The Economist thus announced ‘The End of an Epoch’ in late September with a thud, admitting the flight from gold had produced no bank runs, no riots, no crash, instead heralding an uptick in exports, consumer and business confidence. And yet the paper continued to view the situation as temporary. In 1932, it denounced as ‘nauseating the symphony of imperial wind instruments’ braying for imperial preference, and called on Liberals to resign from the National Government over the adoption of tariffs at the Ottawa conference, this ‘mere piece of pettifogging political hoodwinking’.75 Layton dispatched eight pages explaining free trade to prime minister MacDonald, who meekly apologized. And though he resigned from the planning of the London Economic Conference due the next year, Layton in fact played a key behind-the-scenes role, in part because this gathering would still be empowered to negotiate a return to gold, to which he and the Economist remained committed.76
Far from lamenting the ‘end of an epoch’, Keynes celebrated. Graham Hutton, Economist assistant editor, remembered him bursting into a New Statesman and Nation luncheon direct from the Treasury on 21 September 1931, ‘rubbing his hands and chuckling like a boy who has just exploded a firework underneath someone he doesn’t like’. ‘At one stroke, Britain has resumed the financial hegemony of the world!’, Keynes jubilantly informed the journalists.77 The fact that twenty-five countries had followed Britain off gold was, Keynes added in a Treasury note, ‘an exceptional opportunity for uniting the whole Empire on a reformed sterling standard’, to be ‘managed by the Bank of England and pivoted on London’.78 His stress on imperial leadership at the moment of its apparent collapse is remarkable, especially as Keynes admitted the ‘great advantage in purely national currencies managed solely in the interests of domestic stability and social peace’. Britain had another destiny, however, and much to gain from a wide currency union. A sterling standard based on 1929 wholesale prices would raise what imperial countries could charge for food and raw materials, increasing both their power to consume British goods and the City’s income from equities held abroad – in other words, reconciling industry and finance along mid-nineteenth century lines, only now on the basis of ‘Empire free trade’.79
For Keynes, that still very substantial alteration to the liberal creed was justified above all by the need to balance American power – which threatened to digest the British Empire, a danger he perceived as early as 1917, while scrounging for dollars at the Treasury.80 Far from wishing to suppress or alter the structural primacy of finance – beyond criticizing it on occasion for neglecting home investment81 – Keynes came to see that its recovery would first have to pass through the real economy, on the back of a trade surplus, and was far readier than Layton’s Economist to consider unorthodox solutions to do this, including tapping the Empire. Sensing an opening in March 1931, as passage of the Smoot-Hawley Tariff demonstrated US failure to assume a constructive global role, Keynes briefly argued for a revenue tariff and for the gold exchange to be ‘relentlessly defended, that we may resume the vacant financial leadership of the world, which no one else has the experience or public spirit to occupy’.82 Five months later, the same hope led him to the opposite conclusion, when he toasted devaluation with Hutton.83
The Economist and the ‘mandarins’ who read it found this inconsistency disturbing, but it must be borne in mind so as not to misunderstand the postlude to these debates in 1936: the General Theory of Employment, Interest and Money and its call to ‘euthanize the rentier’. Despite the presence of many of his students on its staff at this point, the Economist remained extremely cautious about the interventions Keynes proposed – agreeing on little more than the need for low interest rates, which kept up stock and housing prices in the pit of a now worldwide depression. When the young Tory MP Harold Macmillan’s Reconstruction: A Plea for National Unity appeared three years prior, for example, the paper harshly criticized its reliance on Keynes: overproduction was impossible, while stripped of ‘verbal embellishments’, the schemes to force reorganization in the cotton and coal industries ‘amount in fact to Protection plus Monopoly!’84
Keynes’s magnum opus was so explosive in the City in 1936 that Layton abandoned the practice of anonymity in asking Austin Robinson, Keynes’s student and colleague at Cambridge, to sign his review of it. A row ensued with Robinson, who later spoke about Layton’s role in it:
He was so able and in a way one of the early creators of quantitative economics. But he was at the same time curiously anti-intellectual. One of my most vivid memories of crossing swords with him was over the review in the Economist of Keynes’s General Theory. He and Geoffrey Crowther (who was potentially more able but in practice very obstinate and anti-intellectual) were terrified of seeming to praise the General Theory or to say that it was important. They not only made me sign the review when the Economist normally published unsigned reviews. They also cut out, without my agreement, the final paragraph in which I summed up the book. I never quite forgave Geoffrey Crowther, and I still think that Layton ought to have had a little more perception and courage. He was a great man but he had rather severe limitations.85
Layton and his deputy Geoffrey Crowther hedged their bets, censoring the part of the review that referred to supplementing monetary with fiscal action. During bouts of pessimism, in which the marginal efficiency of capital was low, Robinson was allowed to hint, it might be impossible to achieve a rate of interest high enough to induce lenders to lend or low enough to get borrowers to borrow and invest. In such cases, Keynes ‘would wish to supplement private investment by public investment, or to increase the propensity to consume by social services or redistribution’.86
The General Theory was not just a theoretical rebuttal to the Treasury attacks on Lloyd George’s plan to ‘conquer unemployment’ – which could, its officials had claimed in 1928, only crowd out private investment, with no cumulative economic benefit. Keynes’s call for the ‘euthanasia of the rentier’ and the ‘somewhat comprehensive socialisation of investment’ in the final chapter of the General Theory was also a product of his clashes with City opinion more broadly since 1925, as embodied in the Economist. This would have been the more frustrating for Keynes insofar as the obstinacy he encountered from City circles was out of proportion to their disagreement.87 Layton seemed just as ambivalent thirty years after the appearance of the General Theory, offering Keynes a belated, backhanded recognition. ‘Since 1945 full employment and Keynesian policies have been an assumption of our public life, at times to a damaging degree.’ ‘The tragedy’, Layton added, ‘was that they won acceptance twenty years too late. Unemployment and slump left scars on the British working population that still cramp our ability to face the future.’88
Sterling Thirties: Empire and Editorial Change, 1931–38
If Layton set the Economist against the tide of imperial and national self-sufficiency after 1931, the paper he ran nevertheless reflected the historic changes set in motion that year. The creation of the sterling currency area and the Ottawa system of imperial tariffs accelerated the trend of the decade before, with foreign investment falling as a share of national income, even as a larger part of it now flowed to the Empire.89 In 1928, Layton visited India, the top destination for investment, as assessor to the Simon Commission. Layton’s wife Dorothy joined him on the voyage, with both viewing it through the prism of Katherine Mayo’s 1927 bestseller Mother India – a follow-up to Isle of Fear, her justification of US imperialism in the Philippines – which highlighted the cruelties of the Hindu caste system, in particular the practice of child marriage.90 As the latest Economist editor to try to reform the Raj, Layton proposed a new federal system in which the central government in Delhi would raise and distribute tax revenues to the provinces, which would then spend the bulk of them – on sanitation, health, education and agriculture, much the same priorities as in the Liberal Yellow Book.91 Indian nationalists rejected the very premise of the Simon Commission, with no Indian members among the authors of its report on the reform
of Indian institutions, and not so much as a hint of Dominion status when it appeared in June 1930 amidst Gandhi’s Salt Satyagraha.
The Economist received the three round table conferences that superseded it, and later the Government of India Act of 1935, as a victory for moderates on both sides, ‘another step along the road to self-government’ at a time ‘when the accepted principles of parliamentary democracy are under challenge in so many countries’.92
India was not the only part of the Empire in which newly powerful nationalist movements contested the terms of British rule. In 1936, the Arab Revolt began in mandated Palestine after Jewish immigration into it more than doubled in five years: it took a force of 25,000 – the largest British overseas deployment since the Great War, and its most significant colonial intervention in the interwar period – to crush the uprising, alongside Jewish settler volunteers.93 The Economist backed harsh repression to bring Arab ‘bandits’ to heel, while pressing London and the League of Nations to implement the political solution that had proved itself in Ireland: partition. Fed up with British troops and police being a target of both Arab and Jewish attacks, and entrapped by the ‘morally incompatible’ promises made to each of them since the Balfour Declaration in 1917, the Economist came out in favour of a two-state solution in 1937.94
Starting in the late 1920s, the Economist experienced the first significant changes in its ownership, design and circulation – with Layton responsible, in his own painstaking way, for updating each aspect of the original edifice. As a result, the characters and arguments of owners, board members and editors, and even office politics, came into view with unusual sharpness.
The press was arguably subject to more insistent pressure to rationalize than any other industry in Britain, a process the war accelerated as mass circulation dailies edited in London edged out the provincial morning papers, while also fighting one another for readers.95 The world of weekly political journals may have been slightly more genteel, but not by much. Layton, Keynes and other Liberal Summer Schoolers bought the Nation and Athenaeum from the Rowntrees in 1922, merging it with the Webbs’ New Statesman in 1931 and the Courtauld-backed Weekend Review in 1933. Layton was convinced the Economist could achieve similar growth on its own, provided the descendants of James Wilson would sell their shares in it, ending a practice of ‘distributing profits up to the hilt to the many family beneficiaries’. ‘The need to plough back profits and expand the staff led me to approach some of my friends with a view to buying the paper and turning it into a private company.’96 At the same time, Henry and Laurence Cadbury made Layton, a former tutor to Laurence, financial advisor to the family-owned Daily News. After helping to negotiate its merger with the Westminster Gazette and Daily Chronicle, in 1930 Layton became chairman of the combined News Chronicle, whose circulation of 1.4 million would enable it to compete with the giant tabloids – Rothermere’s Daily Mail and Beaverbrook’s Daily Express on the right, and Labour’s Daily Herald.97
It was the Economist that presented the greater difficulties, however, when – after three years of negotiations – an unexpected rival appeared in 1928. This was Brendan Bracken, a twenty-seven-year-old mythomaniac, who claimed to be an Australian orphan (his mother lived in Ireland) and the illegitimate son of Winston Churchill, his political mentor. Bracken was the sort of person who instructed servants to interrupt dinner parties with imaginary messages – ‘the prime minister is on the phone, sir’ – and he provided rich material for the novelist Evelyn Waugh, who based his Canadian wheeler-dealer Rex Mottram on Bracken in Brideshead Revisited. Lanky, with thick glasses and crinkly red hair, Bracken had made a name converting the staid Illustrated News into English Life, a pageant of foxes, hounds, horses, homes and titles. He then turned to another gentlemanly pursuit, buying up business publications for the publishers Eyre and Spottiswoode: the Banker in 1926, the Financial News, Economist and Investors Chronicle in 1928, and the Financial Times in 1945.98 Bracken made his first move for the Economist at a party with the society hostess Sibyl Colefax, Wilson’s great-granddaughter. ‘I suppose you are sentimentally attached to your holding’, he remarked. ‘Oh, no’, she replied. ‘I find it a very dull paper and feel no attachment to it at all.’99
Layton invoked the tradition of independent liberalism that risked being lost under Bracken, with his flamboyant links to the Tories, to launch his own bid. He managed to corral an impressive list of immensely wealthy liberal backers: Ernest Simon, John Simon, Laurence Cadbury, Walter Runciman and some of the grandest bankers in the City, including the Rothschilds, Schroders and Lazard brothers. His key ally in this was Henry Strakosch, an Austrian Jewish emigré to Britain who had risen to the chairmanship of the Union Corporation, the dominant player in South African gold mining. Like Layton, Strakosch was deeply engaged in trying to rebuild the free trade world order in the 1920s and ‘30s, as both a respected authority on the monetary system and a member of the financial committee of the League.100 Notwithstanding this financial firepower, when bidding raised the Economist’s asking price from £60,000 to £100,000 – it made about £4,000 in profit annually – Layton baulked, and opted to cut a deal with Bracken. The latter agreed to a joint purchase, but also to a structure of ownership and control designed, as Layton put it, to allow ‘the editor to run the paper as though it belonged to him’.101 In a charter that went further than a similar scheme at the Times, the editor obtained power over policy, salaries, hiring and firing. For an added layer of insulation from business pressure, four trustees without financial stakes in the company would be needed to take on or dismiss the editor, approve share transfers or install a chairman. Bracken became managing director and took two board seats for Financial News Limited. But Layton held the balance, reflecting his sway with the trustees, and the fact that the City had intervened to buy half the paper at his urging. Strakosch became chairman of the board, with Layton and Runciman behind him, and Bracken and the banker Major Guy P. Dawnay holding the board seats allotted to the Financial News. Of the trustees, three were Layton’s friends: Sir William Beveridge, Sir Josiah Stamp and the shipping magnate Sir Alan Anderson; Sir Lionel Halsey, retired vice-admiral and royal equerry, was in the fourth position.102
The most visible change in the wake of this handover was to the look of the Economist – a change Layton resisted, however, for another five years. (Keynes, in contrast, had revamped the Nation a full twelve years earlier in 1922.) Until 1934, the Economist looked more or less as it had a century before. The title ran across the top in heavy Gothic letters. The table of contents and money market news were crowded into a double column, along with bank and insurance advertisements, that sank to the bottom. This Victorian relic now got a facelift. Scrubbed clean, the new façade was neoclassical and imposing, like that of a bank. A single column banished all other material but the lead article and the contents to the back, and a clean serif font ran throughout, crafted by the team that had remade the typeface for the Times in 1932. As sober and unfussy as this was, it was a rude shock to Montagu Norman, the governor of the Bank of England, who complained bitterly of the change. Strakosch worried it might hurt circulation abroad. In fact, it signalled an opening to the world already underway: circulation increased steadily under Layton from 6,000 in 1930, passing 10,000 for the first time in 1938, with half that from overseas.103
A New Generation of ‘City Radicals’ at the Economist
Layton hired editors, writers and foreign correspondents at the same time as this circulation surge, moving many into a much larger twenty-four-room office off Fleet Street – rented from News of the World on Bouverie Street, opposite the Daily News – in 1928. The new recruits represented a generational and ideological shift at the Economist. Among this fresh intake of students of Keynes at Cambridge, and Harold Laski at the London School of Economics, the most important were all ‘self-confessed radicals’ under thirty: Douglas Jay and Geoffrey Crowther, born in 1907, and Graham Hutton, born in 1904. Arriving at the paper in 1932–33, they pointe
d to a realignment that responded to the political landscape of the 1930s. With the Liberal Party weak and divided over the tariffs imposed after 1931, and the fascist right on the rise in Europe, could a younger and more radical staff push the Economist’s liberalism to the left?
Douglas Jay had kept liberal company as a classics student at New College, Oxford, where warden Herbert Fisher introduced him to Lloyd George and Jan Smuts, and at All Souls. It was as assistant editor in charge of foreign correspondence at the Economist that Jay emerged as a policymaker for the Labour Party, after Graham Hutton told the left-liberal political scientist Harold Laski that Jay should serve on the Labour National Executive’s trade and finance committees.104 Hutton was the Economist’s foreign editor, a specialist on Central Europe who had been Laski’s student at the London School of Economics. Even Geoffrey Crowther, least adventurous of the lot, had studied at Cambridge under Keynes, who recommended him to Layton.105 Together these three young men wrote and collated much of the Economist, along with Aylmer Vallance, the most bibulous and leftwing assistant editor ever to hold the job. (Vallance moved to the News Chronicle in 1933, then in 1936 to the New Statesman and Nation, where he advocated a popular front to include British Communists.)106 Layton presided over Monday meetings and looked in on Wednesdays and Thursdays to correct proofs and approve leaders. But it was the historian Arnold Toynbee who did the most talking. In part, this reflected his seniority – born in 1889, he was over a decade older than the new editors – but it was also a question of style, both personal and professional. Toynbee wrote for the Economist on world politics in almost every issue from 1922 to 1939, substantially overlaying his annual surveys for the Royal Institute of International Affairs. Editors recalled his ‘hand-written manuscript, perfectly legible, which required amendment of no syllable or comma’; and that, ‘once started on his monologue’ at meetings, ‘he would never stop until he reached some dead end like the Falkland Islands. We listened to him spellbound’.107
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