide a detailed record of a lifetime of overspending and financial risk taking

Churchill was virtually bankrupt when he became Prime Minister in 1940

Churchill was virtually bankrupt when he became Prime Minister in 1940

Following the recent lecture he gave to The London Library Founders’ Circle, David Lough – Historian and Trustee of The London Library – takes the guest slot for our blog. His new book, No More Champagne, reveals the financial highs and lows of Sir Winston Churchill – who joined the Library in his wilderness years and became vice-President in 1948.

As David describes in his blog and in a fascinating interview filmed in The London Library Times room, Churchill was a profligate spender and teetered on the brink of bankruptcy before wartime fame, friends and film rights restored his position as a multi-millionaire.

“As I come off the back of a seven year mission to lift the lid on Churchill’s finances I confess to a lifelong fascination with the man. But my interest has always had an appetite for revisionism, originally sparked by an excellent history teacher at school who excited my curiosity by describing Churchill as a “romantic old windbag”. Keen to demonstrate my new found independence of thought, I offered this view to my family, outraging my grandmother who was appalled that I could so much as dare impugn the reputation of one of the greatest of Englishmen. I retreated.

“But the questions kept coming, and for ages I have been puzzled by the odd bits of information, often contradictory, that have emerged about Churchill’s money problems. There was clearly a story to be unearthed and I was surprised to find that no one had written about the subject properly before.

“In pulling together the history of Churchill’s finances I have perhaps drawn a lesson from the clash with my grandmother – to expose any foibles and failings of a supremely talented national hero it’s essential to build a very well-researched case. Fortunately, the access that I have been given to the Churchill archive, along with the wealth of published material touching on different aspects of Churchill’s life and times – a good deal of which I have been able to borrow from The London Library – has provided an astonishingly intact record of his financial affairs. Churchill left his own bank statements, bills, investment records and tax demands in his archive, despite the evidence of debt and profligate gambling they reveal. And the story that emerges from my research is richer than I had originally dared hope.

“Churchill lived for most of his life on a financial cliff edge. The popular image may be of champagne and cigars but, behind the scenes, his friends and family came to the rescue several times to prevent his financial problems from engulfing his political career. For the qualities that were to make Churchill a great war leader came very close to destroying him time and again during his career, as manic optimism and risk-taking plunged him repeatedly into colossal debt. In contrast to his well-documented periods of anxiety and depression, when the ‘black dog’ struck him, there were phases when he gambled or traded shares and currencies with such intensity that he appeared to be on a ‘high’ — devoid of inhibition, brimming with self-confidence and energy.

“In my own career, advising families on tax affairs and investments, I have never encountered addiction to risk on such a scale as his. This was never more clearly on display than in the 1930s, when he was a married man in his fifties with four dependent children and already borrowing today’s equivalent of more than £2.5 million. Yet, during the decade, he gambled heavily enough during his holidays to lose an average of £40,000 each year in today’s money.

“Churchill’s financial trials also had an impact on his politics. When his father Lord Randolph Churchill died aged forty-five, he left no immediate allowance for his children in his will and the twenty-year-old Churchill had to rely on his own talents. ‘The only thing that worries me in life is — money,’ he wrote to his brother, Jack. ‘Extravagant tastes, an expensive style of living, small and diminished resources — these are fertile sources of trouble’. Within five years, however, he had built up a capital sum equivalent to a million pounds today. This meant that he could make an early start in politics, but it also gave him a greater affinity with the attitudes of ‘new’ money rather than ‘old’ and may well help explain his willingness to defect from the Tory Party of his aristocratic friends to the Liberal Party of enterprise.

“Some twenty years later, he rejoined the Conservative benches. Again, it is perhaps no coincidence that he had recently inherited his great-grandmother’s Irish estate, transforming the erstwhile entrepreneur into a propertied landlord for the first time in his life – a rentier, as his wife Clementine put it.

“To her intense disappointment, however, Churchill consumed the entire inheritance within a decade – by underestimating the cost of converting his new country home at Chartwell, by gambling more than he ever let on and by losing heavily in the Wall Street Crash of 1929, an episode curiously omitted from his official biography.

“These losses had their own impact on his political career in the 1930s: Churchill resigned from the Conservative front bench not just because he was out of sympathy with the party’s policy on future independence for India, but also to enable him to devote sufficient time to the more lucrative work of writing books and churning out newspaper columns to keep the bank at bay.

“The financial difficulties that accompanied his wilderness years meant that it was only through the intervention of Sir Henry Strakosh – who wrote two cheques for well over £1 million to clear Churchill’s debts – that he wasn’t made bankrupt in 1940 instead of being made Prime Minister.

“Throughout the Second World War many of those around Churchill worked hard to tame his risk-taking (their success ultimately evidenced by his willingness to delay the Allied invasion of Normandy until the summer of 1944). Churchill’s attitude to his own finances underwent a similar conversion over the course of the war, during which he devoted more time to his private affairs than is often realised.

“What finally rescued Churchill’s finances, however, and put him on a stable footing for the rest of his life, was Hollywood. In 1943, an Italian immigrant film producer paid him £50,000 (£2.5 million) for the movie rights to his biography of his ancestor, the military genius Lord Marlborough. The death of Sir Henry Strakosch in October 1943 brought a legacy of £20,000 (£1 million) as well as cancelling a loan.

“As D-Day approached, Churchill was solvent for the first time in 20 years. By the end of the war, he had collected another £50,000 (£2.5 million) for the film rights to his History Of The English-Speaking Peoples. And a further colossal bonus came when he was unexpectedly ousted from Downing Street by the voters in July 1945: on the day of his resignation, offers began to flood in from publishers around the world for his war memoirs.

“The remarkable story of Churchill and his money only makes the man himself more fascinating. In an age when we demand that our politicians are paragons of financial virtue it is salutary to discover that one of the most successful political figures of the twentieth century ran up huge personal debts, gambled heavily, lost large amounts on the stock exchange, paid his bills reluctantly and avoided tax in a way that would cause a scandal today.

“When he died aged 90 on January 24, 1965, the world mourned. But some had a particular reason to regret his passing. In France, Madame Odette Pol-Roger instructed that a black band of mourning should be placed around the label of every bottle of her family’s champagne – recognition perhaps that they would never see such a customer again.”

© 2015 David Lough.