Royal Legacy: How the royal family have made, spent and passed on their wealth

by McClure, David

  "From time to time I have told you of the interminable meetings and problems we have faced in the Select Committee on the Civil List. It has been a long haul and there is more to come.”40 Three weeks later when Barber sent the draft report to the Foreign Secretary Sir Alec Douglas Home, he added the personal comment:

  "Dear Alec, I thought you would like to be informed of the "progress" since March and I'm writing similarly to other ministers concerned. The Lord President and I have had quite a time! Yours Tony.”41

  A week later the Foreign Secretary wrote back "Thank you for your letter about Civil List arrangements. I think you have achieved marvels. Alec."42 In truth, it was the palace that had achieved marvels - or certainly achieved one of its key aims of keeping the size of the Queen’s private fortune away from the prying eyes of the committee members. They hardly laid a glove on Lord Cobbold during his two long bouts in the committee room (a frustrated Willie Hamilton described him and Sir Michael Adeane as looking like two rich funeral directors intent on defending the status quo).43 When in his second appearance Roy Jenkins pressed the Lord Chamberlain for more precise information about the Queen's private wealth, all he could do was to repeat Her Majesty's earlier assurance that the rumours of it being in excess of £50m were "wildly exaggerated." Slightly abashed, he acknowledged that he had said nothing new: "I accept, Mr. Jenkins, that that does not go all the way to answer your question you asked me. I hope it may be of some help, but I'm afraid that is as far as I can go," to which Jenkins could only reply: "It leaves certain problems to the committee but I would not wish myself to press further."44 A former Chancellor of the Exchequer had clearly been bested by a former Governor of the Bank of England.

  This victory for the palace was underlined in the opening paragraphs of the published report: "there is no foundation for the suggestions which have been made in some quarters that, apart for these items [the Royal Palaces, the Crown Jewels and similar inalienable property], the Queen owns private funds which may now run into such figures as £50 million or more. Your committee were assured that these suggestions are wildly exaggerated and have thought it right to incorporate this assurance in their report."45 Interestingly the wording of this passage so troubled the Chancellor that he scribbled on his draft script: "Surely this needs amending [unclear?] in the light of Cobbold’s later evidence? I thought he went out of his way to point out the £50m was "widely exaggerated". This important, & was certainly his contention. Stick to his words". But a later Treasury memo revealed who was calling the shots by explaining that at the end of the day the line had not been amended because "the references to the personal fortune has already been cleared with the palace and reflect very closely the evidence given on the subject by the Lord Chamberlain.46

  The whole issue was clearly explosive as was revealed by a Treasury lobby briefing paper which recommended that the line to be taken by the Chancellor if asked about the Queen's private funds was: "the committee questioned Lord Cobbold on this and his replies are given in the printed evidence. For myself I do not expect the Queen to subsidise the expenses of state out of her private income any more than we should expect a Prime Minister - or Chancellor of the Exchequer - to do the same."47 We know of course from the released papers of Barber's private meeting with Cobbold on June 11 that he did think that the Queen's personal wealth should be made known in order to reach a broad assessment of how much Civil List money should be granted to her. On this matter of disclosure, the Treasury Sir Humphreys seem to have won a small battle over their minister.

  Even though Willie Hamilton could not have known what was going on behind the scenes in Whitehall, he came to the firm conclusion a little later that “the establishment” had succeeded in screening the royal family’s private wealth from parliament and the people.48 His Labour colleague on the committee Joel Barnett was so dissatisfied with the palace's failure to supply information about the Queen's private fortune and the extent to which it had grown since 1952 as a result of her income tax exemption that he refused to vote for the new Civil List. They found an unlikely ally in The Financial Times which in a leader at the time of the report's release complained: "the committee has not made any serious attempt to find out all the relevant facts about Her Majesty's private income and it has resorted to the practice of "sidelining" to censor from its pages such bits of evidence as it is officially thought right to conceal."49

  We now know what really went on because more than twenty-five Treasury papers were released in 2002 under the thirty year rule and for the most part they confirm the suspicion of Hamilton writing back in 1975 that the role of the select committee was to put “a coat of democratic whitewash” over a process that was far from democratic.50 But intriguingly one file was held back - Civil List Bill preparatory papers 1971-72.51 By definition it is impossible to know the precise contents of the secret bundle of documents, but given that the numerically closest declassified file - T326/1629 - covers the issue of whether the Queen's private wealth should be taken into consideration when assessing the Civil List, it is possible that the closed document includes some sensitive material about the Queen and her family wealth, otherwise why not release it. Almost a decade after its closure all the National Archives catalogue will say about the missing file is: "temporarily retained by the department". When a request was formally made to the department for its release or some explanation why it was not declassified, the Treasury declined to respond. A cynic might judge that they had decided to hammer an extra nail into the lid of the coffin after the thirty year rule had let in too much daylight.

  Based on the evidence of the Civil List documents that were released, the charge of some limited collaboration between the Treasury and the palace over suppressing details about the royal family’s inherited wealth is hard to refute. Palace officials were without doubt deeply worried about the release of any embarrassing financial information and Whitehall was more than content to keep things under wraps. With no royal deaths in 1971, the only thing buried in that year was bad news.

  9.THE WINDSORS AND THEIR WEALTH - 1972-1986

  "Damn it. The money was his, not hers”

  Lord Mountbatten on hearing that the Duchess of Windsor had rejected his plans for the Duke's estate1

  In the later years of his life, that supreme planner Earl Mountbatten was at the centre of a protracted struggle for control of the Duke of Windsor's estate. When alive Edward VIII had thrown a spanner into the well-lubricated succession machinery and now in his grave he threatened to do the same thing again. At stake was the royal reputation in the form of a cache of documents and some family heirlooms.

  After the death of his cousin in Paris on 28 May 1972, Lord Louis took it upon himself in his unofficial role as the ombudsman of the royal family to ingratiate himself with the Duchess of Windsor to ensure that any royal property was repatriated to England. He felt he had the blessing of the Queen as she had asked him to help her with the duchess since he was the only member of the royal family remotely close to her. He had served in the Royal Navy with her husband, made him best man at his wedding and later was wont to describe himself as "David's devoted friend." It was Mountbatten who was granted the royal seal of approval to make the official television tribute to the former king which on the eve of the funeral was watched by his widow and other family members at Buckingham Palace. “He was more than my best man, he was my best friend all my life,” Mountbatten emoted with more than a touch of hyperbole.2

  What Mountbatten did not realise was that the duchess had long disliked his overbearing manner, dismissing according to legend his decision to give his wife Edwina a naval burial: “what can you say about a man who throws his wife into the sea?” She had earlier been warned by the duke, who liked to refer to him as "Tricky Dickie," not to trust him. In truth, the embittered former sovereign had never forgiven him for failing to repay the compliment to be best man at his own wedding in the south of France in 1937 - a wedding that was conspicuously boycotted by the rest of the royal
family.

  When on Friday June 2 Wallis and her large entourage (which included a maid, secretary and hairdresser) flew into Heathrow Airport for the funeral, much to her dismay Earl Mountbatten rather than the anticipated Prince of Wales was waiting on the tarmac to greet her. He drove her to Buckingham Palace in the royal-crested Rolls-Royce briefing her about the protocol for the lying-in-state prior to the funeral on the Monday and assuring her that she would be welcomed with open arms by all the family. She told him that she was particularly worried about how she would be received by the Queen Mother whom she believed “never approved of her.”3 To combat her evident nervousness, Mountbatten accompanied her to St George’s Chapel, Windsor where the duke’s body was lying in state.

  What the Windsors dreaded was that she might collapse under the strain of the occasion but on the day the funeral ceremony passed off without incident - due in no small part to Mountbatten's adroit handling of the situation. At the luncheon in Windsor Castle after the service, he and Prince Philip were conveniently seated next to her. Without beating round the bush they asked her what she intended to do with the duke's archives and other possessions and whether she planned to return to America. She reportedly told than that “I won’t be coming back to England, if that is what you are afraid of, except to visit the grave.”4 When it came to the duke's papers, she only wanted to do what was considered right and after some prompting from her two luncheon guests she agreed that the documents should be sent to the archives in Windsor.

  A week later on June 15 the first batch of the duke's papers along with his orders of chivalry and other decorations which had been deposited in a Paris bank were duly handed over to a librarian from the Royal Archives, Sir Robin Mackworth-Young. But Mountbatten felt obliged to pay several visits on his own to the duchess to tie up the loose ends. The first on June 30 was presented purely as a social call but he was really there to enquire about what would happen to the rest of the estate of the duke and duchess. After this softening up exercise which resulted in the removal of the second batch of papers by the archivist in December, in early February he was back in Paris with the duchess and over tea suggested that the duke's assets should be placed in a trust fund under the control of Prince Charles, his successor as Prince of Wales, who could keep his memory alive by distributing the money to worthy causes in Wales. In a letter to the duchess eleven days later confirming arrangements, he also offered his services as executor of the duchess's own estate.5

  Far from weakening her defences, this bombardment of advice from the former Supreme Allied Commander only served to stiffen her resolve. She began to tire of his repeated hints that she might pass on some of her husband's gold boxes and other souvenirs to her "old friend Dickie" and in their next meeting insisted that her lawyer be present. Finally, she wrote him two terse letters: the first saying that she did not want to set up the proposed foundation preferring to use the money in ways she felt appropriate, and the second making it clear that he should no longer raise the matter of her and the duke’s death as it was making her depressed.6

  Meanwhile the judicial process of winding up the duke's estate was being completed with less drama. On 27 November 1972 probate was granted in London. As a former sovereign his will was sealed by right and the official entry at the Principal Registry records that he left £7,845 17s. This of course was just his English estate which most likely amounted to no more than a few UK bank accounts and investments made by his London stockbroker and did not include his French assets which would have been part of his French probate which was granted a week later on 4 December 1972.

  For more than three decades France had been his home and one of the main reasons for this was its huge tax benefits. After the Second World War, he had considered moving to the United States, his wife's homeland, where he had many friends. It seemed the natural place to settle for a man who through his early impressionable visits to New York had been, according to court gossip, “Americanised” and “modernised” - to such an extent that he had begun to speak with a slight American accent.7 His hope was to take up some diplomatic position helping to improve Anglo-American relations. But Walter Monckton, his lawyer and mentor, advised that the American tax laws were "strict and egalitarian" and that the US Treasury would be unlikely to grant an exemption to a former king with such a large fortune.8 The duke had suggested that if he were granted diplomatic status in his capacity as some form of roving ambassador he would automatically be exempted from US tax, but this idea was soon quashed by the Foreign Office who took the view that the Americans would soon see through the appointment as a ploy to circumvent their tax regime.9

  At this time, the duke seemed obsessed by the evils of taxation – not just in America but in Britain too. When his brother-in-law Earl Harewood died in May 1947, there was much talk about how his landed estate might be annihilated by death duties and other wealth taxes. Echoing Lord Crawford’s warning that a national scandal was taking place before their eyes.10 The duke lamented in a letter to Queen Mary how thirty years of Liberal and Labour legislation was wrecking a special part of national life – the country estate.11 While there is an element of self-pleading to this observation, the duke nevertheless had a point. When combined with a seventy-year depression in land prices, the relentless rise in death duties from 15% in 1914 to a frightening 75% in 1948 had decimated the landed wealth of the British aristocracy. In the postwar years of Clement Attlee’s welfare state socialism, Earl Harewood lost two thirds of his Yorkshire holdings, Viscount Portman had to dispose of all of his Dorset estate and the Duke of Argyll was forced to sell the Island of Tiree and much of Kintyre.12 Although some of these estates were accepted by the Treasury in lieu of death duties, there was a limit to the number of mansions that heritage bodies like the National Trust could accommodate and between 1945 and 1955 four hundred country houses had to be demolished. By 1956 little more than one third of the peerage possessed a country estate.13 At the back of the mind of any British royal – even an exiled one – was the worry that he might go the way of his aristocratic cousins. The only escape from such a fate was to be granted special treatment from the state.

  In stark contrast to the United States and the United Kingdom, France had a long heritage of welcoming exiled monarchs to its shores and offering them generous tax concessions. After further inquiries to the French Treasury, it was learned that the duke would be granted diplomatic status, given police protection and exempted from many taxes. He would pay only modest property taxes, no income tax and many household purchases - including his television sets, vacuum cleaners and even cars - would be duty free. Even though the duke had no great love for France (during his thirty years in the country he never managed to learn the language despite his fluency in German), had almost no close French friends and liked to joke that the only thing wrong with the French countryside was that it was "populated with Frenchman"), he could hardly afford to live elsewhere given his lavish lifestyle and his aversion to paying tax.14 Much to his delight in 1959 the Bank of England confirmed his UK status as a non-resident for tax purposes.15

  The tax privileges did not end with his death. Soon after his funeral, the duchess's lawyer negotiated a generous deal with the French state whereby she would pay no income tax and her husband no death duties. The latter was a considerable saving for an estate estimated to be worth well over £10m and the former was hardly necessary given that she would inherit the estate and enjoy the £5,000 annuity from the abdication financial settlement that her husband had persuaded the palace to pass to her on his death.

  The duke had had plenty of time to put his financial affairs in order and prepare a smooth succession. After suffering for many years from a heart condition and other ailments brought on by his heavy smoking, he was diagnosed in November 1971 with throat cancer. He undertook an exhausting forty-one day course of cobalt treatment which brought little relief and was ended in January. On February 21 he underwent an exploratory operation that revealed that the tumour on his th
roat was inoperable and that he was unlikely to live more than six months. He did survive long enough to receive the Queen on May 18 on her state visit to France, much to the relief of the British Ambassador to Paris, Sir Christopher Soames, who had made it clear to his doctor that it would be a political disaster if the duke died during the visit.16 Having fulfilled his duty in receiving his niece, the sovereign, the duke began to fade fast and died ten days later.

  He had signed his last will and testament on 6 January 1972. On the advice of his long-standing English lawyer Sir Godfrey Morley and the French senator Jacques Roselli, he had decided to place all his assets in a trust of which the duchess would be the sole beneficiary during her lifetime. Should she predecease him, the following bequests would be given to his staff - $30,000 to his Bahamian valet Sydney Johnson, $20,000 his chef Lucien Massy, $15,000 to his driver Georgio Martin and $10,000 to his maid Giselle Deberry. Several other associates including the duchess's hairdressers Messieurs Alexandre and Edouard were each to receive $5,000, while his personal secretary John Utter was meant to get $10,000 but this was revoked by a codicil.17 The amount of money that each received gives a clue to the importance he attached to them in the household and their loyalty of service. His trusted valet Johnson had been in his employ since his governorship of the Bahamas in 1940.

  According to the royal chronicler Hugo Vickers who gained access to the will by virtue of his friendship with the duchess's personal secretary, the duke's clear intention was that the duchess should benefit fully from the estate during her lifetime but that on her death the residue would return to the United Kingdom and be donated to charity. A registered company had been created by Sir Godfrey Morley's law firm to channel the funds to this end. Morley was named as executor along with another English lawyer Ronald Edgar Plummer and the Windsors' French lawyer Suzanne Blum. For the will of a French resident to be valid in France, a French executor was necessary - although Maitre Blum was in no way involved in the drafting of the document or even notified that she would be executor. By all accounts, the duke deliberately kept her out of the loop.18