Churchill's turning point? HM Treasury, 1924-29
The wartime leader's five years as Chancellor of the Exchequer receive mixed reviews but his appointment crucially confirmed his place within the Conservative hierarchy
A century and two days ago, on Thursday 6 November 1924, Winston Churchill was appointed Chancellor of the Exchequer by Prime Minister Stanley Baldwin. He was an unexpected choice for the role, nor had he been Baldwin’s first choice. Moreover it was not a policy area in which Churchill was especially experienced or expert. His innate self-confidence and sense of entitlement, however, allowed him to accept with alacrity, and it was a defining point in his long public career. Although his long stint in the wilderness of the backbenches during the 1930s still lay ahead of him, Churchill’s chancellorship cemented his position as one of the most senior politicians in the Conservative Party. It is more than arguable that, in an indirect way, his tenure at the head of HM Treasury allowed him to become Prime Minister in May 1940, with everything which flowed from that.
Conservative victory ends the first Labour government
Parliament had been dissolved on 9 October 1924 after Ramsay MacDonald’s minority Labour government had been defeated on a de facto motion of no confidence the preceding day. In technical terms, it was not a confidence motion, which deserves a brief explanation (those with a low threshold for parliamentary procedure may wish to skip ahead).
On 25 July 1924, an edition of the Communist Party of Great Britain’s official newspaper Workers’ Weekly had included “An Open Letter to the Fighting Forces”, which encouraged soldiers to disobey orders if told to take action against civilians. When it proclaimed “Refuse to shoot down your fellow workers! Refuse to fight for profits! Turn your weapons on your oppressors!”, this was regarded as prima facie an offence under the Incitement to Mutiny Act 1797, and the Attorney-General, Sir Patrick Hastings, advised the government that the acting editor of Workers’ Weekly, J.R. Campbell, should be prosecuted accordingly. However, the charges were shortly afterwards withdrawn, supposedly under pressure from Labour Members of Parliament. This outraged both Conservatives and Liberals who accused the government of being in thrall to radical left-wing elements.
On 8 October, the Unionist MP for Glasgow Hillhead and former Chancellor of the Exchequer, Sir Robert Horne, moved a motion in the House which condemned the government’s actions. It was not strictly speaking a motion of confidence or no confidence, instead proposing:
That the conduct of His Majesty’s Government in relation to the institution and subsequent withdrawal of criminal proceedings against the editor of the ‘Workers’ Weekly’ is deserving of the censure of this House.
Nevertheless, the Prime Minister had made it clear that he regarded the motion as equally serious and of similar effect: that is, if the government was defeated, it would resign and he would seek a dissolution of Parliament. Horne’s motion was rejected by 198 votes to 359, but an amendment had been proposed by Sir John Simon, MP for Spen Valley and Deputy Leader of the Liberal Party, to substitute the following words:
That a Select Committee be appointed to investigate and report upon the circumstances leading up to the withdrawal of the proceedings recently instituted by the Director of Public Prosecutions against Mr. Campbell.
This motion was superficially much less serious, but the government did not distinguish between them in intent, and the motion as amended by Simon was agreed to 364 votes to 198. The following day, after oral questions in the usual manner, MacDonald told the House:
The action taken by the two Opposition parties yesterday rendered an Election inevitable. I, therefore, have had an audience with His Majesty this morning, and asked for a dissolution. His Majesty empowers me to announce that he has consented.
So there was no formal vote of confidence or no confidence, and the only concrete action agreed to was the establishment of a select committee to look into the decision not to prosecute Campbell. The majority by which Simon’s amended motion was passed, 166, would stand as the biggest defeat for a government in the House of Commons until January 2019. In any event, with only 191 MPs out of 615, the Labour Party had always formed a fragile government and it was in danger of defeat at any time.
Stanley Baldwin would lead the Conservatives to the largest single-party majority in parliamentary history at the general election which ensued on 29 October. The party won 412 seats to Labour’s 151 and 40 Liberals, an advantage of 209. As well as marking a Tory triumph, it sealed the fate of H.H. Asquith’s Liberal Party, which lost 118 seats including Asquith’s own in Paisley. Strictly speaking, however, Winston Churchill was not among those Conservatives; seven MPs were returned under the banner of “Constitutionalist”, including Churchill in Epping. It was not a formal party label but was used by those who had supported David Lloyd George’s coalition government of 1916-22.
Churchill’s party games
Winston Churchill was coming to the end of a long and meandering journey in parliamentary and ideological terms. He had first been elected as a Conservative in Oldham in 1900, but in May 1904, ostensibly in opposition to what would become the Aliens Act 1905, he crossed the floor to join the Liberal Party. He rose quickly in his new home, becoming Under-Secretary of State for the Colonies in 1906, and was promoted to cabinet aged only 33 as President of the Board of Trade in April 1908, when Asquith succeeded Sir Henry Campbell-Bannerman as Prime Minister. But there was a sudden, if temporary, setback. At that point, MPs newly appointed to cabinet positions were required to undergo a by-election in their constituency as a kind of confirmation process, and Churchill was defeated in North West Manchester, to where he had moved in 1906, by 429 votes. However, the Liberal MP for Dundee, Edmund Robertson, was created a peer as Lord Lochee in order to manufacture a by-election, which Churchill promptly won.
Churchill continued to rise, being appointed Home Secretary in February 1910 then First Lord of the Admiralty in October 1911. In May 1915, bearing much of the blame for the lack of success in amphibious operations at Gallipoli, he was demoted to Chancellor of the Duchy of Lancaster. This was a demand of the Conservatives, who had agreed to join a wartime coalition government but found Churchill too noxious to bear. He then resigned entirely in November, though remaining an MP, and volunteered for active military service. For a time he was commanding officer of 6th Battalion, Royal Scots Fusiliers, on the Western Front, but he returned to the House of Commons in summer 1916, just ahead of his old comrade, David Lloyd George, then Secretary of State for War, usurp Asquith at the head of the government in December.
In July 1917, Churchill was appointed Minister of Munitions, and it seemed as if his career in the Liberal Party was firmly back on track. In January 1919, he became Secretary of State for War and Secretary of State for Air, then two years later moved to be Colonial Secretary. But at the general election in November 1922, shortly after Lloyd George had been ousted like Asquith before him, Churchill again suffered electoral defeat, this time losing Dundee to Edwin Scrymgeour, the only MP in British history to be elected as a temperance candidate, representing the Scottish Prohibition Party. When there was another election in 1923, seven local Liberal Party associations approached him about being their candidatem, and he was adopted for Leicester West but lost by nearly 4,400 votes.
Churchill had never been particularly motivated by obedient partisan or ideological conformity, and, like many Liberals in the early 1920s, he regarded the rise of the Labour Party as a seismic event. It had grown from 57 MPs in 1918 to 142 in 1922—when it overhauled the Liberals to become the second party in the House of Commons—and then 191 in 1923. He now increasingly saw British politics as a battle between socialists and anti-socialists, and at the Westminster Abbey by-election in March 1924 he stood as an anti-Labour candidate under the Constitutionalist banner, receiving unofficial support from the Conservatives. As a proponent of a coalition between Conservatives and Liberals against Labour, he hoped to gain the backing of both parties, or at least a clear run at the by-election, but in the end he faced opponents from all three parties. Even so, he eventually lost to the Conservative Otho Nicholson, nephew of the previous MP, by a mere 43 votes.
If Churchill’s principal ideological stance by 1924 was opposition to socialism, then it was obvious that his original home of the Conservative Party offered greater potential success than a declining Liberal Party, even if the Asquith/Lloyd George schism had been healed in 1923. In July 1924, he agreed with Baldwin that he would return to the Conservative fold at the next election, and although he stood in Epping as a Constitutionalist once more, there was no official Conservative candidate opposing him, the sitting MP, sugar magnate and tennis star Leonard Lyle, having been knighted and persuaded to stand aside.
Cabinet-making
So it was that when Stanley Baldwin, having led the Conservatives to a crushing victory, sat down to assemble a government at the end of October and beginning of November 1924, Churchill was among the senior and experienced parliamentarians available to him. But there were other factors to consider. The Prime Minister himself was still a relative neophyte; although he had been elected as MP for Bewdley in 1908, he had not achieved ministerial office until June 1917, when he had been appointed Financial Secretary to the Treasury. He had only reached the cabinet, as President of the Board of Trade, in April 1921, then becoming Chancellor of the Exchequer in October 1922 before succeeding the fatally ill Andrew Bonar Law as Prime Minister in May 1923.
Only 18 months had passed since then. It was also widely acknowledged that Baldwin had been preferred as Law’s successor rather than the far more eminent and experienced Foreign Secretary, the Marquess Curzon of Kedleston, because it was felt a peer could not easily lead the government while the Labour Party, virtually unrepresented in the upper house, was the Official Opposition. Although Curzon could be difficult and prickly, by every other measure he was more qualified for high office than Baldwin: he had won a Prize Fellowship at All Souls College, Oxford, after winning a first-class degree in classics at Balliol; he had been elected MP for Southport in 1886, aged 27, while Baldwin was still reading for his eventual third in history at Trinity College, Cambridge; he had served as Under-Secretary of State for India 1891-92 and Under-Secretary of State for Foreign Affairs under the Marquess of Salisbury from 1895 to 1898; he had served as Viceroy of India from 1899 to 1905; and had then held various cabinet offices between 1915 and 1924. But as a peer, by 1923, it seemed that the final rung at the top of the ladder was now closed off to him.
One challenge, or opportunity, which faced Baldwin in 1924 was the reconciliation of those senior Conservatives who had stayed out of the government after the break-up of the wartime coalition in 1922. In October that year, many Conservative backbenchers had agitated to end the party’s alliance with Lloyd George. The coalition which had first been formed in 1916 was by then overwhelmingly dominated in numerical terms by the Conservative Party, which had won 379 seats in 1918 compared to only 127 Coalition Liberals loyal to Lloyd George. Yet the Liberal Prime Minister was the outstanding figure of the government, and most of the senior Conservative ministers cleaved obediently to the Welsh Wizard. Conservative MPs met at the Carlton Club at 11.00 am on 19 October 1922 to determine their future, and there was a clear division between the leadership and the rank-and-file.
There are no reliable figures of the voting on the future of the coalition that day, but it is likely that those who wanted to leave the partnership with Lloyd George prevailed by something like two to one. The most senior rebel was former leader Bonar Law, who had headed the party in the House of Commons from 1911 to 1921 and was the obvious candidate to become Prime Minister, while Baldwin became his Chancellor. Curzon remained as Foreign Secretary, but most Conservative grandees refused to turn against Lloyd George, which meant that the political sidelines ended up populated by Austen Chamberlain, the Earl of Balfour, the Earl of Birkenhead, Sir Robert Horne, Sir Laming Worthington-Evans, the Earl of Crawford and Balcarres and Lord Lee of Fareham. Law’s cabinet, as a result—nine MPs and seven peers—was regarded as rather underpowered: Birkenhead contemptuously described it as “a government of the Second XI”, one in which “the cabin boys have taken over the ship” and a cabinet of “second-class brains”. To this last barb, Lord Robert Cecil, son of the Marquess of Salisbury and a former minister, remarked that it was better than “second-class characters”.
In appointing a new government, Baldwin had to try to reconcile all factions of the party. In one sense, his position was strong because of the enormous majority the Conservatives had won, but there were still more than enough egos to jostle for special consideration. In the end, in appointing a 21-strong cabinet of 15 MPs and six peers, he brought most major figures into the tent. Austen Chamberlain became Foreign Secretary, in which role he would be notably successful, with Lord Curzon moved sideways to be Lord President of the Council and Leader of the House of Lords (he would be dead of a bladder haemorrhage within months). To replace Curzon as Lord President, Baldwin then recalled Balfour, 76 years old and as languid as ever but enormously experienced. Birkenhead did not resume his previous position as Lord Chancellor but was appointed Secretary of State for India, a dignified job of middling importance in which he spent a great deal of time playing golf. The Woolsack instead went to the inoffensive but undistinguished Viscount Cave, who had occupied it from 1922 to 1924. Worthington-Evans returned to the War Office.
The post of Chancellor of the Exchequer was critical, as it always is. Birkenhead and others urged Baldwin to appoint Sir Robert Horne, who had held the job for the last 18 months of Lloyd George’s government; he was only 53, clever and a successful lawyer and businessman. The Spectator reported that Baldwin had offered Horne the Ministry of Labour, his home in 1919-20, but that Horne preferred to concentrate on a career on the City, and no offer of the Treasury was made. The Prime Minister’s first choice was Neville Chamberlain, his Chancellor from August 1923 to January 1924, but Chamberlain, passionate about social reform and a shrewd observer of the world, opted instead to become Minister of Health.
The department was barely five years old, created by the Ministry of Health Act 1919, but its responsibilities were extremely broad. Under the umbrella of “the health of the people”, they included healthcare, local government, housing and rent control, sanitation, medical research, young children, public health and disease prevention, National Insurance and poverty relief. Chamberlain saw the practical opportunities in the role, and within a fortnight presented to cabinet a programme of 25 pieces of legislation he wanted to enact; by the time he left office in 1929, 21 of them were on the statute books.
The choice of Churchill
Baldwin therefore turned to Winston Churchill, the former Liberal cabinet minister who had abandoned the Conservatives 20 years before and had still not formally rejoined the party (he would do so on appointment as Chancellor). He was weeks away from his 50th birthday, dynamic and self-confident (notwithstanding bouts of private depression), instinctively an economic liberal and committed to free trade. Churchill was a powerful orator and formidable debater in a cabinet short of rhetorical spark, and his charisma was undeniable.
It is alleged that when Baldwin made the offer of the chancellorship, Churchill at first misunderstood and thought he was to be Chancellor of the Duchy of Lancaster, which he had previously been from May to November 1915, but the Treasury was an institution close to his heart for sentimental reasons: his father, Lord Randolph Churchill, had been Chancellor of the Exchequer from August to December 1886, before threatening to resign over potential cuts to the Army and Royal Navy. He had not expected the Prime Minister, Lord Salisbury, to accept his resignation, believing there were no other plausible candidates for the role at that time. Salisbury, however, called his bluff and instead turned to former Liberal Unionist minister George Goschen, recently defeated in his Edinburgh East constituency. Goschen stood in a by-election in Liverpool Exchange in January 1887 but was defeated by seven votes, then he won a contest the following month in St George’s, Hanover Square. Reflecting on his mistaken sense of irreplaceability, Lord Randolph remarked “I had forgotten Goschen”.
Churchill was only just 20 years old when his father died in 1895 after years of debilitating illness which may have been syphilis, a brain tumour, multiple sclerosis or “nervous exhaustion”. He had idolised Lord Randolph but lacked a close relationship with him and was, like everyone else, often a victim of his father’s staggering rudeness, and his image of an influential statesman was generous at best. Nevertheless, being appointed to the post his father had once held, however briefly, moved Churchill profoundly. There had been rumours he might be made Chancellor when Bonar Law had retired in 1921, and The Westminster Gazette observed:
He is always known to have cherished the ambition of becoming Chancellor of the Exchequer. It was the post which his father held, and relinquished, and he wishes to hold it and show how well he could retain it.
On his appointment, Churchill told Baldwin “I still have my father’s robe as Chancellor. I shall be proud to serve you in this splendid office”, and he did indeed wear his father’s robe of office when he was formally sworn in.
This is not an attempt to assess Churchill’s tenure as Chancellor, which is fiercely contested. His introduction of the Gold Standard Act 1925, which put sterling back on the gold standard it had abandoned in 1914, is especially controversial and believed by many to have been fundamentally mistaken. I suggest, instead, that the fact of Churchill’s chancellorship was in many ways as important as the nature of it, that it came at a critical time in his career and that it allowed the latter part of his extraordinary public life to happen.
Stanley Baldwin did not owe Winston Churchill any great debt in November 1924, and, as we have seen, he was not the Prime Minister’s first choice for the Treasury. It is very easy to imagine a set of circumstances in which Churchill never became Chancellor: on his appointment, he had only just returned to the House of Commons after an absence of two years and was not even formally a Conservative. While his politically identity was crystallising as fundamentally anti-socialist and therefore anti-Labour, it was two decades since he had crossed the floor of the House, and, as I wrote in The Daily Express in April this year when Dr Dan Poulter defected from the Conservatives to Labour, many of those who change their party allegiance never truly find peace and acceptance thereafter. Those whom they have left behind feel betrayed, deceived and let down, while their new-found colleagues often privately question their commitment and sincerity.
Famously (but perhaps apocryphally), Churchill said of his shifting party allegiances “Anyone can rat, but it takes a certain amount of ingenuity to re-rat”, and his career after 1939/40 has diminished the significance of his shifts between political parties. But such demonstrable opportunism, leaving the Conservative Party less than two years before it suffered a catastrophic election defeat in 1906 and then enjoying a swift rise through the ministerial ranks as a Liberal, combined with a deeper unease about something Churchill’s character than was narcissistic and unreliable. Lloyd George was not wholly speaking in jest when he alleged that Churchill “would make a drum out of the skin of his own mother in order to sound his own praises”.
The significance of the appointment
However we rate Churchill performance in charge of the nation’s finances, the fact that Baldwin appointed him and then left him in post for the full period of the government’s life was in part a tacit endorsement and a seal of approval. It advertised that Churchill had been welcomed back into the highest ranks of the Conservative Party and should be regarded as part of its future. It gave Churchill a foundation sufficiently robust that, even after his resignation from the shadow cabinet in 1931 over Baldwin’s support for India being awarded dominion status, he did not fade completely into background. He left the Treasury in June 1929 and was a backbencher until appointed First Lord of the Admiralty in September 1939, but when Neville Chamberlain’s leadership began to fray at the edges, after war had broken out, Churchill could already be regarded as a potential replacement in extremis.
It is easy to imagine an alternative career trajectory for Churchill. When he returned to the House of Commons in 1924, he had not sat as a Conservative for more than 20 years, and he had a long history of friendship and political alliance with Lloyd George, against whom the Conservatives had revolted two years before. Although he had 15 years’ ministerial experience behind him, having spent more of the 20th century in office than out of it, and had held very senior posts, his was already a career spotted with controversy: most prominent, of course, was the Gallipoli campaign, but his handling of the Tonypandy riot in November 1910 was criticised both as too soft and too draconian, some found his eye-catching, hands-on appearance at the siege of Sidney Street in January 1911 distastefully attention-seeking, and in several situations, on Home Rule for Ireland, in the Russian Civil War of 1917-22 and in the management of British interests and presence in the Middle East after the First World War, there was always a hint of recklessness in his judgement, veering from one emphatic position to another.
In short, it would in some ways have been the easy option for Baldwin not to have offered Churchill any preferment when he came to assembling a government in late 1924. Churchill’s relationship with Baldwin was never especially easy. As much as anything else, he found the Worcestershire industrialist’s political success baffling, later describing him as “a countrified businessman who seemed to have reached the Cabinet by accident”. Their relationship would deteriorate in the 1930s over rearmament and the threat posed by Nazi Germany, but even by the 1920s the two had little in common. Baldwin was stolid, reassuring, undemonstrative and consensual, an effective communicator but usually a stranger to rhetorical flourishes. He was the personification of a certain type of quiet, bucolic Englishness, while Churchill was the ultimate thrill-seeker and adventurer, dazzling, epigrammatic and often unreliable.
Given all of that, and given, as we have seen, that Churchill had no professional qualifications or expertise which put him at the head of the queue for the chancellorship, a cautious leader like Baldwin, especially in the wake of the biggest single-party election victory in British history, could reasonably have set Churchill to one side. Certainly he was a popular and persuasive speaker, and what was said in the House of Commons was more extensively reported and more influential then that it is now, but even at his gadfly worst Churchill would have been only a minor exasperation. At the very least, he could not have felt aggrieved at an expectation that he would serve a sort of probation for a year or two on his return to the Conservative fold.
If that had been the outcome, the longer term effects on Churchill’s career might have been very serious. I wrote last year, while considering historical reputations, that if Churchill had died before 1939, when he was in his mid-60s, “his legacy would today be mixed to poor”. It is certainly the case that much of claim to the premiership by the time Chamberlain was forced out in May 1940 rested on his long-standing and consistent championing of rearmament and his opposition to appeasement, despite spending the 1930s otherwise in the political wilderness. But there was surely an extent to which he gained any hearing at all even in his wilderness years because he had been a senior cabinet minister in the Conservative government of 1924-29. If he had lacked that element of his curriculum vitae, if he had looked back to the Lloyd George coalition and before to show his experience of high office, it might have seemed to younger contemporaries a little flimsy or at least outdated.
Judging Winston Churchill before 1940 and without the foreknowledge of his historic role in the Second World War is a desperately difficult task which has defeated scholars far more eminent than me. He was not Baldwin’s first choice for Chancellor of the Exchequer, and when the fact was announced, The Guardian responded delicately:
Decidedly, Mr Baldwin does many things which a weak or timid man would not do. This much must in fairness be said by any opponent who knows a strong man when he sees him. The most striking appointment is that of Mr Churchill to the Exchequer.
Neville Chamberlain was, naturally, the obvious candidate. But The Guardian had not offered its mildly catty observation in the spirit of disapproval.
In Mr Churchill [Baldwin] has, undoubtedly, secured a far abler man than any of Mr Churchill’s more orthodox Conservative rivals, including the mysteriously admired Sir Robert Horne, whose agreed talent as a City man seems to be widely confused with statesmanship. The appointment is courageous because it will necessarily infuriate all the die-hards. Their former organ, the “Morning Post” is now pretty well muzzled and cannot bellow as it would have done a year ago.
The Times was also cautiously approving, although its leader writer could hardly have been more minatory.
The most daring appointment, from the public point of view, is that of Mr Churchill as Chancellor of the Exchequer, but we believe it to be sound. Mr Churchill’s administrative ability will be tested to the utmost in an office which, more than any other, falls under the constant test of expert criticism. He has a huge opportunity of showing, what the public have often doubted, that he is capable not merely of brilliant imagination, but of taking the best advice and forming sober judgment upon it. In any case his fitness for the post will be determined solely henceforth by his achievements at the Treasury, and not by any more discursive political activity.
Churchill’s predecessor and successor, Labour’s Philip Snowden (1924, 1929-31), can be forgiven a reaction of greater asperity. He wrote in his memoirs a decade afterwards, “What induced Mr Baldwin to offer Mr Churchill this important post still remains an inscrutable mystery”.
These were all largely fair assessments of Churchill as he approached 50. What they capture, however, in a way which is so difficult for us now, is the sense of a politician who had outrageous gifts and great charisma, as well as a profound sense of destiny and his place in it, but who was, ultimately, a politician like the others among whom he moved. Of the cabinet which Baldwin assembled that November, certainly Curzon and Austen Chamberlain were weightier and more accomplished figures than Churchill, Leo Amery and Sir Arthur Steel-Maitland were more formidable intellects, while Birkenhead was hardly less dazzling in oratory, argument or conversation (he would be dead within six years, killed by drink at the age of 58).
It was that Churchill, not the figure of patriotic mythology, whom Baldwin had to contemplate: charismatic but divisive, intuitively brilliant but often of startlingly poor judgement; capable of profound personal loyalty but widely distrusted in political terms; a reflexively radical social reformer but a die-hard imperialist even by contemporary standards. If he was not an economist, a financier or a businessman, nor had been his father; nor were Austen Chamberlain (1903-05, 1919-21), Lloyd George (1908-15), Asquith (1905-08) or Sir Michael Hicks Beach (1885-86, 1895-1902).
In this context, it hardly matters whether Churchill’s chancellorship was a success or a failure (though this brisk account includes a plausible defence of his decision to return to the Gold Standard). The central point is that Baldwin’s choice of Churchill was understandable but not compelling: it could have gone either way. But, in retrospect, it was a fork in the road for Churchill, and the road not taken could have seen him drift even further to the fringes than he would do in the 1930s, while the five years he spent at the Treasury gave him an anchor in mainstream party politics which was enough—just enough—to keep him within the bounds of credibility and imagination when his appointment with destiny arrived in May 1940.