Nor were the Soviets the only wayward power to court the good opinion of the City through the Economist editor. In Italy, where Mussolini’s march on Rome culminated in his appointment as prime minister in October 1922, the Economist returned the compliment, praising Il Duce – who took his lead from London in pledging to restore ‘thrift, labour, discipline’ to an economy racked by inflation and labour revolts – as ‘passionate and full of vigour’. Here, the liberal economist and senator Luigi Einaudi – the Economist’s Italian correspondent from 1908 until 1946, shortly before he became Italy’s president – justified the delegation of ‘full powers’ to the Fascists in 1922 as necessary to avoid ‘Muscovite communism and barbarism’, and to implement a package of budget cuts, indirect tax raises, public sector layoffs and privatizations.138 Cheers greeted ‘the renunciation by Parliament of all its powers’, Einaudi wrote, for ‘Italians were sick of talkers and of weak executives’ and ‘would accept a Czar for the sake of getting out of chaos’.139 Like the shift to austerity in Britain in 1921, such measures paved the way for a return to gold for Italy in 1927, after the ‘battle of the lira’ the year before and a secret conclave of central bankers in London had set convertibility at 92.46 lira to the pound.140 From his base in Turin, Einaudi supplied the paper with a positive account of economic progress under Mussolini at least until 1937 – criticizing the regime almost exclusively for departing from economic orthodoxy during the Depression, when Mussolini raised tariffs, created new state monopolies, and took direct control of the foreign exchanges.141 In February 1932, Layton met Mussolini, who appeared to be well aware of the importance of the Economist in shaping opinion in London and New York:
On reflection, however, there is a doubt which of us did the interviewing. Mussolini started the conversation by asking me what I thought of ‘the crisis’. I naturally asked to which of the many current crises (the devaluation of the pound, the reparations moratorium, disarmament, the Manchurian deadlock) he referred. So he made his question more specific and asked whether the Economist (of which he claimed to have been a regular reader) would support the disarmament plan which Signor Grandi had laid before the Disarmament Conference in Geneva two or three days previously. It was an interesting opening gambit which represented Mussolini himself as Europe’s number one peace-loving statesman. The pose was a caricature, though our long talk was both frank and friendly.142
The Economist and Hitler
Layton then moved on to Hitler – whose advisors were also eager to present the new chancellor in a good light – meeting him in March 1933, a month after the Reichstag fire, and in the midst of a boycott of Jewish businesses that the Economist and News Chronicle criticized.143 Reichsbank president Hjalmar Schacht, reinstalled to reassure both domestic capitalists and foreign creditors about the Nazis’ financial competence so that a stimulus to reduce unemployment and to rearm could begin, acted as Layton’s translator with the Führer in Berlin.144
Short, thickset and clad in a russet-coloured suit, his face had lost the sharpness of outline which is noticeable in his early photographs; but the famous lock of hair over the forehead was in its place … I came away feeling that I had not discovered the source of his power. He rarely looked straight at me but closely followed Schacht who was on his left and doing most of the interpreting. The only sign of the familiar Hitler was that from time to time he raised his voice – and it was a fine resonant voice – as though addressing a public meeting for he answered most of my questions with little more than the ordinary phrases he had been using for years … I asked him questions under three heads: 1) economic questions and the Nazi idea of autarchy, 2) the boycott and internal repression, 3) international affairs. On the first he refused to be drawn: I was given to understand that I might refer to Schacht, though whether Schacht interpolated or whether Hitler actually said it, I do not know.
On the boycott Hitler, in effect, politely warned me off with the statement that it was an internal matter for Germany. He claimed – with justice – that the Nazi forces were well under control. This conclusion was prefaced by a short lecture on the history of the Nazi movement, and the struggle between two Germanys, one which had knuckled under the peace treaties, the other determined to uphold her pride. But the Nazi fight was not merely a German fight, it was also a war against communism. It was therefore a battle for other countries, England included. If we understood the true meaning of the communist movement we would be whole-heartedly supporting him.145
Schacht flattered Layton, assuring him the interview had ‘gone better than any of the others’, and ‘Hitler always had difficulty in finding common ground with people familiar with international affairs and took refuge in his speeches.’ But did Hitler understand finance, Layton asked? ‘Yes, certainly. He has at least one idea and a very good one. It is to leave it to Schacht.’ When Schacht heard that Layton had repeated this conversation to others during his tour of Germany that year – among them Goebbels, ex-chancellor Brüning, and Generals von Schleicher and von Hammerstein – he wrote asking him to kindly stop. ‘My answer was and certainly meant that he would do, what I would do. That is to say, that he has as sound ideas about finance as I pretend to have.’146
But if Layton was disturbed by what he saw in Germany, he muted criticism of it in the Economist, in part because London had much to lose from a showdown harming economic links between it and Berlin. Not only did German trade depend on the City for short-term finance, Britain was also Germany’s main export market and a source of hard currency, while the British Empire supplied Germany with vital raw materials.147 An Economist leader based on Layton’s visit predicted the German Nationalists’ coalition with the Nazis would prove ‘one of the great miscalculations of history’, but also hoped that a shaky current account would force Hitler to compromise with his European neighbours, as had happened with Mussolini. When Schacht put an end to debt payments that June, however, the paper shrugged this off as inevitable, while it all but cheered the Anglo-German Payments Union sealed the next year.148
It was a Layton family vacation to Cornwall in late August that allowed Douglas Jay to slip in one of the Economist’s few open attacks on the regime – a review of The Brown Book of the Hitler Terror, which claimed that Nazis had started the Reichstag blaze to solidify their grip on power and purge their Communist opponents. With only Graham Hutton and Geoffrey Crowther in the office, the unfiltered leader ran, accusing the Third Reich of an ‘orgy of barbarism and brutality’, whose concentration camps, anti-Semitic killings and book burnings were ‘the direct consequence of incitement by Nazi leaders’ and ‘bound to produce a shock of revulsion and horror throughout the civilized world’.149 An indignant letter immediately arrived from the German finance minister, Count Schwerin von Krosigk. ‘As you know, for many years I have had the highest admiration for you and your journal’, he wrote, addressing Layton. ‘It is therefore the more to be regretted that you have now thought fit to publish a one-sided judgment of the situation in Germany.’ Layton replied that ‘the attitude of the Economist in commenting on matters affecting Germany such as reparations, the war guilt question and disarmament, during the ten years of my editorship is, I hope, a sufficient guarantee that I would not willingly misinterpret the German situation.’ Instead of an apology, though, Layton promised ‘a full and unbiased report of the case for the prosecution at the forthcoming Leipzig trial’, offering to attend it in person, and asking Jay for a weekly column on its progress when this was refused.150
It was not so much the domestic terror unleashed by fascists within Italy and Germany, however, as their quest to undo the Versailles settlement by force, outside and in defiance of the League of Nations, that undermined Layton’s editorship. In his intervention, Jay had gone so far as to ask ‘whether the right to equality of status among the nations’ could be claimed by the Third Reich, hinting that force might be justified against a ‘government which revenged itself on its own fellow-countrymen’. But in practice his threat only came
down to the standard editorial line – not opposed to rearmament, but insisting that to be legitimate it had to be collective, pivoting on Geneva.151 As the breakdown of the international order gathered pace during the second half of the 1930s, it put this position – on which Layton and the Economist had wagered so much – to a devastating series of tests.152
Mussolini’s threatened invasion of Abyssinia at the start of 1935 was supposed to be an occasion for the League to demonstrate its effectiveness, when Emperor Haile Selassie asked it to arbitrate. Instead, the ensuing crisis erected an epitaph to it. After placing arms embargoes on both sides that left the Ethiopians exposed to a campaign of aerial gassing, the League bent to the Hoare-Laval Pact signed in secret between the foreign minister of Britain and the French premier – a ‘polite way’, alleged the Economist when news of it broke, ‘of cloaking’ Italy’s ‘virtual annexation’ of the independent African nation. ‘Completely at a loss to understand’ how the Baldwin-led National Government in Britain, returned five weeks earlier on a pledge to uphold the League Covenant, if necessary by force, could commit such a volte-face, the paper looked to ‘public opinion’ to overturn it.153
Hitler’s gamble to remilitarize the Rhineland the following March, on the other hand, was a clear violation of the Locarno pact. ‘Yet, morally,’ the Economist declared, ‘to send German troops into the German Rhineland amid the acclamations of a German population is an act which has nothing at all in common with Signor Mussolini’s invasion of a foreign country, a member of the League, and his employment of all the devilries of mechanical warfare against an unoffending and defenceless population.’ The paper asked Hitler to consider temporarily withdrawing his troops, ‘in exchange for an understanding that they shall be allowed to return again as soon as a new European settlement has been negotiated on the terms which Herr Hitler himself has put forward’. 154 Layton and Arnold Toynbee delivered this article’s message direct to Britain’s prime minister Stanley Baldwin, alongside much of the soon-to-be notorious Cliveden set with whom they were weekending in Norfolk, after Toynbee’s return from Berlin to interview Hitler: ‘Welcome Hitler’s declarations wholeheartedly … condemn entry of German troops into forbidden zone … [but] not to be taken tragically in view of the peace proposals which accompany it … Versailles is now a corpse and should be buried … Treat entrance to zone as … demonstration of recovered status of equality and not as act of aggression.’155 A few days earlier on 8 March, Toynbee had written a confidential memorandum to the prime minister and the foreign secretary, Anthony Eden, arguing that Hitler desired the return of Germany’s colonies, but in Europe only ‘reuniting the whole German nation, but not including anyone else’.156 Layton agreed: a colonial revision in favour of Nazi Germany, extending the League’s mandate system to it, could secure peace in Europe. Both Layton and Toynbee pressed in the Economist for ‘imperial economic disarmament’, removing the grievances of ‘have-not’ powers by revising the Ottawa accords to allow for ‘intermediate tariffs’ between the British Empire and foreign blocs.157
With British assent, the Rhineland matter was buried in a committee of the League, emboldening Hitler and Mussolini to strike again – in Spain – where the men and materiel they supplied to the Fascist rebels tipped the scales in the civil war which broke out that July. The Economist heaped scorn on Britain’s response: its policy of ‘nonintervention’ recalled Abyssinia, but was worse, in that a vital imperial interest was at stake – control of the Mediterranean.158 And yet the paper’s position was hardly more forceful. Instead of lifting a trade embargo that, it admitted, only hurt the republican side, it proposed that the embargo be better-enforced. Tougher talk came in 1937 after the bombing of Guernica, when it moved that if Germany persisted in such violations, ‘we let Berlin know at once that we shall give our consent to any countervailing action the French may choose to take’.159 Layton sounded bolder on the podium than in print, enjoining, at the 1936 Liberal Summer School, ‘a popular front for Britain’, but again with very striking limitations on it. He recommended that there be no rearmament outside the League, and that Britain ‘constantly … make it clear to Germany we are anxious and willing’ to include it in a ‘system of collective security’ – by, inter alia, ceding a share of colonies to it, and that ‘indeed, we should expect to see, an extension of German influence in Central Europe’.160
Hitler’s Anschluss of Austria, which followed in March 1938, brought a more sombre vision of a German-dominated Mitteleuropa – ‘vast totalitarian Empire’, anti-communist, anti-Semitic, set to crush France and encircle Britain, like ‘one gigantic rock of Gibraltar’ – yet, at the same time, the feeble hope that united action might still ‘compel Herr Hitler to give Czechoslovakia not intolerable terms’.161 The capitulation of France and Britain six months later at Munich was thus foretold. If abandoning the Czechs to their fate over the Sudetenland was a bitter pill, the Economist swallowed it while uttering a ‘prayer of thanksgiving’ for being spared the ‘hell of totalitarian war’ on the night the Munich Agreement was signed.162
Layton resigned as editor the same day, so it was Crowther, chosen as his replacement, who wrote this prayer to peace. Strakosch was behind the ouster, having renewed his calls for Layton to quit that May – a fact Layton’s biographer attributes to the City, on edge at his newly confrontational tone towards the Fascist powers. In fact, the opposite seems more probable: the failure of appeasement, as judged by Strakosch with Bracken as his boardroom ally, likely prompted the move. The confusion stems in part from Strakosch himself, who kept his indictment of Layton vague. ‘An undue amount of space has been devoted to foreign politics’, he wrote in an internal memorandum, ‘and the tendency has been to present these subjects in a manner which savours far too much of party politics.’163 The timing of his call so soon after Anschluss – and a record of passing secret intelligence on Hitler’s rearmament program to Churchill, from his business contacts in Germany – suggests that Strakosch was in fact less cautious than Layton about confronting the Third Reich.164
The staff of the Economist and News Chronicle certainly had grounds for thinking so. Frustration at Layton’s prevarications had reached a boiling point by 1938. Douglas Jay was already at his wits’ end when he left the Economist in 1934. ‘“Will Hitler desist from further aggression?” we would ask. “Time alone will show”, added Layton, altering the entire tone of the article.’165 At the News Chronicle, Layton could not make up his mind what to publish as edition after edition went to press on the night of Munich, with editor Gerald Berry later complaining bitterly of a watered-down leader, ready by 3:30 a.m. Vernon Bartlett, the correspondent whose article Layton diluted, was more direct. After putting the paper to bed in London, Layton called him at his hotel in Prague to chat. ‘Fuck you’, Bartlett shouted into the receiver and hung up.166 In his valedictory, Layton cited the ‘deterioration of political relationships which has reduced the League of Nations to impotence’, along with the failure to re-establish trade on a ‘rational basis’, to explain and bookend his years as editor. Starting out with ‘high hopes of world appeasement inspired by a great practical measure of disarmament’ at Washington in 1922, these had ended a ‘hair’s breadth’ from world war in 1938.167
Layton struck a more defiant note in his internal response to Strakosch – a seventeen-page letter that broke down for the board of trustees the actual distribution of articles by theme, with 1935 as baseline: 58 per cent economic, 42 political; of which the majority were domestic, not foreign. If he missed the real accusations being levelled against him, however, Layton showed the firmer grasp of what set the Economist apart as a journal of opinion – that it provided political views to the business world, and had the ear of politicians for the mechanics of business. If foreign politics were now more visible in the paper, he claimed, that was because business was ‘dominated by political events’ and business readers looked to the Economist to understand their interrelationship. The proof? Circulation had gone from 6
,000 in 1931 to over 10,000, half of this abroad, with strong growth in Europe, the Empire and America. The Economist was no longer limited to the role of ‘spare chancellor’ in Britain alone; its sights were trained on the horizon. ‘Next to the Times it is more widely quoted by important American papers (e.g. New York Times, Chicago Tribune), than any English Newspaper’. More: ‘A thousand words of summary are cabled every week by the American Embassy to the State Department and its readers include Roosevelt, Mussolini, Azaña and Brüning (when Chancellor).’168
The preliminary number and prospectus, August 1843
‘Monetary Crisis’, 8 August 1914: ‘Since last week millions of men have been drawn from the factory to slay one another by order of the warlords of Europe. It is perhaps the greatest tragedy of human history.’
‘Back to Gold’, 31 March 1934
Nixon on Vietnam, 8 November 1969
‘The War for Asia’, 17 April 1971
‘If That’s What It’s Worth’, 2 March 1968
The cricket team, 25 August 1973
‘Britain under Siege’, 20 January 1979
‘Capital of Capital’, 11 October 1986
Liberalism at Large Page 26