The Gathering Storm: The Second World War (5 page)

The party stresses which the Irish Settlement had created inside Mr. Lloyd George’s Coalition were growing with the approach of an inevitable general election. The issue arose whether we should go to the country as a Coalition Government or break up beforehand. It seemed more in accordance with the public interest and the decencies of British politics that parties and ministers who had come through so much together and borne a mass of joint responsibilities should present themselves unitedly to the nation. In order to make this easy for the Conservatives, who were by far the larger and stronger party, the Prime Minister and I had written earlier in the year offering to resign our offices, and give our support from a private station to a new Government to be formed by Mr. Austen Chamberlain. The Conservative leaders, having considered this letter, replied firmly that they would not accept that sacrifice from us and that we must all stand or fall together. This chivalrous attitude was not endorsed by their followers in the party, which now felt itself strong enough to resume undivided power in the State.

By an overwhelming vote the Conservative Party determined to break with Lloyd George and end the National Coalition Government. The Prime Minister resigned that same afternoon. In the morning, we had been friends and colleagues of all these people. By nightfall, they were our party foes, intent on driving us from public life. With the solitary and unexpected exception of Lord Curzon, all the prominent Conservatives who had fought the war with us, and the majority of all the Ministers, adhered to Lloyd George. Those included Arthur Balfour, Austen Chamberlain, Robert Home, and Lord Birkenhead, the four ablest figures in the Conservative Party. At the crucial moment I was prostrated by a severe operation for appendicitis, and in the morning when I recovered consciousness I learned that the Lloyd George Government had resigned, and that I had lost not only my appendix but my office as Secretary of State for the Dominions and Colonies, in which I conceived myself to have had some parliamentary and administrative success. Mr. Bonar Law, who had left us a year before for serious reasons of health, reluctantly became Prime Minister. He formed a Government of what one might call “The Second Eleven.” Mr. Baldwin, the outstanding figure, was Chancellor of the Exchequer. The Prime Minister asked the King for a dissolution. The people wanted a change. Mr. Bonar Law, with Mr. Baldwin at his side, and Lord Beaver-brook as his principal stimulant and mentor, gained a majority of 120, with all the expectation of a five-year tenure of power. Early in the year 1923, Mr. Bonar Law resigned the Premiership and retired to die of his fell affliction. Mr. Baldwin succeeded him as Prime Minister, and Lord Curzon reconciled himself to the office of Foreign Secretary in the new Administration.

Thus began that period of fourteen years which may well be called “The Baldwin-MacDonald Régime.” During all that time Mr. Baldwin was always, in fact if not in form, either at the head of the Government or leader of the Opposition, and as Mr. MacDonald never obtained an independent majority, Mr. Baldwin, whether in office or opposition, was the ruling political figure in Britain. At first in alternation but eventually in political brotherhood, these two statesmen governed the country. Nominally the representatives of opposing parties, of contrary doctrines, of antagonistic interests, they proved in fact to be more nearly akin in outlook, temperament, and method than any other two men who had been Prime Ministers since that office was known to the Constitution. Curiously enough, the sympathies of each extended far into the territory of the other. Ramsay MacDonald nursed many of the sentiments of the old Tory. Stanley Baldwin, apart from a manufacturer’s ingrained approval of protection, was by disposition a truer representative of mild Socialism than many to be found in the Labour ranks.

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Mr. Baldwin was by no means dazzled by his suddenly acquired political eminence. “Give me your prayers,” he said, when congratulations were offered. He was, however, soon disquieted by the fear that Mr. Lloyd George would rally, upon the cry of protection, the numerous dissentient Conservative leaders who had gone out of office with the War Cabinet, and thus split the Government majority and even challenge the party leadership. He therefore resolved, in the autumn of 1923, to forestall his rivals by raising the protectionist issue himself. He made a speech at Plymouth on October 25, which could only have the effect of bringing the newly elected Parliament to an untimely end. He protested his innocence of any such design; but to accept this would be to underrate his profound knowledge of British party politics. Parliament was accordingly on his advice dissolved in October, and a second general election was held within barely a twelvemonth.

The Liberal Party, rallying round the standard of free trade, to which I also adhered, gained a balancing position at the polls, and, though in a minority, might well have taken office had Mr. Asquith wished to do so. In view of his disinclination, Mr. Ramsay MacDonald, at the head of little more than two-fifths of the House, became the first Socialist Prime Minister of Great Britain, and lived in office for a year by the sufferance and on the quarrels of the two older parties. The nation was extremely restive under minority Socialist rule, and the political weather became so favourable that the two Oppositions – Liberal and Conservative – picked an occasion to defeat the Socialist Government on a major issue. There was another general election – the third in less than two years. The Conservatives were returned by a majority of 222 over all other parties combined.
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At the beginning of this election Mr. Baldwin’s position was very weak, and he made no particular contribution to the result. He had, however, previously maintained himself as party leader, and as the results were declared, it became certain he would become again Prime Minister. He retired to his home to form his second Administration.

At this time I stood fairly high in Tory popularity. At the Westminster by-election six months before I proved my hold upon Conservative forces. Although I stood as a Liberal, great numbers of Tories worked and voted for me. In charge of each of my thirty-four committee rooms was a Conservative M.P. defying his leader Mr. Baldwin and the party machine. This was unprecedented. I was defeated only by forty-three votes out of twenty thousand cast. At the general election I was returned for Epping by a ten thousand majority, but as a “Constitutionalist.” I would not at that time adopt the name “Conservative.” I had had some friendly contacts with Mr. Baldwin in the interval; but I did not think he would survive to be Prime Minister. Now on the morrow of his victory, I had no idea how he felt towards me. I was surprised, and the Conservative Party dumbfounded, when he invited me to become Chancellor of the Exchequer, the office which my father had once held. A year later, with the approval of my constituents, not having been pressed personally in any way, I formally rejoined the Conservative Party and the Carlton Club, which I had left twenty years before.

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My first question at the Treasury of an international character was our American debt. At the end of the war, the European Allies owed the United States about ten thousand million dollars, of which four thousand million were owed by Britain. On the other hand, we were owed by the other Allies, principally by Russia, seven thousand million dollars. In 1920, Britain had proposed an all-round cancellation of war debts. This involved, on paper at least, a sacrifice by us of about seven hundred and fifty million pounds sterling. As the value of money has halved since then, the figures could in fact be doubled. No settlement was reached. On August 1, 1922, in Mr. Lloyd George’s day, the Balfour Note had declared that Great Britain would collect no more from her debtors, Ally or former enemy, than the United States collected from her. This was a worthy statement. In December of 1922, a British delegation, under Government, visited Washington; and as the result Britain agreed to pay the whole of her war debt to the United States at a rate of interest reduced from five to three and one-half per cent, irrespective of receipts from her debtors.

This agreement caused deep concern in many instructed quarters, and to no one more than the Prime Minister himself. It imposed upon Great Britain, much impoverished by the war in which, as she was to do once again, she had fought from the first day to the last, the payment of thirty-five millions sterling a year for sixty-two years. The basis of this agreement was considered, not only in this island, but by many disinterested financial authorities in America, to be a severe and improvident condition for both borrower and lender. “They hired the money, didn’t they?” said President Coolidge. This laconic statement was true, but not exhaustive. Payments between countries which take the form of the transfer of goods and services, or still more of their fruitful exchange, are not only just but beneficial. Payments which are only the arbitrary, artificial transmission across the exchange of such very large sums as arise in war finance cannot fail to derange the whole process of world economy. This is equally true whether the payments are exacted from an ally who shared the victory and bore much of the brunt or from a defeated enemy nation. The enforcement of the Baldwin-Coolidge debt settlement is a recognisable factor in the economic collapse which was presently to overwhelm the world, to prevent its recovery and inflame its hatreds.

The service of the American debt was particularly difficult to render to a country which had newly raised its tariffs to even higher limits, and had already buried in its vaults nearly all the gold yet dug up. Similar but lighter settlements were imposed upon the other European Allies. The first result was that everyone put the screw on Germany. I was in full accord with the policy of the Balfour Note of 1922, and had argued for it at the time; and when I became Chancellor of the Exchequer I reiterated it, and acted accordingly. I thought that if Great Britain were thus made not only the debtor, but the debt-collector of the United States, the unwisdom of the debt collection would become apparent at Washington. However, no such reaction followed. Indeed the argument was resented. The United States continued to insist upon its annual repayments from Great Britain.

It, therefore, fell to me to make settlements with all our Allies which, added to the German payments which we had already scaled down, would enable us to produce the thirty-five millions annually for the American Treasury. Severest pressure was put upon Germany, and a vexatious régime of international control of German internal affairs was imposed. The United States received from England three payments in full, and these were extorted from Germany by indemnities on the modified Dawes scale.

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For almost five years I lived next door to Mr. Baldwin at Number 11 Downing Street, and nearly every morning on my way through his house to the Treasury, I looked in upon him for a few minutes’ chat in the Cabinet Room. As I was one of his leading colleagues, I take my share of responsibility for all that happened. These five years were marked by very considerable recovery at home. This was a capable, sedate Government during a period in which marked improvement and recovery were gradually effected year by year. There was nothing sensational or controversial to boast about on the platforms, but measured by every test, economic and financial, the mass of the people were definitely better off, and the state of the nation and of the world was easier and more fertile by the end of our term than at its beginning. Here is a modest, but a solid claim.

It was in Europe that the distinction of the Administration was achieved.

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Hindenburg now rose to power in Germany. At the end of February, 1925, Friedrich Ebert, leader of the pre-war German Social-Democrat Party, and first President of the German Republic after the defeat, died. A new President had to be chosen. AllGermans had long been brought up under paternal despotism, tempered by far-reaching customs of free speech and parliamentary opposition. Defeat had brought them on its scaly wings democratic forms and liberties in an extreme degree. But the nation was rent and bewildered by all it had gone through, and many parties and groups contended for precedence and office. Out of the turmoil emerged a strong desire to turn to old Field-Marshal von Hindenburg, who was dwelling in dignified retirement. Hindenburg was faithful to the exiled Emperor, and favoured a restoration of the imperial monarchy “on the English model.” This, of course, was much the most sensible though least fashionable thing to do. When he was besought to stand as a candidate for the Presidency under the Weimar Constitution, he was profoundly disturbed. “Leave me in peace,” he said again and again.

However, the pressure was continuous, and only Grand-Admiral von Tirpitz at last was found capable of persuading him to abandon both his scruples and his inclinations at the call of Duty, which he had always obeyed. Hindenburg’s opponents were Marx of the Catholic Centre and Thaelmann the Communist. On Sunday, April 26, all Germany voted. The result was unexpectedly close:

Hindenburg, who towered above his opponents by being illustrious, reluctant, and disinterested, was elected by less than a million majority, and with no absolute majority on the total poll. He rebuked his son Oskar for waking him at seven to tell him the news: “Why did you want to wake me up an hour earlier? It would still have been true at eight.” And with this he went to sleep again till his usual calling-time.

In France the election of Hindenburg was at first viewed as a renewal of the German challenge. In England there was an easier reaction. Always wishing as I did to see Germany recover her honour and self-respect, and to let war-bitterness die, I was not at all distressed by the news. “He is a very sensible old man,” said Lloyd George to me when we next met; and so indeed he proved as long as his faculties remained. Even some of his most bitter opponents were forced to admit, “Better a Zero than a Nero.”
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However, he was seventy-seven, and his term of office was to be seven years. Few expected him to be returned again. He did his best to be impartial between the various parties, and certainly his tenure of the Presidency gave a sober strength and comfort to Germany without menace to her neighbours.