Winston Churchill (1874-1965) was the grandson of a Duke, but his early start in politics was largely due to his literary talent, his mother’s affairs and contacts and his flair for self-promotion – as well as physical courage, a virtue that Lloyd George notably lacked. He entered Parliament in 1900 as a Conservative, then crossed the floor to Liberal in 1904 over the issue of free trade – as was to be demonstrated repeatedly, his economic understanding was limited.
An excellent speaker and networker, he entered the Cabinet as President of the Board of Trade (a somewhat inappropriate ministry) in 1908, before transitioning to the Home Office and the Admiralty. At the Admiralty, he built up the Navy aggressively and negotiated the purchase of a majority stake in the Anglo-Persian Oil Company, thus ensuring oil supplies for the Navy. He also founded Room 40, the seed of the government’s code-breaking operations in the World Wars and since, now GCHQ. Then after war began, he promoted the idea of the 1915 Dardanelles Campaign, generally felt now to have been strategically sound but poorly executed. He was also instrumental in the development of the tank.
Churchill was distrusted by the Conservatives, but was brought back into the Cabinet by Lloyd George, first as Minister for Munitions and then, after the Armistice, as Secretary of State for War, where he favoured an aggressive campaign against the Russian Bolshevik government. When the Coalition fell, he fought the 1923 election as a Liberal on a Free Trade platform, then transitioned to the Conservatives, being unexpectedly rewarded by Baldwin in 1924 with the office of Chancellor of the Exchequer.
As Chancellor, he put Britain back on the Gold Standard, with an overvalued pound. (The pound’s overvaluation, generally estimated at around 10%, could have been avoided by passing the tariff that Churchill had opposed only 18 months earlier.) As Chancellor, Churchill also opposed defence spending as energetically as he supported it 15 years earlier or a decade later. Then he spent ten years “in the wilderness” out of office, of which the first half was devoted to a quixotic attempt to slow the progress towards Indian independence and the second half was spent denouncing the government for not standing up to Hitler (contrary to later claims in Churchill’s memoirs, the government was rearming from 1934).
Churchill’s inclusion in the government in September 1939 was inevitable and his ascension to the top office in May 1940 nearly so, despite his responsibility for the bungled Norway campaign. His opponent, Edward Wood, Viscount Halifax (1881-1959), perceived correctly that he had entirely the wrong temperament for a war leader – he would have been feebler than Chamberlain, not stronger as the situation, the Commons and the public demanded. Halifax’s abortive peace attempt at the end of May marked the end of his real influence – whereas staying out of war altogether might have been attractive, a peace with Hitler following Britain’s major military defeat in France was much less so.
Churchill’s ability to inspire the House of Commons and the British people was a vital contribution over the next year, during which his inspirational quality was far greater than Lloyd George’s, and as good as Chatham at his best – and he possessed far better technology than Chatham’s with which to relay his words to the world. His personality and oratory also appealed to many Americans; they were vital in convincing Franklin Roosevelt that Britain was a true ally and worth helping. Once America entered the war Churchill’s inspirational contribution was less, and he came close to losing office after the defeats of early 1942, but before that time his contribution was unique, and worthy of the accolades heaped upon it ever since.
Churchill was no great military strategist; he favoured the kind of “side-show” diversions from the main war effort that Pitt and Dundas had favoured in the 1790s and Lloyd George in World War I – unlike Liverpool’s focus on the Peninsula conflict. However, in one respect Churchill’s instincts were sound, in deterring the United States from a direct invasion of the European mainland until 1944.
Churchill’s relationships with his military commanders were generally good, even if General Alan Brooke (1883-1963), the Chief of the Imperial General Staff, found him tiresome to deal with. Certainly, they were much better than Lloyd George’s poisonous relationships with both Generals and Admirals in World War I. On the other hand, Churchill’s personnel selections were sometimes flawed, notably in over-promoting the King’s cousin Lord Louis Mountbatten (1900-79), whose replacement of the admirable Roger Keyes (1872-1945) as Chief of Combined Operations led to the incompetently planned Dieppe Raid disaster. 1
Churchill’s economic management during World War II was minimal – he simply allowed Clement Attlee, Keynes and the civil servants to build the big-government command economy that the government had attempted to build in the last years of World War I. However, there is one major blot on his record: his selection of Keynes as the British representative at the Bretton Woods talks in July 1944.
Keynes was a poor negotiator, with prickly relationships with his U.S. counterparts and altogether too much sympathy with the destructive Soviet delegation. He also committed four major blunders, from the viewpoint of British economic interests:
- First, as a convinced free trader he allowed the U.S. to bully Britain out of its Imperial Preference arrangements, which had hugely damaging effects, both political and economic on Britain’s post-war status.
- Second, he focused on the question of U.S. funding for Britain’s short-term post-war needs, and the interest rate on that funding, rather than gaining Britain flexibility to devalue the pound from its over-valued $4.03 parity, which would have allowed William Morris’s Morris Motors the economic space for the post-war sales blitz he was planning in the U.S. market.
- Third, Keynes instituted a “Bretton Woods system” of a phony gold standard and fixed dollar parities that locked the world economy into inflation and made Britain suffer an endless series of foreign exchange crises, while being constrained by exchange controls until 1979.
- Finally, of less short-term importance, he designed a post-war economic system in which international development would be carried out by global state-controlled bureaucracies, the World Bank and the International Monetary Fund, thus doing untold damage to Third World economic development and depriving the London merchant banks of what before World War I had been the cream of their business (the American banks had tried to seize this business in the 1920s, but they were no good at it and caused major economic damage through excessive debt issuance).2
Churchill was surprised to lose the 1945 election, but in truth he had allowed Labour propagandists throughout the war to demonize the Conservatives and the economically successful 1930s, so a short election campaign in which he referred to them as the Gestapo did not work. Then he played an invaluable role with his “Iron Curtain” speech of March 1946 in Fulton, Missouri to awaken President Truman and the West to the continuing dangers of Stalin’s Soviet Union.
By the time the Conservatives finally won the election in October 1951, Churchill was almost 77, but buoyed up by his prestige and the belief that Anthony Eden, his deputy, was not up to the job. His second term in office could be called undistinguished – except that Churchill was now a statemen of worldwide distinction. He played a successful role in foreign policy, but once again economics was his weakness.
Churchill began badly by appointing the squishy consensus-minded R.A. Butler (1902-82) to the Exchequer instead of the more distinguished ex-City banker Oliver Lyttleton (1893-1972), thus ensuring that Socialist controls and taxes would be largely left in place and Britain would miss out on the economic miracle of rapid growth that other Western European countries all enjoyed in the next two decades. His biggest single mistake came in January 1952 when the Treasury, the Bank of England and, surprisingly, Butler, proposed Operation ROBOT, by which the pound would have been floated and exchange control abandoned – this would have allowed the British economy to grow without the painful “stop-start” of incessant sterling crises. Backed by his two most economically leftist ministers, Eden and Macmillan, Churchill vetoed the scheme – a huge opportunity missed.
Rationing was ended in 1954, but taxes came down only marginally, although the economy began to recover more solidly. Part of the problem was Churchill’s excessive deference to the trade unions, which began the process of stagflationary labour relations surrenders that continued until Margaret Thatcher’s term in office. On the other hand, even in 1951-55, he did not “become the King’s First Minister in order to preside over the liquidation of the British Empire”3 – no further de-colonization occurred until 1956.
Even with a large boost for inspiring war leadership, which was really confined to a period of about 18 months, Churchill does not deserve to rank at the very top of this list, although his support for innovation and science in general is an important boost. Pitt (albeit an inferior war leader) and Liverpool should rank above him, while Salisbury, Attlee and Margaret Thatcher are close to doing so. However, with that caveat he still occupies an eminent position, as he should.
 “Churchill – Walking with Destiny” Andrew Roberts, Viking, 2018, pp 755-56 sets out Mountbatten’s responsibility for Dieppe’s futile loss of life, and his successful attempt to make Churchill whitewash his account of this in his World War II history.
 The Bretton Woods conference is best dealt with in “The Battle of Bretton Woods,” Benn Stiel, Princeton, 2013. William Morris’s plans for post-war U.S. expansion and the excessive British steel costs (30% higher than in the U.S.) that derailed those plans are analysed in Fortune, July 1946.
 Churchill, Mansion House speech, November 10, 1942.