by David Lough
If it’s for me so that I can do what I want with it, I would like it very much. But I don’t want them to raise a sum for charity just to bring home some coloured gentleman from Jamaica to complete his education. I’d rather they did nothing. Of course, I might give some of the money subscribed to a charity that I was connected with. But I’m not a rich man... The four volumes of History of the English-Speaking Peoples will bring me a great income, but the Treasury will take it all.56
Shortly before Churchill’s birthday, Moir pointed out that any money handed over to Churchill would become part of his estate, causing an extra tax bill should he die within five years, and for a year even if he gave it away. After urgent meetings with the Fund’s legal team, Churchill’s advisers decided that all the money raised so far would have to go to him, but they urged him to announce immediately that – his own needs now met – future donations would go towards a new Winston Churchill Birthday Charity that he was establishing forthwith.
The expected rush of City contributions never materialized, but donations reached £259,000; Churchill was presented with a first cheque for £150,000 on the day after his birthday, followed by another for £26,134 six months later. Both cheques went into a new ‘Presentation Account’ at his bank,57 from which he transferred £25,000 as his personal contribution to his Birthday Trust.58 Clementine received a cheque for £2,000 at Christmas and Churchill’s bank accounts finished the year with more than £170,000 of cash.59
Throughout 1954 Churchill was encouraged by family and friends to retire. He dismissed any such suggestion, but early in 1955 he told a small circle of friends that he would leave halfway through the year. ‘Our friend, under no pressure from Clemmie, Eden or other Ministers, intends to depart before July,’ Bracken told Beaverbrook in the middle of January. ‘His only wish now is to find a small villa in the South of France where he can spend the winter months in the years that remain to him.’60 Just before he resigned in April 1955, Churchill invited Elizabeth II to dinner at 10 Downing Street. The young queen offered her prime minister a dukedom, but he declined. Without a great landed estate it would be an embarrassment, he decided.61
*1 Cassell did not publish in Britain until September 1952, as a result of paper rationing and printers’ strikes.
26
‘I shall lay an egg a year’
A Third and Final Retirement, 1955–7
Exchange rates: $2.80 = £1; francs 1,000 = £1
Inflation multiples: US x 9; UK x 22
AFTER RETIRING, CHURCHILL took a fortnight’s holiday with Clementine, painting and playing bezique in Sicily. While he was there, eighteen months of work by Churchill’s solicitor Anthony Moir culminated in the announcement of publishing arrangements for A History of the English-Speaking Peoples.1 Cassell & Co. had paid £20,000 for the worldwide rights in 1933, but acknowledged that much had changed since then. They suggested instead that their payment be treated as an advance on the new arrangements; Dodd, Mead and Co. and McClelland & Stewart – the American and Canadian publishers who had bought the book from Cassell before the war – took the same view: the book was too attractive a commercial property to lose to rivals.
Moir had set out the new contracts to ensure that Churchill was paid more and lost as little as possible to tax, because the book would almost certainly be Churchill’s last and its earnings might have to last him for several more years. The Second World War’s tax scheme could not be used, because A History of the English-Speaking Peoples had been written before the Literary Trust came into being. However, Moir chose to arrange a series of fixed payments by the publishers, in the middle of which Churchill would retire as an author for the third and final time, thus converting all remaining payments into untaxed capital receipts.
Moir concentrated first on the American newspapers, agreeing four instalments of $50,000 each with LIFE.2 Hearing that Henry Luce had been spotted leaving Downing Street with a sheaf of papers tucked under his arm, Emery Reves lobbied Churchill for the foreign language rights.3 These rights had been part of LIFE’s package, but Churchill took up the cause of his old agent directly with Luce, cabling:
I would like to have them handled by Emery Reves who had made a wonderful success abroad of the War Memoirs and who has worked with me since the anti-Hitler days before the War. Although I have made no personal profit by sale of the War Memoirs abroad it is a great pleasure to me to feel that these books are translated into 26 different languages and I am sure that no one could have done it except Reves who buzzed around the world for nearly a year making contacts.4
By Christmas 1955 the matter was ‘settled’: Reves paid £34,000 and LIFE’s price fell to $150,000, a fifth of the sum it had paid for The Second World War.5 Although the baton had passed to a new generation at The Daily Telegraph, the Berry brothers followed family tradition by offering £40,000. They broke with their father’s practice by asking for their loans to Churchill of £32,000 to be netted against their payments.6
Churchill’s retirement from politics had encouraged him to expand his racing interests into breeding. In the spring of 1955 he had bought the Newchapel stud, close to Chartwell, for £6,500.7 An honorarium of £1,000 a year secured the services of Major Arnold Carey Foster, the man who had spotted Colonist II, as a combined stud manager, racing manager and vet.8 Within a year, the stud housed seven mares and four colts, with another four foals on the way.
After two victories by stud horses at the same Windsor race meeting in 1957, Churchill explained to Clementine that the stud was paying its way.9 However, James Wood of Wood, Willey & Co. struggled to explain whether Churchill’s ‘equine activities’ as a whole produced a profit. For tax purposes, racing and betting were considered a private hobby, which Wood calculated cost Churchill less than £1,000 in 1957. In contrast, the Inland Revenue treated the operations of the stud as a business, although Wood considered it an odd one. Most of the stud’s theoretical ‘income’ depended on changes in the valuations of Churchill’s horses as they moved between racing and breeding duties without any cash changing hands. The stud certainly cost £18,000 a year to run, but so far as Wood could tell the ‘loss’ was limited to £6,000 during its first year and this could all be offset against Churchill’s other tax bill.10
Even after his retirement, Churchill still saw a selection of Foreign Office telegrams and had to deal with a constant stream of official visitors and correspondence. To help his office cope, the government provided the temporary assistance of a young civil servant, Anthony Montague Browne. He had joined Churchill’s Downing Street office in 1952, but had returned to the Foreign Office on Churchill’s resignation. Montague Browne was originally dispatched to help his former employer ‘for a week’ at Lord Beaverbrook’s villa in the south of France, but the foreign secretary Harold Macmillan extended his appointment to two years during which Churchill reimbursed his salary to the Treasury.11
Macmillan’s instructions to Montague Browne were to concentrate on Churchill’s relations with other governments and his speeches on international affairs, and to keep away from his private affairs and finances, but that soon turned out to be impractical: ‘For one so wise and far-sighted,’ Montague Browne wrote in his memoirs, ‘[Churchill] was quite amazingly extravagant... There were only two ways of helping, either by making more money or by curbing expenditure.’12 Wisely, Montague Browne concentrated on the former, conscious of the need to preserve his employer’s reputation and avoid income tax.*1
Churchill so enjoyed his two months painting, and polishing A History of the English-Speaking Peoples at La Capponcina in autumn 1955 that he asked his host whether he could stay for November and December. However, Beaverbrook’s staff were due to move to his winter home in the Bahamas, so the Churchills were invited there.
Then another invitation came from Emery Reves and his partner Wendy Russell, who had just finished restoring La Pausa, their house on the French Riviera, overlooking Monte Carlo and the sea. It had been bought by Coco Chanel in 1928 and re
stored with money provided by her partner at the time, Churchill’s friend the duke of Westminster. Now it was Reves’s earnings from Churchill’s The Second World War that had funded the restoration.
The Churchills chose La Pausa, so that they could search for a home of their own in the region, although Clementine was doubtful about this idea. They wanted a house set back in the hills, rather than on the coast, with at least ten bedrooms, four bathrooms and pleasant grounds.13 On arrival at La Pausa early in 1958, however, Clementine was unwell, so Churchill had to house-hunt alone. He inspected properties priced between 26 and 65 million francs.14 He even summoned his bank manager over from London to discuss how best to approach the Bank of England for the necessary licence to export £25,000 for a purchase.
‘Sir Winston has been advised by his doctors that he should spend the winter months not in England but in the south of France’, read the application, which the bank quickly rubber-stamped.15 The Société des Bains de Mer de Monaco, which also owned Monte Carlo’s casino, offered an alternative: in return for a rent of £1,500 a year, it would spend £50,000 on converting a villa overlooking the sea for Churchill’s exclusive use for the rest of his life.16 Over lunch at La Pausa, Randolph had introduced his father to the Société’s main shareholder, the Greek ship owner Aristotle Onassis, and Churchill had been favourably impressed. But Clementine was not enthusiastic, as she told her husband:
Somehow I don’t want to be beholden to this rich and powerful man, & for the nest to be blazoned. Similarly, tho’ to a lesser degree, I don’t want to stay at La Pausa... Also I want this journey to last as long as possible and to get off at Marseilles & rattle along either by train or car to Monte Carlo, then stay with that unconventional and uneasy ménage does not allure me – Please forgive me; but you can’t teach an old dog new tricks.17
The idea of a house where they could both spend months at a time was dropped. Churchill stayed for four months at La Pausa, where he was given the use of an entire floor, including office, bedroom and rooms for his guests.
LIFE and The Daily Telegraph started running extracts from the first volume of A History of the English-Speaking Peoples in the spring of 1956. It was clear it would be a commercial success when Paris Match bought an episode featuring Joan of Arc. It, too, was chosen as Book of the Month in America, a decision worth ‘at least a quarter million dollars’ to Churchill, according to Edward Dodd, president of Dodd, Mead.18
With the publishers now able to forecast sales for the book’s later volumes, Moir asked Charles Graham-Dixon, QC, to plan Churchill’s retirement as an author, so that he escaped income tax on any volumes published after his retirement date. It would not be easy, the barrister advised: Churchill could not retire first and then deliver a finished text later, so all the manuscript delivery dates would have to be renegotiated with each publisher. Graham-Dixon also warned that the Inland Revenue might anyway insist on taxing some future income to match the literary expenses already claimed by Churchill; for good measure, he advised that everything should be put in place over the following eight months, because he expected the budget of April 1957 to close some of the loopholes which they hoped to exploit.19
Churchill approved Moir’s suggestion that he test the water informally with the Inland Revenue. Moir and James Wood left that meeting ‘hopeful’, but some of their optimism dissipated, however, when a new tax inspector, Mr Bullock, ruled that Churchill would have to match income and expenses for at least his last year as an author and possibly two.20 This ‘very disappointing’ news would catch £56,000 of his remaining instalments due from LIFE and The Daily Telegraph, although any post-retirement payments for the later volumes of the book would be safe.
Moir and Graham-Dixon visited the headquarters of the Inland Revenue to challenge this decision.21 Their first encounter was inconclusive, but their second, just before Christmas, ended in a classic compromise: the Inland Revenue agreed to apply a test that applied to The Daily Telegraph’s payments, but not to LIFE’s.22 As a result, Wood estimated, £165,000 of Churchill’s £276,000 earnings for A History would escape tax altogether. He would also be able to offset farming losses and literary expenses against the rest, leaving only a quarter to be taxed.23
Films were the second topic of discussion between Churchill and his lawyers. Bernard Baruch in America had weeded out most of the industry’s offers before they reached Churchill, but he let one through on account of its size: the National Broadcasting Company was willing to pay $250,000 for six taped interviews of one hour each, to be filmed at a time and place of Churchill’s choice.24 The offer’s one fatal flaw was that income tax could not be avoided. Churchill preferred to deal in any case with his old friend Sir Alexander Korda.
He wanted Sir Alexander to mediate between himself and the Ford Foundation, which was interested in sponsoring a television series for schools based on A History of the English-Speaking Peoples. Sir Alexander mentioned tactfully that he suspected he had already bought the rights at the end of the war. However, Moir came up with a compromise under which each of Churchill and Korda contributed a small sum of capital to form a joint venture, M & P Investments.*2 It would buy the film rights to A History from Sir Alexander and ‘live’ television rights from Churchill, before selling its shares to the Ford Foundation for $350,000. Churchill’s profits would remain untaxed because a sale of shares was treated as a capital transaction.25
M & P Investments duly took up its rights early in 1956, but when Sir Alexander Korda died suddenly of a heart attack, the Ford Foundation lost interest. Aware that historical films are expensive to make, Sir Alexander’s partner, Sir David Cunynghame, was sceptical of finding a replacement sponsor. Churchill’s team favoured using a New York agent, Charles Wicks, who was confident he could sell the rights for $1 million.26 When he acknowledged failure three months later, Emery Reves tried to sell them at a reduced price of $100,000, but had to be relieved of his duties early in 1957 so that he could host Churchill at La Pausa.27
As hopes faded for the Ford project during 1956, an offer came out of the blue from Metro Goldwyn Meyer for the film rights to My Early Life. MGM’s opening bid included a cash advance to Churchill of $100,000 on a half share of the film’s profits, which the studio hinted might produce eventual earnings of $1 million or more.28 New to Churchill’s business affairs, Anthony Montague Browne checked the ownership of the rights with Moir, who gave the ‘all clear’ after checking in turn with Churchill’s previous solicitors Nicholl, Manisty & Co.29
A senior MGM producer, Marjorie Thorson, flew to London and she had already raised the guarantee to $150,000 – and seemed prepared to go further – when the studio’s own checks showed that Warner Brothers had bought the rights during the war for just £7,500.30 Churchill apologized profusely to MGM’s owner Arthur Loew, while Brendan Bracken tried to buy the rights back from Jack Warner. Unwilling to release them to a rival, Warner tested whether he would be allowed to cover later episodes from Churchill’s life if he went ahead and made a film.31
Moir felt Churchill had some bargaining power, as Warner’s rights expired in two years’ time if unused. So he asked Warner for the same terms that MGM had offered, with Churchill entitled to approve the film’s cast and ‘treatment’.32 Warner professed interest, but caused consternation in the Churchill camp by putting his London lawyer in charge of negotiations: Dr Fletcher was not only a lawyer but ‘a Socialist MP’.
By the time the two sides sat down to negotiations in January 1957, Churchill’s final ‘retirement’, set for February, was fast approaching. Moir ruled out Warner’s stipulation that the entire Churchill family would have to take part in filming at both Chartwell and Hyde Park Gate and the project was put on ice, pending a personal meeting between Churchill and Jack Warner.
Churchill returned to La Pausa for some last-minute work on A History of the English-Speaking Peoples before his retirement took effect on 18 February. Moir warned Churchill’s staff that, once the date had passed, he would not be
allowed to ‘perform any act which would normally be carried out by an Author while continuing his profession’: there could be no book prefaces or film or television appearances in connection with any books and no work on film scripts.33
With two weeks to go, Churchill was still trying to complete A History. He worked on on the epilogue himself, while Denis Kelly tackled the preface and Montague Browne added a chapter on nineteenth-century Germany. ‘This was fun and I was rather proud of the result,’ he recalled in his memoirs. ‘WSC generously gave me £1,000 for my chapter, a large sum in those days, with the remark: “This is a present. It is not for the taxman.” The taxman thought otherwise.’34
During the final week, both Kelly and Montague Browne helped Churchill to earn an extra £20,000, provided by Reves, for a last-minute preface to an abridged version of The Second World War; to save time, Reves took the risk of selling the preface to the book’s other publishers.35
Money poured into Churchill’s bank once his retirement date passed. Only the Canadian publishers, McClelland Stewart, refused to commute royalties for the remaining three volumes into a lump sum; Cassell paid £70,000 for them after what Moir described as ‘considerable but very friendly negotiation’;36 and Dodd added $250,000 for America, estimating that royalties would have reached $450,000.37
By April 1957 Churchill’s bank accounts held nearly £300,000.38 However, he was spending £30,000 a year, two-thirds of it on six secretaries, eight full-time and nine part-time staff, a complement that was only likely to grow as he and his wife needed more medical care.39 At least he had staunched the steady stream of farming losses, which had required cheques of nearly £15,000 the previous year. A disappointing harvest and the Soames’ imminent move to a home of their own had persuaded Churchill to give up his farming ambitions completely.40 Auctioned in July 1957, the remaining land and livestock had fetched a combined sum of £50,000, more than enough to clear the farm overdraft and repay the mortgage.41