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Churchill and his Taxes: “Genius has many outlets”

Churchill and his Taxes: “Genius has many outlets”

Taxes and the Man

On the mat­ter of Churchill’s tax­es, a friend quotes a very good his­to­ri­an we both respect. “…his rela­tion­ship with the tax­man was scan­dalous. As Chan­cel­lor of the Exche­quer, Churchill exploit­ed tax loop­holes and he retired as an author on more than one occa­sion to avoid pay­ing tax.”

My friend writes: “Sure­ly what Churchill did was just on the bor­der­line of tax-opti­miza­tion? It would only be scan­dalous if it was tax eva­sion. But it was in fact legal.”

I am not an expert on Churchill’s tax­es. I accept that he took what­ev­er mea­sures that were open and legal to min­i­mize the bite. It is true that he “retired” as a writer for tax pur­pos­es from time to time. Read­ers should refer to David Lough’s com­pre­hen­sive No More Cham­pagne: Churchill and His Mon­ey. With regard to his World War II mem­oirs, see also David Reynolds, In Com­mand of His­to­ry: Churchill Fight­ing and Writ­ing the Sec­ond World War.

Paintings not Articles

taxesOf inter­est is a note by Wal­ter Graeb­n­er, Churchill’s edi­tor for Life magazine’s seri­al­iza­tion of his war mem­oirs. In his delight­ful 1965 mem­oir, My Dear Mis­ter Churchill, Graeb­n­er recalls a vis­it to WSC in August 1945. Hav­ing left Down­ing Street fol­low­ing the July gen­er­al elec­tion, the Churchills were stay­ing at Clar­idges, before acquir­ing and mov­ing into 28 Hyde Park Gate.

Five dol­lars a word! That’s what Life offered for his arti­cles. This is $67 a word in today’s money—a fig­ure that makes the heads of us writ­ers swim. Graebner’s com­ments also bear on the tax issue, and Churchill’s tac­tic of “retir­ing” from writ­ing dur­ing peri­ods of high tax vul­ner­a­bil­i­ty:

***

Miss Hill [WSC’s sec­re­tary] opened the door and asked me to take a seat in the draw­ing-room to the left, adding, “Mr. Churchill will be here in a moment.” I looked for a chair, but none was emp­ty. Every chair and sofa in the room had a paint­ing on it, so there was noth­ing for me to do but wan­der around and exam­ine the col­lec­tion.​ ​Here was show­man­ship at its best. Churchill had care­ful­ly set up a pri­vate exhi­bi­tion, and I was his audi­ence.

Just as I had fin­ished inspect­ing the last of about a dozen pic­tures, Churchill walked in wear­ing his blue zip suit, his face pink and pow­dery after a shave, his pale blue eyes smil­ing. “I’ve been on hol­i­day in Italy and the South of France as you may know,” he began, “and while there I made these paint­ings which you see—er—in this gallery—on pri­vate view. You wrote to me a short time ago about writ­ing some arti­cles….”

March­ing up and down the room he con­tin­ued: “That was a very good offer you made me—very flat­ter­ing. I wish I could have accept­ed it. It’s the best offer I’ve ever had. Five dol­lars a word I think it works out at. That’s very good. But I am not in a posi­tion to write any­thing now—perhaps later—but not now. I have gone into the whole thing very care­ful­ly with my advis­ers and they tell, me that if I come out of retirement—you see I’ve been in retire­ment ever since the elec­tion when the peo­ple turned me out—and write any­thing now, I would have to pay tax­es of nine­teen and six in the pound, so what’s the use?”

“Genius has many outlets”

The pound was then worth $4; 19 shillings six­pence or $3.90 rep­re­sents 97.5% of it. Churchill’s remark is a stun­ning illus­tra­tion of the long-run­ning claim of “sup­ply siders” that high tax­es actu­al­ly dimin­ish gov­ern­ment rev­enue by dis­cour­ag­ing the pro­duc­tive from work­ing hard­er. But I digress. Graeb­n­er con­tin­ues:

Then, ges­tur­ing towards the paint­ings, he con­clud­ed: “But these are some­thing else again. Do you think your peo­ple might like to pub­lish them—that is, to take them in place of one of the arti­cles? I would like such an arrange­ment bet­ter for the time being, as the income, I am advised, would be con­sid­ered as a cap­i­tal gain and there­fore non-tax­able.”

The point was clear. Churchill was offer­ing for $25,000 the repro­duc­tion rights to the paint­ings he had made on hol­i­day. It was agreed that I would com­mu­ni­cate with my edi­tors. Before leav­ing I con­grat­u­lat­ed him on the excel­lence of his pic­tures, express­ing sur­prise that he could find the time to take up paint­ing on top of all his oth­er work. Behind an enor­mous grin he mur­mured: “Genius has many out­lets.”

Evi­dent­ly they hadn’t thought of tax­ing cap­i­tal gains in Britain then. And for the record, $25,000 in 1945 is equal to $338,000 in today’s mon­ey.

Do not take Churchill’s wise­crack out of con­text as the expres­sion of a brag­gart. Many such quips are in Graebner’s book. He smiled when he said those things. Win­ston Churchill was not a brag­gart. But he could not resist his lit­tle joke.

Churchill on the Optimist and the Pessimist

Churchill on the Optimist and the Pessimist

Opti­mist and Pes­simist: Fif­teen min­utes of fame! David Davis MP, Sec­re­tary of State for Brex­it, boots one in his recent speech and I’m final­ly in The Guardian. Prob­a­bly the first and last time, giv­en my opin­ions. **

Ques­tion: Refer­ring to your posts of quotations Churchill nev­er said, do you know who actu­al­ly did say “A pes­simist sees the dif­fi­culty in every oppor­tu­nity; an opti­mist sees the oppor­tu­nity in every dif­fi­cul­ty”? I find no attri­bu­tion oth­er than to Churchill.

Pessimist: Not Churchill’s Quip

Answer: Sor­ry. I can’t track it; nor can my col­league Ralph Keyes, edi­tor of The Quote Ver­i­fi­er.

Like many “red her­rings,” the optimist/pessimist quote is all over the web ascribed to Churchill–and not one of those appear­ances offers a source (speech, book or what­ev­er). If he said it, no one has pro­duced the source.

Churchill did say some amus­ing and thought­ful things about opti­mists and pes­simists:

We remem­ber the sar­don­ic war-time joke about the opti­mist and the pes­simist. The opti­mist was the man who did not mind what hap­pened so long as it did not hap­pen to him. The pes­simist was the man who lived with the opti­mist. (1 Decem­ber, 1938, “How Stand Britain and France Since Munich?” Dai­ly Tele­graph; reprint­ed in Step by Step, first edi­tion, page 293.)

For myself I am an optimist—it does not seem to be much use being any­thing else…. (9 Novem­ber 1954, Lord Mayor’s Ban­quet, Guild­hall, Lon­don; The Unwrit­ten Alliance, page 195.)

** Optimist: Nice lines about Europe?

In report­ing this mis­quote in The Guardian, 19 June 2017, Mr. David Hen­ley kind­ly links to this post, while adding:

The great man did, how­ev­er, come up with a few nice lines about Europe. The “sov­er­eign rem­e­dy” to the tragedy of post­war Europe, he said in 1946, was to “re-cre­ate the Euro­pean fam­i­ly … and pro­vide it with a struc­ture under which it can dwell in peace, in safe­ty and in free­dom. We must build a kind of Unit­ed States of Europe.” (Zurich Uni­ver­si­ty, 19 Sep­tem­ber 1946)

A lit­tle more dig­ging would pro­duce a cou­ple of oth­er Churchill lines, from a time when Europe had begun indeed to unite:

It is only when plans for unit­ing Europe take a fed­er­al form that we our­selves can­not take part, because we can­not sub­or­di­nate our­selves or the con­trol of British pol­i­cy to fed­er­al author­i­ties. (House of Com­mons, 29 Novem­ber 1951)

We are not mem­bers of the Euro­pean Defence Com­mu­ni­ty, nor do we intend to be merged in a fed­er­al Euro­pean sys­tem. We feel we have a spe­cial rela­tion­ship to both. (House of Com­mons, 11 May, 1953)

What Churchill real­ly thought about Euro­pean union is devel­oped here­in. See “Zurich +70” and “Bri­tan­nia Waives the Rules.” Not like­ly to make The Guardian, I fear.

Quotations are from…

Churchill By Him­self (USA) and Churchill in His Own Words (new edi­tion, UK).

“Utmost Fish”: A Churchill Story that is No Old Cod

“Utmost Fish”: A Churchill Story that is No Old Cod

Q: What can you tell me about Churchill’s order for “Utmost Fish” in 1939. What did this have to do with his role as First Lord of the Admi­ral­ty?” —L.S, Spokane, Wash.

A: It had noth­ing to do with his role. It was char­ac­ter­is­tic of his atten­tion to detail, and will­ing­ness to stray out­side his lim­its.

“Utmost Fish”

fish
Sir Geof­frey Shake­speare, 1943 (Wiki­me­dia)

Hills­dale College’s “The Churchill Doc­u­ments,” Vol. 14, for Sep­tem­ber 1939-May 1940, car­ries a rec­ol­lec­tion by Sir Geof­frey Shake­speare. Shake­speare (1893-1980) was a Lib­er­al MP, 1923-45. He served Churchill as Par­lia­men­tary Under-Sec­re­tary of State for Domin­ion Affairs from 1940 to 1942. This note is from his diary for 18 Octo­ber 1939 in his book, “Let Can­dles Be Brought In,” pages 230-2):

One morn­ing I found on my desk a pink tab with a memo to this effect: “I am con­cerned about the short­age of fish. Par­lia­men­tary Sec­re­tary will imme­di­ate­ly take up the mat­ter with the Assis­tant Chief of the Naval Staff and the head of the Mine Sweep­ing Divi­sion to see if any trawlers can be released for fish­ing. We must have a pol­i­cy of “utmost fish.” Par­lia­men­tary Sec­re­tary will report to me by mid­night with his pro­pos­als. WSC.

*****

This was indeed a pos­er. I had no knowl­edge of, or respon­si­bil­i­ty for, the fish­ing indus­try. That ques­tion came with­in the purview of the Min­istry of Agri­cul­ture and Fish­eries. I got busy, how­ev­er, and arranged with the Min­istry of Agri­cul­ture to call a con­fer­ence of trawler own­ers from Hull, Grims­by and else­where, and Assis­tant Chief of the Naval Staff—Rear-Admi­ral Harold Bur­rough, whose name lat­er in the war was bril­liant­ly asso­ci­at­ed with the Mal­ta convoys—came to the res­cue by releas­ing a few trawlers.

After many hours of inten­sive study of the prob­lem, I dic­tat­ed a com­pre­hen­sive mem­o­ran­dum on the essen­tial facts of the indus­try, the num­ber of trawlers and drifters still used for fish­ing and the num­bers tak­en over by the Admi­ral­ty, dai­ly catch­es, dif­fi­cul­ties of pro­tect­ing fish­ing fleets from air­craft and mines, and I con­clud­ed by sug­gest­ing the for­ma­tion of a new Fish­ing Pro­mo­tion Coun­cil, com­posed of rep­re­sen­ta­tives of the Admi­ral­ty, Min­istry of Agri­cul­ture, trawler and drifter own­ers, and of the trades unions con­cerned.

I com­plet­ed the mem­o­ran­dum just after mid­night and took it into the pres­ence. Churchill read it, asked numer­ous ques­tions and con­curred in the for­ma­tion of the new coun­cil and instruct­ed me to con­sti­tute it forth­with. He also asked me to approach Ernest Bevin [Min­is­ter of Labour]  to secure his interest….So a pol­i­cy of “utmost fish” was fos­tered by the Admi­ral­ty in wartime.

Churchill Trolls for Answers

As a result of his enquiries, Churchill con­vened a meet­ing. (Churchill papers, 19/3) 18 Octo­ber 1939

I have asked the Min­is­ter of Agri­cul­ture to bring Mr. Ernest Bevin and his dep­u­ta­tion to the Admi­ral­ty at 4.15 o’clock tomor­row after they have explored the ground among themselves….I will pre­side myself.

Mean­while Assis­tant Chief of the Naval Staff, Direc­tor of the Trade Divi­sion and Con­troller or Deputy-Con­troller should togeth­er with Finan­cial Sec­re­tary meet togeth­er this evening to work out a plan, the object of which is the Utmost Fish, sub­ject to Naval neces­si­ty. The imme­di­ate loss aris­ing from our req­ui­si­tion should be shared between ports… the fact that a port has built the best kind of trawlers must not lead to its being the worst suf­fer­er.

Side by side with this equal­i­sa­tion process a type of trawler which can be built as quick­ly as pos­si­ble, and will serve its pur­pose,​ ​should be giv­en facil­i­ties in the ship-yards. As soon as these trawlers flow in, they can either be added to the var­i­ous ports, or else be giv­en to the ports from whom the chief req­ui­si­tion has been made, the equal­is­ing trawlers being restored after tem­po­rary use – this is for local opin­ion to decide. It is vital to keep the fish trade going, and we must fight for this part of our food sup­ply as hard as we do against the U-boats.

​No Carping Around

Nor­man Rose in Churchill: An Unruly Life, 254, is rather good on this:

Of course, not all were hap­py with Churchill’s for­ays into spheres beyond his imme­di­ate domain. His “Utmost Fish” order—intended to resolve the short­age of fresh fish—being a case in point. This carp­ing did not deter him.

Pro­fes­sor Rose was not floun­der­ing around when he wrote that.

Of course it wasn’t his sole point. But the sto­ry is no old cod, for sure.