Chapter VI: Prejudice or Politics?
Leslie Hore-Belisha's appointment as Chancellor of the Exchequer was surprising at the time and has, over the years that followed, attracted a great deal of comment and more than it's fair share of conspiracy theories. Broadly speaking there are three lines of discussion around circumstances of his appointment, and the subsequent weakening of the Treasury's power, the constitutionalist argument, the 'conning' of the National Liberals and those who focus on Hore-Belisha's faith as the critical factor.
The constitutionalists argue that as the Treasury is traditionally the most powerful department in Whitehall, weakening the Chancellor strengthens the Prime Minister and so pushes the country towards a more Presidential, rather than Cabinet, style of government. At first sight there is something in this argument, certainly Churchill's undoubtedly powerful personality and seemingly boundless energy he attracted a great deal more media attention than his predecessors as Prime Minister, coverage that to some extent came at the extent of his Cabinet colleagues. However visibility is not the same as importance, just because a Cabinet minister does inspire media interest does not mean they are doing unimportant work. More relevantly this over-estimates Churchill's abilities, his attentions were strong, deep but narrow, areas outside of his current concerns were generally left to the relevant Minister with little to no oversight. Declassified minutes show that getting Churchill to show an interest in a subject was a much more common problem that complaints of excess Prime Ministerial control. In any case the majority of the Treasury's powers did not go to the Prime Minister, but to other departments which owed their temporary existence to the economic conditions of the country. Certainly it may not have been constitutionally ideal, but then very few of Britain's constitutional affairs were and yet things managed to work without the government, or the country, falling into the many traps the constitutional purists insisted were waiting.
Taking the last point, Hore-Belisha was a Jew and so was sadly fated to have a minority view his every action from that perspective. At the one extreme once could find Oswald Mosely declaring that his appointment was an example of the all-powerful 'Jewish lobby' getting one of their own into high office, at the other those claimed the Treasury was only weakened because Hore-Belisha was appointed Chancellor and that he was therefore a victim of anti-Semitism. In fact the truth of the appointment was far less dramatic than either extreme and had nothing at all to do with faith. Regardless of candidate Churchill had always intended for the Chancellor's position to be watered down, partly as he intended to offer it to the National Liberals as concession but mainly as he wanted economic policy taken out of the hands of Treasury mandarins. Churchill did not trust the bureaucrats of Whitehall to push through the polices needed to re-vitalise the economy and wanted to minimise their influence on economic policy. The men he would appoint would be from outside the traditional Westminster orthodox, with all the benefits and problems that came with that, and the powers they would need would have to come from the Treasury.
This brings up the final complaint, that the National Liberals were swindled out of their fair stake in government. There is clearly no depth to this accusation, if the National Liberal leadership had truly believed they were getting the Treasury Sir John Simon would have insisted on being Chancellor and he didn't. The National Liberals were well aware that the Conservative party would never tolerate them holding too many powerful departments at once, not without some compromises, so were well aware of quite what Hore-Belisha was being signed up for. It should also be noted that many of the Treasury's powers on tariffs and trade, issues on which Liberals famously held strong views, were transferred to the Board of Trade, which remained headed up by the National Liberal Walter Runciman
Walter Runciman, President of the Board of Trade and leading National Liberal. Runciman embodied the splits running though the Liberal movement. A life long supporter of Free Trade he had nevertheless compromised that principle to support the National Government through the Depression, indeed he had become grudgingly convinced of the needs for some tariffs as 'emergency measures' during the Depression. He remained a supporter of Free Trade, negotiating the Roca-Runciman trade treaty with Argentina and using his position to support Empire Free Trade over the alternative of Imperial Preference. As we shall see in later chapters, this was not a mere semantic issue but a crucial one for the British economy and the exchequer.
The somewhat unexciting truth is that Hore-Belisha was made Chancellor because he had shown he was a solid administration in his time as Treasury Secretary and Minister for Transport, but he wasn't outstanding or massively popular. He had shown the energy and drive to get schemes developed and successfully implemented, but he did not have radical plans to completely reinvent the Treasury and he had solid pro re-armament credentials so would go along with the planned increases in defence expenditure. Crucially he lacked a base of support in the party, an unfortunate side effect of the ease and regularity with which he made enemies, so was unlikely to turn the Treasury into a power base with which to threaten Simon for the leadership. In short the perfect man to implement some needed but steady reform to the Treasury, while others carried out the more radical work elsewhere.
Moving onto one of these areas of reform, the responsibility for economic planning was placed with Lord Beaverbrook's Ministry of Production and Development. Beaverbrook had made his reputation, and his fortune, by hiring the best in the business and letting them get on with it while he worked on the next big deal or grand plan. As he intended to move in the highest circles of government his approach to the economy was no different, he wanted to set the grand plan, appoint excellent people to carry it out and then return to High Politics and grand strategy. To this end his first appointment was Sir Walter Jones.
Sir Walter Benton Jones, perhaps better known as the Scrap King. Sir Walter's trademark would be the spotting of connections, both between individual companies that could be combined and between related industries. He would also keep his fingers in a great many pies, along side leading the United Steel Corporation he would find time to be a Director of the Westminster Bank and President of the heavy industry focused Sheffield Stock Exchange. His connections across the industrial north an his knowledge of the heavy metal centres of the country would be invaluable for Beaverbrook's economic recovery plan.
Sir Walter had first made his name as Chairman and Managing Director of the United Steel Companies, one of the first vertically integrated steel companies that included the coal mines, coking plants and the iron and steel mills. After successfully guiding the company through the ravages of the Depression, a significant enough achievement given the collapse of iron and steel demand, his big coup was to notice the potential combination of the Jarrow yards and his steel works. Steel making is most efficient when a certain amount of scrap is added during the process, and the higher the grade of scrap the better. The best grades of steel were from large ships, ships which the Jarrow yards were equipped to scrap and which the world's financially pressured shipping lines were keen to get rid of.
Under Sir Walter's direction USC brought the yard into the group and tendered for every scrap contract it could, generally being the winning bidder thanks to having a reliable end use for the scrapped steel; the groups ever hungry mills. The most famous ship to be scrapped there was undoubtedly RMS Olympic, although it was for the coup of scrapping the US Navy's BB-32, the USS Wyoming, that the yard was most notorious.
The USS Wyoming, lead ship of her class, veteran of Battleship Division 9 and one of the battleships the US Navy sent to join the Grand Fleet in 1917. Required to be demilitarised by the London Treaty of 1930, the US Navy had planned to use her as a training ship, with a 'secret' back up option of converting her back into a battleship if a crisis loomed and the treaties lapsed. Sadly the ongoing Depression, and subsequent heavy cuts in spending, his the US Navy hard and they were forced to make drastic savings, one of which was to transfer the Wyoming's sister, the USS Arkansas, into the training role and scrap the Wyoming. The USC duly won the contract, offering a higher price than any US yard wished to pay, and so, despite displeased rumblings from Congress, the Wyoming made her final journey across the Atlantic in late 1931 to be scraped by the Jarrow Yards.
Although initially viewed with distrust by some in government, not least some in the Admiralty who feared their ships might be next, he was undoubtedly capable of spotting opportunities and turning around failing companies. Beaverbrook was betting he could also turn around a failing country. This already strong team was not yet complete and Beaverbrook would need to recruit one more member before his ministry was ready to make a real impact.
Up next: Mussolini's reply and Beaverbrook's recruit.