110.The Socialist Case’s object was to counter the ‘flood of quasi-Marxist volumes pouring forth from Gollancz’s Left Book Club’: Jay, Change and Fortune, pp. 62–63.
111.Jay liked Kingsley Martin when he was dropping marbles down the actress Deborah Kerr’s bosom but could not understand how he could think Britain was suited to a ‘centralised communist economy’ leading to ‘concentration camps or lunatic asylums of which he would be the first inmate’: Davenport, Memoirs of a City Radical, pp. 30, 109.
112.In the Economist, Layton also criticized Baldwin for breaking off talks with the miners, and employers for threats to penalize sympathy strikers. ‘How the Strike Came About’, Economist, 8 May 1926; ‘Cost of the Strike’, 8 May 1926; ‘Restoring Peace’, 15 May 1926.
113.Burden of Plenty?, ed. Graham Hutton, London 1935, p. 133; We Too Can Prosper, London 1953; Rebirth of Britain: A Symposium of Essays by Eighteen Writers, ed. Arthur Seldon, London 1964, pp. 14–15, put out with the Institute for Economic Affairs. For a profile, see ‘A Good Friend’, Economist, 22 October 1988, and for the nineteenth-century liberal outlook of some of Labour’s leading thinkers, see Stefan Collini, ‘Moral Mind: R. H. Tawney’, in English Pasts: Essays in History and Culture, Oxford 1999, pp. 177–94.
114.Skidelsky, John Maynard Keynes, London 1992, Vol. II, p. 569; John Maynard Keynes, ‘Am I a Liberal?’, in Essays in Persuasion, p. 324.
115.Francis Williams, Nothing So Strange: An Autobiography, London 1970, pp. 109–10. This criticism of Keynes did not prevent Jay from issuing the notorious dictum: ‘In the case of nutrition and health, just as in the case of education, the gentleman in Whitehall really does know better what is good for people than the people themselves’: The Socialist Case, London 1937, p. 317.
116.Davenport, Memoirs of a City Radical, p. 76.
117.Ibid., p. 77.
118.Jay, Change and Fortune, p. 60; Williams, Nothing So Strange, pp. 112–13.
119.Davenport chose the lavatory, fearing the effects of the local seafood. Davenport, Memoirs, London 1974, p. 44.
120.Jay, Change and Fortune, p. 50.
121.Stevenson, Lloyd George, p. 260.
122.James Thomas, Popular Newspapers, the Labour Party and British Politics, Abingdon 2005, pp. 13–14.
123.Surely the Chronicle would take a stand against nationalization of industry? ‘The line between state ownership and control or unfettered private enterprise is a matter of expediency rather than principle’, Layton wrote, echoing the middle course charted in the Liberal Industrial Inquiry. Hubback, No Ordinary, p. 155.
124.Hubback, No Ordinary, pp. 90, 188, 155.
125.‘No newspaper has attacked the National Government more fiercely than the “News Chronicle”, but no man has been happier than Sir Walter Layton on occasions when the Prime Minister happened to consult him.’ Ibid., p. 137.
126.Aylmer Vallance to Henry Strakosch, 27 December 1932, Layton Papers, TCC, Box 81.16.
127.‘As agreed between us I shall carry this position for three years, you giving me full discretion to sell or vary the holdings at any time, but on the understanding that you incur no further liability.’ Martin Gilbert, Winston S. Churchill, London 1976, Vol. V, p. 920. When Strakosch died in 1943, he left Churchill £20,000 – along with the earlier debts taken over from his stockbroker, gifts amounting to about £2 million in today’s money.
128.John Dizikes, ‘Britain, Roosevelt and the New Deal: British Opinion, 1932–1938’ (PhD diss., Harvard University 1979), p. 266.
129.‘But if the New Deal be compared, not with the absolute standard of Utopia, but with the achievements of other Governments, the former adverse judgement must be modified. If it be compared with either the performance or the promise of its rivals, it comes out well. If its achievement be compared with the situation which confronted it in March 1933, it is a striking success. Mr Roosevelt may have given the wrong answer to many of his problems. But he is at least the first President of modern America who has asked the right questions.’ ‘The New Deal’, 3 October 1936.
130.Praising the Federal Deposit Insurance Corporation, it still had ‘serious doubts’ about it as a permanent system, since it amounted to a ‘penalisation of sound banks’ and ‘endowment of imprudent banking’. Ibid. For more on the paper’s favourable attitude to Roosevelt, and mixed reaction to his New Deal over time, see Alastair Burnet, America: 1843–1993: 150 Years of Reporting the American Connection, London 1993, pp. 114–22.
131.‘Russian Trade Agreement’, 9 October 1920. Most Labour voters couldn’t even pronounce Bolshevik, scoffed a piece dismissing the alleged links between the two parties. ‘The theory of Bolshevism may be good or bad, but in fairness to Lenin and Trotsky it ought to be said that it has no more to do with murder and other atrocities than the British Constitution has with the exploits of the Black and Tans’: ‘Labour and Communism’, 30 July 1921. It found little to fear from Bolshevik influence on Labour, even during the red-baiting 1924 election: ‘Defeat of the Communists’, 11 October 1924. Nor was the paper opposed to diplomatic dialogue. If it criticized the first drafts of Labour’s Anglo-Russian treaty, this was not due to the clauses about trade or fisheries, but because conditions attached to a new British loan were far too vague. This was ‘bad morality and bad business’: ‘A Bad Treaty’, 16 August 1924.
132.‘Russian Supplement’, 19 March 1927; Hubback, No Ordinary, p. 86.
133.The Economist pointed out that by 1928, UK trade with the Soviet Union was second only to Germany and not by much: in 1927–28, it amounted to £150 million as compared to £186.2 million with Germany; in 1928–29, the figure was £192.5 million compared to £208.5 million with Germany. 1 November 1930.
134.Collectivization would depend on building enough machines and inducing the peasants to use them; establishing ‘village communism’ was more daunting and ‘cannot take place as the result of sheer relentless compulsion … [still] the idea of a new life has been awakened among the active members of the younger generation’. ‘An Impression of Russia’, 17 November 1931; Layton Papers, TCC, Box 81.10.
135.Ibid., Layton Papers, TCC, Box 81.10.
136.‘Russia Revisited I’, 3 June 1933. The Economist under Layton provided more neutral and detailed coverage of Russia than did Keynes, or the New Statesman and Nation or the Guardian. See, ‘A Short View of Russia’ (1925) in Keynes, Essays in Persuasion.
137.Maisky’s diaries reveal two visits to the Soviet embassy: during the Munich crisis on 18 September 1938, when Layton sent Arthur Cummings, News Chronicle political editor, to check a Cabinet rumour that the Soviets planned to do nothing, even if ‘France came out to protect Czechoslovakia with arms in hand’, which Maisky denied; and on 17 April 1939 from Layton, at the behest – so Maisky speculated – of Chamberlain, to indicate a last minute ‘radical change’ in public opinion in favour of a ‘new course’ to ‘repel aggression and achieve agreement and cooperation with the USSR’. Maisky cultivated the British press, particularly in the City, ‘which he assumed controlled British politics’. See his exchanges with Bracken, The Maisky Diaries: Red Ambassador to the Court of St James’s, 1932–43, ed. Gabriel Gorodetsky, New Haven 2015, pp. 41, 45–46, 402, 499–500, passim.
138.Of Mussolini: ‘For the moment, he has uttered at Naples only one economic sentence: “Italy needs at the helm a man capable of saying No to all requests of new expenditure.” So far, so good.’ ‘Will the new party have the will and the power to redress the awkward financial situation of the State, which is the only true cause of the present unfavourable movement of exchanges and prices?’ Einaudi worried that the Fascists – like the Catholics and Socialists, who ‘cater for the vote of multitudes crying always after State aid’ – ‘would hesitate before the task’. ‘Italy – The Fascisti and their Program’, 28 October 1922. I am grateful to Clara Mattei for bringing the extent of Einaudi’s support for fascist austerity policies in the 1920s to my attention. See, Clara E. Mattei, ‘Austerity and Repressive Polit
ics: Italian Economists in the Early Years of the Fascist Government’, Laboratory of Economics and Management Working Paper, Pisa 2015. Articles attributed to Einaudi are in From Our Italian Correspondent: Luigi Einaudi’s Articles in the Economist, 1908–1946, ed. Roberto Marchionatti, Vol. I–II, Florence 2000.
139.Einaudi harshly criticized the post-war governments of Giovanni Giolitti and Francesco Nitti for raising taxes and tariffs, and as too susceptible to popular pressure in favour of welfare spending, and for not intervening more forcefully against striking workers, in occupation of factories, and the Communists. He welcomed the arrival of ‘youths of the middle class, returned men and officers in indignation’ that ‘grouped themselves into “fasci”’ with the result that ‘the communists are everywhere defeated … this renewed feeling of hope in the future of our country is not the least important cause of the better tone in foreign exchanges’. ‘Italy – Passing of the Communist Peril’, 16 April 1921. Reforms included independence to the Bank of Italy, and an end to what Einaudi called ‘the demagogic persecution of savings and capital’ – ‘it was high time from the government bench that a voice should be raised against the frenzied finance of the Bolshevist after-armistice period’: ‘Absolute Government in Italy’, 27 November 1922.
140.Industrial securities rose 10 per cent on average the week after stabilization, disproving critics who said it overvalued the currency. ‘Stabilisation of the Lira’, 31 December 1927; Roland Sarti, ‘Mussolini and the Italian Industrial Leadership in the Battle of the Lira 1925–1927’, Past and Present, May 1970, pp. 97–112.
141.Einaudi was generally supportive of Mussolini’s fiscal and monetary policies, and generally critical of corporatist moves or state intervention (a notable exception being the bank bailouts in 1931–33). From Our Italian Correspondent, XXVIII, XLI. London editors, ‘free from the risk of Fascist repression’, may have been more critical, as Marchionatti argues, but not by much (‘Nemesis of Fascism’, 24 June 1924; ‘New Crisis in Italy’, 10 January 1925), or else qualified their criticisms. A free press, political parties, fair elections, an independent civil service and judiciary – all had been suppressed with ‘deplorable methods’, for none ‘were needed to achieve the great results which admittedly have been accomplished since the new régime took office’: ‘Italy Under Fascism’, 25 September 1926. There is little to support the claim Layton later made that Einaudi’s pieces were ‘a thorn in the flesh of the Fascisti’: Speech to the ‘Instituto Italiano di Cultura’, London, February 20, 1962, Layton Papers, TCC.
142.Layton, Dorothy, p. 90. At the time, however, the Economist applauded Mussolini’s foreign minister Dino Grandi, whose call for the abolition of submarines and chemical and biological warfare as well as heavy artillery and tanks, ‘rightly gave his country the moral initiative at Geneva’: ‘The Disarmament Conference’, 13 February 1932.
143.On free trade and humanitarian grounds. ‘Germany and Jewry’, 1 April 1933. ‘Germany’s Boycott’, 8 April 1933.
144.Hitler returned Schacht to his former role with these factors in mind, as the following exchange between them, in anticipation of the Nazis’ arrival in office indicates. ‘What would happen if we – or rather, a National Socialist Reichsbank president – were to begin with our way of financing employment the moment we take over the government?’ Hitler asked. ‘The international financial world would stand on its head and attack our currency with all the means at its command’: Alan Milward, ‘The Nazi Miracle’, London Review of Books, 23 January 1986.
145.‘Memoirs’, Layton Papers, TCC, Box 147.
146.Hubback, No Ordinary, p. 142.
147.Adam Tooze, The Wages of Destruction: The Making and Breaking of the Nazi Economy, New York 2006, pp. 70–71.
148.‘Outlook in Germany’, 15 April 1933; ‘Dr Schacht’s Declarations’, 10 June 1933; ‘Guaranteeing Export Trade’, 22 December 1934; Layton published ‘The New Germany as I Saw It’ in the News Chronicle on 5, 7, 10 April 1933. On the importance of the Anglo-German Payments Union, see Tooze, Wages of Destruction, p. 87.
149.‘The Hitler Terror’, 2 September 1933.
150.Layton to Schwerin von Krosigk, 23 September 1933, Layton Papers, TCC, Box 81.17; ‘The German Government and the Economist’, 23 September 1933.
151.Jay wrote that honouring treaty obligations meant being willing to use force when these were violated: ‘Pacifism’ 2 December 1933. On Germany’s withdrawal from the League, see ‘Hitler Shows his Hand’, 21 October 1933.
152.Japan’s onslaught on Manchuria (which began with the Mukden Incident in September 1931), its refusal to abide by League resolutions ordering it to leave, and its withdrawal from Geneva in February 1933 were major blows to the League’s prestige, but not yet fatal ones. The Economist devoted an article to these events almost every week from the time the Chinese referred the matter to the League in October 1931: ‘The League and Manchuria’, 17 October 1931; ‘The Lytton Report’, 8 October 1932; ‘The League Makes Up Its Mind’, 18 February 1933.
153.‘The Paris Blunder’, 14 December 1935; ‘Triumph of Public Opinion’, ‘Back to the League’, 21 December 1935. Layton and his wife Dorothy campaigned vigorously for the ‘Peace Ballot’, organized by the League of Nations Union, in 1934–35. Layton interpreted the vote, with nearly 12 million participants, as a strong indication the public was prepared ‘to take action to resist aggression’ collectively – by economic (87 per cent) and military means (58.6 per cent). Layton, Dorothy, pp. 92–95.
154.‘Peace on the Razor’s Edge’, 14 March 1936.
155.This account of the telephone message to Baldwin is from Thomas Jones, appointed first assistant to the cabinet by Lloyd George in 1916, and its powerful deputy secretary until 1930. The weekend in question was at the estate of Lord Lothian (Philip Kerr), who was Lloyd George’s former private secretary. Alfred F. Havinghurst, Britain in Transition: The Twentieth Century, Chicago 1985, p. 253.
156.‘I want England’s friendship’, Hitler told Toynbee, who interjected, ‘I have the very strong conviction that in this vital point, Hitler was quite sincere in what he said to me’: William McNeill, Arnold Toynbee: A Life, Oxford 1989, p. 172.
157.Walter Layton et al, The Challenge of Democracy: A Popular Front for Britain, London 1936; ‘The Empire and the World’, 1 May 1937. For the support colonial revisionism enjoyed among British liberals, see Pedersen, The Guardians, pp. 331–47.
158.‘Politics and Defence’, 21 November 1936; ‘The Silences of Mr. Eden’, 28 November 1936; ‘Spain and Britain’, 22 August 1936; ‘English Ships and Spain’, 5 December 1936; ‘Spain and Europe’, 8 May 1937.
159.The Economist deplored the ‘extreme bitterness, fanaticism and cruelty displayed by both sides’, adding, ‘if the Spaniards had been left to fight it out and Franco had won, Britain would certainly not have intervened against him’: ‘Storm over Spain’, 26 June 1937. Bold warnings to Eden in 1936 – ‘indulgence’ over Manchuria, Abyssinia and Spain could lead to conquest of the British Empire by Japan, Italy and Germany ‘without a fight’ – gave way to advising Chamberlain to do his best to ensure the ‘territorial integrity and independence of Spain’ under General Franco in 1938. See ‘The Silences of Mr. Eden’ in 1936 and ‘Cabinet and Spain’, 25 June 1938.
160.For his address to the Liberal Summer School in 1936, see Layton et al, The Challenge of Democracy, pp. 18–21.
161.‘We must do what Mr. Churchill is calling for’, the paper suddenly declared: uphold the Covenant, build alliances around Britain and France, ‘inscribe our first “No” on the face of Spain’: ‘The Shadow of the Sword’, 19 March 1938. The mixture of defiance and resignation resembles Toynbee’s ‘After Munich’ essay for Chatham House, which it refused to publish, as a ‘dangerous encouragement to Hitler’. In September 1939, he contemplated surrender for ‘the world is in such desperate need of political unification’ it might be ‘worth paying the price of falling under the worst tyranny’. McNeill, Arnold Toynbee, pp. 171�
��74.
162.‘Eleventh-Hour Reprieve’, 1 October 1938.
163.Layton Papers, TCC, Box 81.62.
164.Churchill Papers, Churchill Archive, 2/244/50–52 (4 November 1935); CHAR 2/244/53–59 (1 November 1935); CHAR 2/244/67–68 (7 November 1935); Churchill based several speeches in the House exhorting rearmament on reports from Strakosch; on 13 April 1936, he copied one to the MP Eleanor Rathbone, concluding, ‘We really are in great danger’. CHAR 2/274/12–13.
165.Jay, Change and Fortune, p. 50.
166.Layton declined to publish the ‘Henlein pamphlet’, which purported to show the timetable for Germany’s conquest of Europe on 29 September, instead dropping it in the mailbox of 10 Downing Street for Chamberlain, ‘in case it might cause him embarrassment at a critical moment’. Hubback, No Ordinary, pp. 157, 163.
167.The subtext was criticism of France: the failure of the League was due to its animus against Germany, its devaluation of the franc against sterling that had rendered the return to gold unworkable, and its veto of the Austro-German Customs Union: ‘From Washington to Munich’, 22 October 1938.
168.Layton to Strakosch, May–July 1938, Layton Papers, TCC, Box 81.62.
6. Extreme Centre
1.For a larger shift in classical liberal thought about war, from economically destructive to potentially productive, see Alan Milward, The Economic Effects of the Two World Wars on Britain, London 1984.
2.Robert Skidelsky, Britain Since 1900: A Success Story?, London 2014, p. 244.
3.Keynes, CW, Vol. XXII, pp. 15–29.
4.Churchill sent Layton to the Ministry of Supply as Director General of Programmes, the Joint War Planning Staff, then on to head the Ministry of Production in 1942. Alec Cairncross, ‘Economists in Wartime’, Contemporary European History, March 1995, pp. 20, 27, 34.
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