Marconi
IN HIS _Autobiography_ Gilbert Chesterton has set down his belief
that the Marconi Scandal will be seen by historians as a landmark in
English history. To him personally the revelations produced by it
were a great shock and gave the death-blow to all that still lingered
of his belief in the Liberal Party. For the rest of his life it may
almost be called an obsession with him. In his eyes it was so great a
landmark that as others spoke of events as pre- or post-war, he
divided the political history of England into pre- and post-Marconi.
It meant as much for his political outlook as the Enclosures for his
social. It is necessary to know what happened in the Marconi Case if
we are to understand a most important element in Chesterton's mental
history.
The difficulty is to know what did happen. The main lines of a very
complicated bit of history have never, so far as I know, been
disentangled by anyone whose only interest was to disentangle them:
and the partisans have naturally tangled them more. I wrote a draft
chapter after reading the two thousand page report of the
Parliamentary Committee, the six hundred page report of Cecil
Chesterton's Trial, and masses of contemporary journalism. Then, in
the circumstances I have related in the Introduction, I called in my
husband's aid. The rest of this chapter is mainly his.
I. WHAT THE MINISTERS DID
The Imperial Conference of 1911 had approved the plan of a chain
of state-owned wireless stations to be erected throughout the
British Empire. The Post Office--Mr. Herbert Samuel being the
Postmaster-General--was instructed to put the matter in hand. After
consideration of competing systems, the Marconi was chosen. The
Marconi Wireless Telegraph Co. of London--of which Mr. Godfrey Isaacs
was Managing Director--was asked to tender for the work. Its tender
was accepted on March 7, 1912. The main terms of the tender were as
follows:
The Company was to erect stations in various parts of the Empire at a
cost to the Government of £60,000 per station; these were then to be
operated by the Governments of the United Kingdom and the Dominions
and Colonies concerned; and the Marconi Company was to receive 10% of
the gross receipts. The Agreement was for 28 years, though the
Postmaster-General might terminate it at the end of eighteen years.
But there was one further clause (Clause 10) allowing for termination
_at any time_ if the Government should find it advantageous to use a
different system.
The acceptance of this tender was only the first stage. A contract
had to be drawn up, and nothing would be finalised till this contract
had been accepted by Parliament. In fact the contract was not
completed till July 19. On that day it was placed on the table of the
House of Commons.
For the understanding of the Marconi Case, the vital period is the
four months of 1912 between March 7, when the tender was accepted,
and July 19 when the contract was tabled. Let us concentrate upon
that four-month period. The Postmaster-General issued no statement
whatever on the matter but on March 8 the Company sent out a circular
to its shareholders telling them the good news--but making the news
look even better than it was by omitting all reference to Clause 10,
which entitled the Government to substitute some rival system at any
time it pleased. The Postmaster-General issued no correction because,
as he said later, he had not been aware of the omission.
Immediately after, Godfrey Isaacs left for America to consider the
affairs of the American Marconi Company, capitalised at $1,600,000,
of which he was a Director. More than half its shares were owned by
the English Company. On behalf of the English Company he bought up
the rights of the American Company's principal rival, and then sold
these rights (at a profit not stated but apparently very
considerable) to the American Company for $1,400,000. To handle all
this and allow for vast developments hoped for from this purchase and
from a very favourable agreement Godfrey Isaacs had negotiated with
Western Union, the American Company was to be re-organized as a
$10,000,000 Company--two million shares at $5 each. The American
Company--whose own repute in America was too low for any hope of
raising money on that scale from the American public--seems to have
agreed to the Godfrey Isaacs plan only on condition that the English
Company should guarantee the subscription; and Godfrey Isaacs made
himself personally responsible for placing 500,000 shares. (It should
be remembered that the pound was then worth just under five dollars:
a $5 share was worth £1.1.3, or £1 1/16 in English money.)
Godfrey Isaacs returned to England. On April 9 he lunched with his
brothers Harry and Rufus--Rufus being Attorney-General in the British
Government. He told them of the arrangements he had made--arrangements
which were not yet made known to the public--and of the new stock
about to be issued, and offered them 100,000 shares, out of the
500,000 for which he had made himself responsible, at the face value
of £1.1.3. Rufus refused--one reason for his refusal being that the
shares were not a good "buy," as the prospects of the Company did not
warrant so large a new issue of capital. Harry took 50,000.
We now come to the transactions which the public was later to lump
together rather crudely as "Ministers Gambling in Marconis."
A. On April 17--roughly a week after the luncheon--Rufus Isaacs
bought 10,000 of Harry's shares at £2. He made the point later that
buying from Godfrey would have been improper as Godfrey was director
of a company with which the Government was negotiating, but that it
was all right to buy from Harry who had bought from Godfrey. (Harry
having paid only £1.1.3 was willing to let Rufus have them for the
same price. But Rufus thought it only fair to pay the higher price.
This is all the more remarkable because only a week earlier he had
thought these same shares bad value at roughly half the price he was
now prepared to pay.) Of his 10,000 shares, Rufus immediately sold
1000 to the Chancellor of the Exchequer, David Lloyd George, and 1000
to the Master of Elibank, who was chief Whip of the Liberal Party
then in office. It is to be noted that no money passed at this time
in any of those transactions: Rufus did not pay Harry, Lloyd George
and Elibank did not pay Rufus.
Nor did the shares pass. Indeed the shares did not as yet exist, as
it was not till the next day, April 18, that the American Marconi
Company authorised the issue of the new capital. On the day after
that, April 19, the shares were put on the market at £3.5.0. That
same day they rose to £4. In the course of the day Rufus Isaacs sold
700 shares at an average price of £3.6.6, which on the face of it
looks like clearing £3000 more than he had paid for all his shares
and still having 3000 shares left. But he explained later that there
had been pooling arrangements between himself and his brother, and
himself and his two friends: so that the upshot of his day's
transactions was that he had sold 2856 of his own shares, and 357
each for Lloyd George and Elibank.* The triumvirate therefore still
had 6430 shares of which 1286 belonged to Lloyd George and Elibank.
[* Rufus' explanation boils down to this: he and Harry had arranged
that whatever either sold in the course of the day should be totalled
and divided in the proportion of their holdings. Rufus sold 7000
shares, Harry 10,850: a total of 17,850. Rufus had taken 1/5 of
Harry's 50,000 shares, so one-fifth of the shares sold were allotted
as his--i.e. 3570. Lloyd George and Elibank had each taken 1/10 of
Rufus', therefore each was considered to have sold 357.]
On April 20 these two sold a further 1000 of their 1286 shares at
£3.5/32.
B. On May 22 Lloyd George and Elibank bought 3000 more shares at
£2.5/32. As they were not due to deliver the shares previously sold
by them at £3.6.6 and £3.5/32 till June 20, this new purchase had
something of the look of a "bear" transaction.
C. In April and May the Master of Elibank bought 3000 shares for the
account of the Liberal Party, of whose funds he had charge.
These three transactions are all that the three politicians ever
admitted, and nothing more was ever proved against them. As we have
seen there was no documentary evidence of the principal transaction
(the one I have called A), except that Rufus sold 7000 shares on
April 19. In his acquiring of the shares, no broker was employed.
Rufus did not pay Harry for the shares until January 6, 1913, some
nine months later, when the enquiry was already on. There was no
evidence other than his own word that 10,000 was the number he had
agreed to take or £2 the price that he had agreed to pay, or that he
had bought from Harry and not from Godfrey, or that of the 7000
shares he had certainly sold at a huge profit on April 19 half were
sold for Harry. There was, indeed, no evidence that the shares were
not a gift.
Even on what they admitted, they had obviously acted improperly. The
contract with the English Marconi Company was not yet completed,
Parliament had not been informed of its terms, Parliament therefore
had yet to decide whether it would accept or reject it. Three members
of Parliament had committed two grave improprieties:
(1) They had purchased shares--directly or at one remove--from the
Managing Director of a Company seeking a contract from Parliament, in
circumstances that were practically equivalent to receiving a gift of
money from him. They received shares which the general public could
not have bought till two days later and then only at over 50% more
than the politicians paid.* (On this count, the fact that the shares
were American Marconis made no difference: the point is that they
were valuable shares sold to ministers at a special low price. This
need not have been bribery, but it is a fact that one way of bribing
a man is to buy something from him at more than it is worth, or sell
something to him at less than it is worth.)
[* H. T. Campbell of Bullett, Campbell & Grenfell, the English
Marconi Company's official brokers, gave evidence before the
Parliamentary Committee that it would have been impossible for the
general public to buy the shares before April 19. And as we have
seen, they opened on that day at £3.5.0.]
(2) They--and through the Chief Whip's action the whole Liberal
Party, though it did not know it--were financially interested in the
acceptance by Parliament of the contract. For though they had not
bought shares in the English Company (with which the contract was
being made) but with the American Company (which had no direct
interest in the contract), none the less it would have lowered the
value of the American shares if the British Parliament had rejected
the Marconi System and chosen some other in preference. I may say at
once that I feel no certainty that the transaction was a sinister
effort to bribe ministers. But had it been, exactly the right
ministers were chosen. They were the Chancellor of the Exchequer, who
has charge of the nation's purse; the Attorney-General, who advises
upon the legality of actions proposed; the Chief Whip, who takes the
Party forces into the voting lobby. It was this same Chief Whip, the
Master of Elibank, that had carried the sale of honours to a new
height in his devotion to the increase of his Party's funds.
II. THE PARLIAMENTARY ENQUIRY
On July 19, 1912, the contract was put on the table of the House of
Commons. In the ordinary course it would have come up for a vote some
time before the end of the Parliamentary Session. But criticism of
the contract was growing on the ground that it was too favourable to
the Marconi Company. And rumours were flying that members of the
Government had been gambling in Marconi shares (which, as we have
seen, they had, though not in English Marconis).
Even before the tabling of the contract, members of Parliament,
notably Major Archer-Shee, a Conservative, had been harrying Mr.
Herbert Samuel, the Postmaster-General. On July 20, and in weekly
articles following, it was attacked as a thoroughly bad contract by a
writer in the _Outlook_, Mr. W. R. Lawson. On August 1, a Labour
Member asked a question in the House about the rising price of
Marconis. The feeling that enquiry was needed was so strong that on
August 6, the last day but one of the session, the Prime Minister
(who knew something of his colleagues' purchase of Marconis but never
mentioned it) promised the House that the Marconi Agreement would not
be rushed through without full discussion. In spite of this Herbert
Samuel* and Elibank both tried hard to get the contract approved that
day or the next. When it was quite clear that Parliament would not
allow this, Herbert Samuel insisted on making a general statement on
the contract. He too knew of the Ministers' dealings in American
Marconis, but did not mention them. There was no debate or division.
The question of ratification or rejection was postponed till the
House should meet again in October.
[* The argument he put to Major Archer-Shee, M.P. was that the
stations were urgently needed for Imperial defence.]
On August 8, Cecil Chesterton's paper the _New Witness_ launched its
first attack on the whole deal (though without reference to
Ministerial gambling in Marconis) under the headline "The Marconi
Scandal":
Isaacs' brother is Chairman of the Marconi Company. It has
therefore been secretly arranged between Isaacs and Samuel that the
British people shall give the Marconi Company a very large sum of
money through the agency of the said Samuel, and for the benefit of
the said Isaacs. Incidentally, the monopoly that is about to be
granted to Isaacs No. 2, through the ardent charity of Isaacs No. 1
and his colleague the Postmaster-General, is a monopoly involving
antiquated methods, the refusal of competing tenders far cheaper and
far more efficient, and the saddling of this country with corruptly
purchased goods, which happen to be inferior goods.
The article went on to say that these "swindles" were apt to occur in
any country, but that England alone lacked the will to punish them:
"it is the lack of even a minimum standard of honour urging even
honest men to protest against such villainy that has brought us where
we are."
In September L. J. Maxse's _National Review_ had a criticism of the
contract by Major Archer-Shee, M.P., with editorial comment as well.
In the same month the _Morning Post_ and the _Spectator_ pressed for
further enquiry. The October number of the _National Review_
contained a searching criticism of the whole business and called
special attention to the Stock Exchange gamble in American Marconis.
A few days later--on October 11--the re-assembled House of Commons
held the promised debate. In the light of what we know, it is
fascinating to read how nobody told a lie exactly and the truth was
concealed all the same. Here is Sir Rufus Isaacs. He begins by
formulating the rumours against Mr. Herbert Samuel and Mr. Lloyd
George and himself. But he is careful to formulate them in such a way
that he can truthfully deny them. The rumours, he says, were that the
Ministers had dealt in the shares of a Company with which the
Government was negotiating a contract: "Never from the beginning . . .
have I had one single transaction with the shares of that Company."
Literally true, as you see. The contract was with the English
Company, the shares he had bought were in the American Company. He
made no allusion to that purchase.
Mr. Herbert Samuel--who is not accused of having purchased shares
himself but who knew of what his colleagues had done--treads the same
careful line: "I say that these stories that members of the Cabinet,
knowing the contract was in contemplation, and feeling that possibly
the price of shares might rise, themselves, directly or indirectly
bought any of those shares, or took any interest in this Company
through any other party whatever, have not one syllable of truth in
them. Neither I myself nor any of my colleagues have at any time held
one shilling's worth of shares in this Company, directly or
indirectly, or have derived one penny profit from the fluctuations in
their prices." However, he promised a Parliamentary Committee to
enquire into the whole affair.
Isaacs had denied any transactions with "that Company," Samuel with
"this Company." Neither had ventured to say "the English
Company"--for that would instantly have raised the question of the
American Company. It is an odd truth that has to be phrased so
delicately. Lloyd George, the first of the ministers to speak,
managed better. He flew into a rage with an interjector: "The hon.
member said something about the Government, and he has talked about
'rumours.' I want to know what these rumours are. If the hon.
gentleman has any charge to make against the Government as a whole,
or against individual members of it, I think it ought to be stated
openly. The reason why the Government wanted _a frank discussion
before going to Committee_* was because we wanted to bring here these
rumours, these sinister rumours, that have been passing from one foul
lip to another behind the backs of the House." He sat down, still in
a white heat, without having denied anything.
[* Italics mine.]
The Master of Elibank did not deny anything either. He was not there.
He was, indeed, no longer in the House of Commons. He had inherited
the title of Lord Murray of Elibank. He had left England in August
and did not return till the enquiry was over: nor did he send any
communication of any sort.
As we have seen, no literal lie was told. But Parliament and the
country assumed that the Ministers had denied any gambling in
Marconis of any sort. And the Ministers must have known that this was
what their denials had been taken to mean.*
[* Rufus Isaacs' son mentions a theory held by some (though he thinks
there are strong arguments against it) that Rufus' silence was due to
instructions from the Prime Minister, Mr. Asquith, who was not
anxious to have the connection of Lloyd George with the matter
disclosed, "fearing that his personal unpopularity would lead to such
an exacerbation of the attacks that the prestige of the whole
Government might be seriously impaired." (_Rufus Isaacs, First
Marquess of Reading_, pp. 248-9.)]
On October 29 the names were announced of the members appointed to
the promised Committee of Enquiry. As usual they represented the
various parties in proportion to their numbers in the House. The
Liberals were in office, supported by Irish Nationalists and Labour
Members: 9 members of the Committee (including the Chairman) were
from these parties; 6 were Conservatives. One might have expected
that the careful evasions in the House would have meant only a brief
respite for the Ministers who had been so economical of the truth.
They would appear before the Committee and then the whole thing would
emerge. But though the Committee was appointed at the end of October
and met three times most weeks thereafter, five months went by and no
Minister was called. The plain fact is that Mr. Samuel's department,
the Post Office, slanted the enquiry in a different direction right
at the start by putting in evidence a confidential Blue Book and
suggesting that Sir Alexander King, secretary to the Post Office, be
heard first.
On the question of the goodness or badness of the contract itself,
the Committee uncovered much that was interesting. It emerged that
the Poulsen System had offered to erect stations at a cost of about
£36,000 less per station than the Marconi, and that the Admiralty
itself had estimated a cost, if they were undertaking the work, about
the same as the Poulsen offer. But, by a confusion as to whether
their figure did or did not include freight charges, the Admiralty
estimate had been put down at £10,000 higher than it was! Nor was
this the only confusion. When Sir Alexander King spoke of
"concessions" made to the Government by the Marconi Company, he
admitted under cross-questioning that there was no written record of
these concessions. He spoke of various vitally important
conversations and was not able to produce a Minute. Letters referred
to were found to have been lost from the Post Office files.
Further, it appeared that while most rigid tests were to be required
of the other systems, the Marconi people had been constantly taken
almost on their own word alone. "Mr. Isaacs and Mr. Marconi both told
us," said Sir Alexander King at one point, when asked whether he had
had technical advice on a point of working.
"You will excuse me," said Mr. Harold Smith, "if for the moment I
ignore the opinion of Mr. Marconi and Mr. Isaacs. I ask you who was
the expert who gave you this information."
Then too as to the terms. The Government had proposed 3% on the gross
takings. Godfrey Isaacs had held out for 10%, and got it. Moreover,
the royalty was to be paid as long as a single Marconi patent was in
use at the stations. Considering that by the Patents Act the
Government had the legal right to take over _any_ invention while
paying reasonable compensation, the provision which gave so high a
royalty to the Marconi Company was severely criticised. Again the
right was given to the Marconi Company to advise on any fresh
invention that should be offered to the Post Office--which meant that
any invention made by their rivals was entirely at their mercy.
Naturally enough the question was pressed home whether the Post
Office had really sought the advice of its own technical experts. It
transpired that a technical sub-committee had been called once, and
had recommended a further investigation of the Poulsen System. The
report of this sub-committee had been shelved, and the members never
summoned for a second meeting.
Early in January 1913, the Parliamentary Committee (against the
advice of Herbert Samuel) asked for a special sub-committee of
experts to go into the merits of the various wireless systems and
report within three months at latest. It is not surprising that the
_New Witness_ commented on this as "a surrender of the most decided
type, for it proposes to do what Samuel himself clearly ought to have
done before he entered into the contract."
The report of this technical sub-committee showed that there had been
a good deal of exaggeration in the first attack by the _New Witness_
on the worth of the Marconi System. If one single system was to be
used, it was the only one capable of carrying out the Government's
requirements. But the sub-committee held that as wireless was in a
state of rapid development, it would be better not to be tied to any
one system. And they added that while the nature of the contract
itself was not within their terms of reference, they must not be held
to approve it.
From its examination of the contract, the Committee passed on to
examine journalists and others as to the rumours against Ministers.
And still the Ministers were not called.
On February 12, 1913, L. J. Maxse, Editor of _The National Review_,
was being examined by the Committee. Suddenly he put his finger on
the precise spot. Having expressed surprise at the non-appearance of
Ministers, he went on: "One might have conceived that they would have
appeared at its first sitting clamoring to state in the most
categorical and emphatic manner that neither directly nor indirectly,
in their own names or in other people's names, have they had any
transactions whatsoever, either in London, Dublin, New York,
Brussels, Amsterdam, Paris, or any other financial centre, in any
shares in any Marconi Company throughout the negotiations with the
Government. . . ."
"Any shares in any Marconi Company": the direct question was at last
put.
On February 14, just two days later, something very curious happened.
_Le Matin_, a Paris Daily paper, published a story to the effect that
Mr. Maxse had charged that Samuel, Rufus Isaacs and Godfrey Isaacs
had bought shares in the English Marconi Company at 50 francs (about
£2 in those days) before the negotiations with the Government were
started and had resold them at 200 francs (about £8) when the public
learnt that the contract was going through. It was an extraordinary
piece of clumsiness for any paper to have printed such a story:
certainly Mr. Maxse had made no such charge. It was an extraordinary
stroke of luck, if the Ministers wanted to tell their story in Court,
that they should have this kind of clumsy libel to deny. And it is at
least a coincidence that Rufus Isaacs happened, as his son tells us,
to be in Paris when _Le Matin_ printed the story. Samuel and Rufus
Isaacs announced that they would prosecute and that Sir Edward Carson
and F. E. Smith were their counsel. This decision to prosecute a not
very important French newspaper, while taking no such step against
papers in their own country, caused Gilbert Chesterton to write a
"song of Cosmopolitan Courage":*
[* _New Witness_, Vol. I, p. 655.]
I am so swift to seize affronts,
My spirit is so high,
Whoever has insulted me
Some foreigner must die.
I brought a libel action,
For the Times had called me "thief,"
Against a paper in Bordeaux,
A paper called _Le Juif_.
_The Nation_ called me "cannibal"
I could not let it pass--
I got a retractation
From a journal in Alsace.
And when _The Morning Post_ raked up
Some murders I'd devised,
A Polish organ of finance
At once apologised.
I know the charges varied much;
At times, I am afraid
_The Frankfurt Frank_ withdrew a charge
The _Outlook_ had not made.
And what the true injustice
Of the _Standard's_ words had been,
Was not correctly altered
In the _Young Turk's Magazine_.
I know it sounds confusing--
But as Mr. Lammle said,
The anger of a gentleman
Is boiling in my head.
The hearing of the case against _Le Matin_ came on March 19. As that
paper had withdrawn and apologised only three days after printing the
story, there was no actual necessity for statements by Rufus Isaacs
and Samuel. But they had decided to answer Maxse's question, to admit
the dealings in American Marconis which they had not mentioned to the
House of Commons: or rather to get their lawyer to tell the story and
then answer his questions on the matter in a Court case where there
could be no cross-examination because the Defendants were not
contesting the case. Sir Edward Carson mentioned the American
purchase at the end of a long speech and almost as an afterthought--
"really the matter is so removed from the charges made in the libel
that I only go into it at all . . . because of the position of the
Attorney-General and because he wishes in the fullest way to state
this deal, so that it may not be said that he keeps anything
whatsoever back." As _The Times_ remarked (9 June, 1913): "The fact
was stated casually, as though it had been a matter at once trifling
and irrelevant. Only persons of the most scrupulous honour, who
desired that nothing whatsoever should remain hid would, it was
suggested, have thought necessary to mention it at all."
The statement was not really as full as Carson's phrasing would seem
to suggest. The court was told that Rufus Isaacs had bought 10,000
shares--but not from whom he had bought them: that he had paid market
price, but not what the price was, nor that the shares were not on
the market: that he had sold 1000 shares each to Lloyd George and
Elibank, and had sold some on their behalf, but not that these two
had had further buyings and sellings on their own. It was stated for
Sir Rufus and reiterated by him that he had lost money on the
deal--the reason being that while he had gained on the shares sold,
the shares he still held had slumped. (It is difficult to see why
Rufus Isaacs and later Lloyd George made such a point of the loss on
their Marconi transactions. They can hardly have bought the shares in
order to lose money on them, and their initial sellings showed a very
large profit. Indeed Rufus Isaacs' loss depended on his having paid
his brother £2 for the shares, and again upon the 7000 shares he sold
on the opening day being only partly on his own behalf, and there is
only his own word for these two statements. If Rufus lost, he lost to
his brother, who had been willing to sell at cost price, with whom he
had a pooling arrangement, and who made an enormous profit. If Rufus
lost, the loss remained in the family.)
A week after the hearing of the _Matin_ case, Rufus Isaacs appeared
for the first time before the Parliamentary Committee, almost five
months after its formation. His problem was not so much to explain
his dealings in American Marconis, as to account for his silence in
the House of Commons. His one desire that day in Parliament, it
seems, had been to answer the "foul lies" being uttered against him,
which he was "quite unable to find any foundation for, quite unable
to trace the source of, quite unable to understand how they were
started": obviously his dealings in American Marconis could have no
possible bearing on these rumours, so he did not mention them: "I
confined my speech entirely . . . to dealing with the four specific
charges _which I formulated."_*
[* Italics mine.]
The Chairman, Sir Albert Spicer, suggested that one way to scotch the
rumours would have been to mention his investment in American
Marconis, "because both being Marconis you could easily understand
one might get confused with the other." This question always drove
Rufus Isaacs into a rage and indeed he met all difficult questions
with rages which to this day, across the gulf of thirty years, seem
simulated, and not convincingly.
Why had he not earlier asked the Committee to hear the story of the
American shares? "I took the view . . . that I had no right to claim
any preferential position . . . and it seemed to me that it might
almost savour of presumption if I had asked the Committee to take my
evidence or any Minister's evidence, out of the ordinary turn in
which the Committee desired it." All the same he had once written a
letter to the Committee asking to be heard but "on consideration did
not send it."
During his examination the element of strain between the two parties
on the Committee, which had been evident throughout the enquiry, was
very much intensified--Lord Robert Cecil and the Conservatives
courteously but tenaciously trying to get at the truth, the
Ministerialists determined to shield their man. There is a most
unpleasing contrast between the earlier bullying of the journalists
(who after all were not on trial) and the deference the majority now
showed to Ministers (who were).
Rufus Isaacs twisted and turned incredibly. But he did admit to Lord
Robert Cecil that he had obtained the shares before they were
available to the general public and at a price lower than that at
which they were afterwards introduced to them. He tried later to
modify this admission by saying that he had been told of dealings by
others before April 17, but he could give no details: and the
evidence of the Marconi Company's broker (quoted above) is decisive.
Two points of special interest emerged from his evidence. The first
was that he had not told the whole story in the _Matin_ case. He now
mentioned that Lloyd George and Elibank had sold a further 1000 of
the shares he held for them on the second day, July 20; and went on
to tell of the purchase of 3000 shares by the same pair, the
so-called "bear" transaction of May 22. The second was more
unpleasing still. He admitted that he had told the story of the
American Marconis privately to two friends _on the Committee_--
Messrs. Falconer and Booth--who had kept the matter to themselves and
had--or at least appeared to have--continually steered the Committee
away from this dangerous ground. Rufus Isaacs' son actually says that
his father "had informed Mr. Falconer and Mr. Handel Booth privately
of these transactions, in order that they might be forearmed when the
journalists came to give evidence."*
[* _Rufus Isaacs, First Marquess of Reading_, p. 256.]
On March 28 Lloyd George appeared before the Committee. Mrs. Charles
Masterman gives an account of Rufus Isaacs grooming Lloyd George for
the event:
There was a really very comic, though somewhat alarming, scene
between Rufus and George on the following Sunday. George had to give
evidence on the Monday--the following day--and Rufus discovered that
George was still in a perfect fog as to what his transaction really
had been, and began talking about "buying a bear." I have never seen
Rufus so nearly lose his temper, and George got extremely sulky,
while Rufus patiently reminded him what he had paid, what he still
owed, when he had paid it, who to, and what for. It was on that
occasion also that Charlie and Rufus tried to impress upon him with
all the force in their power to avoid technical terms and to stick as
closely as possible to the plainest and most ordinary language. _As
is well known, George made a great success of his evidence_.*
(Italics mine.)
[* _C. F. G. Masterman_, p. 255.]
I cannot imagine why she thought so. Hugh O'Donnell's description in
the _New Witness_ of Isaacs and Lloyd George as they appeared before
the Committee accords perfectly with the impression produced by a
reading of the evidence:
. . . While the simile of a panther at bay, anxious to escape, but
ready with tooth and claw, might be applied to Sir Rufus Isaacs,
something more like "a rat in a corner" might be suggested by the
restless, snapping, furious little figure which succeeded. Let us
compromise by saying that Mr. Lloyd George was singularly like a
spitting, angry cat, which had got, perhaps, out of serious danger
from her pursuers, but which caterwauled and spat and swore with
vigour and venomousness quite surprising in that diminutive bulk.
"Dastardly," "dishonourable," "disgraceful," "disreputable,"
"skulking," "cowardly!"
Asked why he had not mentioned his Marconi purchases in the House of
Commons, Lloyd George gave two answers: (1) "There was no time on a
Friday afternoon" (2) "I could not get up and take time when two
Ministers had already spoken." Why had he not asked to be heard
sooner by the Committee? He understood that Sir Rufus had expressed
the willingness of all the accused Ministers to be heard. Like Sir
Rufus, Lloyd George mentioned that he had lost money on his Marconi
transactions.
The obstruction within the Committee continued to the end. The
question had arisen whether Godfrey had had the right to sell the
shares at his own price or for his own profit. He had sold a
considerable number of shares to relations and friends at £1.1.3,
whereas shares were sold to the general public at £3.5.0. Others of
his shares he sold on the Stock Exchange at varying prices, all high.
But were the shares his? Or did they belong to the English Company?
If they were his he was entitled to sacrifice vast profits on some by
selling at cost to his relations, and to take solid profits on others
by selling at what he could get in the open market. But if he was
simply selling as an agent of the Company, he had no right to make so
fantastic a present of one lot of shares and was bound to hand over
to the Company profits made on the others.
He told the Committee that the 500,000 shares had been sold to him
outright but that he had passed on £46,000 of profits to the Company.
He said that a record of this sale of 500,000 shares to him would be
found in the minutes of the English Company. The books of the Company
were inspected and it was found that no such minute existed. Lord
Robert Cecil naturally wished to recall Godfrey Isaacs to explain the
discrepancy between his statements and the records. The usual 8 to 6
majority decided that there was no need to recall Godfrey. It looked
rather as if the shares Godfrey had sold to Harry and Harry to Rufus
at such favourable prices belonged to--and should have been sold for
the profit of--the Company.
On May 7 the Committee concluded its hearings and its members were
marshalling their ideas for the Report. But there was one fact for
them and the public still to learn. Early in June they were re-called
to hear about it. A London stockbroker had absconded: a trustee was
appointed to handle his affairs and it was discovered that the
fleeing stockbroker had acted for the still absent Elibank, had
indeed bought American Marconis for him--a total of 3000: and as it
later appeared, these had been bought for the funds of the Liberal
Party. The comment of _The Times_ (June 9, 1913) on "the totally
unnecessary difficulty which has been placed in the way of getting at
the truth" seems moderate enough.
III. THE TRIAL OF CECIL CHESTERTON
Meanwhile the _New Witness_ had not been neglecting its
self-appointed task of striking at every point that looked
vulnerable. On January 9, 1913, an article appeared attacking the
city record of Mr. Godfrey Isaacs and listing the bankrupt
companies--there were some twenty of them--of which he had been
promoter or director. Some more ardent spirit in the _New Witness_
office sent sandwichmen to parade up and down in front of Godfrey
Isaacs' own office bearing a placard announcing his "Ghastly
failures." Cecil Chesterton said later that he had not ordered this
to be done, but he refused to disclaim responsibility. The placard
was the last straw. Godfrey's solicitors wrote to Cecil saying that
Godfrey would prosecute unless Cecil promised to make no further
statement reflecting on his honour till both had given evidence
before the Parliamentary Committee. Cecil replied: "I am pleased to
hear that your client, Mr. Godfrey Isaacs, proposes to bring an
action against me." And in the _New Witness_ (February 27, 1913) he
wrote: "We are up against a very big thing. . . . You cannot have the
honour (and the fun) of attacking wealthy and powerfully entrenched
interests without the cost. We have counted the cost; we counted it
long ago. We think it good enough--much more than good enough."
The case came on at the Old Bailey on May 27. It is worth recalling
the exact position at this time. The Parliamentary Committee had
concluded its hearings three weeks earlier and was now preparing its
report. (Cecil Chesterton had not given evidence before it, for
though he had frequently demanded to be summoned, when at last the
summons came he excused himself on the plea of ill-health and the
further plea that he wished to reserve his evidence for his own
trial.) the _Matin_ case had been heard a couple of months earlier.
Everything that was ever to be known about ministerial dealings in
Marconis was by now known, except for Elibank's separate purchase on
behalf of the Party Funds, which was made public just at the end of
the trial.
Sir Edward Carson and F. E. Smith were again teamed, as in the
_Matin_ case. The charge was criminal libel. Cecil insisted on facing
the charge alone. His various contributors had joined in the attack
but Cecil would not give the names of the authors of unsigned
articles and took full responsibility as Editor. Carson's opening
speech for the Prosecution divided the six alleged libels under two
main heads: One set, said Carson, charged Godfrey Isaacs with being a
corrupt man who induced his corrupt brother to use his influence with
the corrupt Samuel to get a corrupt contract entered into. The
opening attack under this head has already been quoted. Later
attacks did not diminish in violence: "the swindle or rather
theft--impudent and barefaced as it is": "when Samuel was caught with
his hand in the till (or Isaacs if you prefer to put it that way)."
The second set charged that Godfrey Isaacs had had transactions with
various companies which, had the Attorney-General not been his
brother, would have got him prosecuted. There is the same violence
here: "This is not the first time in the Marconi affair that we find
these two gentlemen [Godfrey and Rufus] swindling": and again: "the
files at Somerset House of the Isaacs companies cry out for vengeance
on the man who created them, who manipulated them, who filled them
with his own creatures, who worked them solely for his own ends, and
who sought to get rid of some of them when they had served his
purpose by casting the expense of burial on to the public purse."
There is no need to describe the case in detail. On the charges
concerned with the contract and ministerial corruption, the same
witnesses (with the notable exception of Lloyd George) gave much the
same evidence as before the Parliamentary Committee. Very little that
was new emerged. The contract looked worse than ever after Cecil
Chesterton's Counsel, Ernest Wild, had examined witnesses, but Mr.
Justice Phillimore insisted that it had nothing to do with the case
"whether the contract was badly drawn or improvident."
But indeed all this discussion of the contract was given an air of
unreality by the extraordinary line the Chesterton Defence took. It
distinguished between the two sets of charges, offering to justify
the second (concerning Godfrey Isaacs' business record) but claiming
that the first set brought accusation of corruption not against
Godfrey but against Rufus and Herbert Samuel--who were not the
prosecutors. It was an impossible position to say that Ministers were
fraudulently giving a fraudulent contract to Godfrey Isaacs but that
this did not mean that he was in the fraud. Cecil showed up unhappily
under cross-examination on this matter, but from the point of view of
his whole campaign worse was to follow: for Cecil withdrew the
charges of corruption he had levelled at the Ministers!
Here are extracts from the relevant sections of the cross-examination
by Sir Edward Carson:
Carson: And do you now accuse him [Godfrey Isaacs] of any
abominable business--I mean in relation to obtaining the contract?
Cecil Chesterton: Yes, certainly; I now accuse Mr. Isaacs of very
abominable conduct between March 7 and July 19.
Carson: Do you accuse the Postmaster General of dishonesty or
corruption?
C. Chesterton: What I accused the Postmaster General of was of
having given a contract which was a byword for laxity and thereby
laying himself open reasonably to the suspicion that he was
conferring a favour on Mr. Godfrey Isaacs because he was the
Attorney-General's brother.
Carson: I must repeat my question, do you accuse the
Postmaster-General of anything dishonest or dishonourable?
C. Chesterton: After the Postmaster-General's denials on oath I
must leave the question; I will not accuse him of perjury.
Carson: And therefore you do not accuse him of anything dishonest
or dishonourable?
AFTER SOME FURTHER QUESTIONING
Judge: That is evasion. Do you or do you not accuse him?
C. Chesterton: I have said "No."
LATER
C. Chesterton: My idea at that time was that Sir Rufus Isaacs had
influenced Mr. Samuel to benefit Godfrey Isaacs.
Carson: You have not that opinion now?
C. Chesterton: Sir Rufus has denied it on oath and I accepted his
denial.
Cecil still insisted that though the Ministers had not been
corrupted, what had come to light about Godfrey's offer of American
Marconi shares to his brother showed that Godfrey had tried to
corrupt them. Godfrey could not have enjoyed the case very much.
There was much emphasis on his concealment of Clause 10 (allowing the
Government to terminate at any time): and Sir Alexander King,
secretary to the Post Office, admitted that Godfrey Isaacs had asked
that it be kept quiet: but this was not among the accusations Cecil
had levelled at him. In his summing up, Mr. Justice Phillimore
indicated the possibility that the shares Godfrey had so gaily sold
belonged not to himself but to the English Marconi Company--merely
adding that this question was not relevant to the present case.
Further the record of his company failures _was_ rather ghastly.
Here is a section of his cross-examination as to the companies he had
been connected with before the Marconi Company--remember that there
were twenty of them!
Wild: I am trying to discover a success.
Judge: It is not an imputation against a man that he has been a
failure.
Wild: Here are cases after cases of failure.
Isaacs: That is my misfortune.
Judge: You might as well cross-examine any speculative widow.
Wild: A speculative widow would not be concerned in the management.
* * *
Wild: Can you point to one success except Marconi in the whole of
your career?
Isaacs: In companies?
Wild: Yes.
Isaacs: A complete success, no; I should not call any one of them a
complete success, but I may say that each of them was an endeavour to
develop something new.
But Carson had made the point in his opening speech that though
Godfrey Isaacs had been connected with so many failures, he had not
been accused by the shareholders of anything dishonourable: in his
closing speech he pointed out that "not one single City man had been
brought forward to say that he had been deceived to the extent of one
sixpence by the representations of Mr. Isaacs." And indeed the
evidence called by the Defence in this present case, however
suspicious it may have made some of his actions appear, did not
establish beyond doubt any actual illegality.
The trial ended on June 9. The Judge summed up heavily against Cecil
Chesterton. The jury was out only forty minutes. The verdict was
"Guilty." Cecil Chesterton, says the _Times_, "smiled and waved his
hand to friends and relations who sat beside the dock." The Judge
preached him a solemn little homily and then imposed a fine of £100
and costs. The Chestertons and all who stood with them held that so
mild a fine instead of a prison sentence for one who had been found
guilty of criminal libel on so large a scale was in itself a moral
victory. "It is a great relief to us," ran the first Editorial in the
_New Witness_ after the conclusion of the trial, "to have our hands
free. We have long desired to re-state our whole case about the
Marconi disgrace, in view of the facts that are now before us and the
English people. . . . When we began our attack . . . we were striking
at something very powerful and very dangerous . . . we were striking
at it in the dark. The politicians saw to that. Our defence is that
if we had not ventured to strike in the dark, we and the people of
England should be in the dark still."
There can be no question of Cecil Chesterton's courage. But he may
have exaggerated a little in saying that if the _New Witness_ had not
struck in the dark the nation would still be in the dark: Parliament
had already refused to approve the contract without proper discussion
and the _Outlook_ was attacking vigorously, _before_ the first _New
Witness_ attack. And there are grave drawbacks to the making of
charges in the dark which later have to be withdrawn. Cecil's
withdrawal of his charges against the Ministers and his failure to
substantiate his charges against Godfrey's company record may have
done more to hinder than help the cause of clean government. But his
courage remains: and, if one has to choose, one prefers the
immoderate man who said more than he knew to the careful men who said
so much less. Gilbert giving evidence at the trial had said that he
envied his brother the dignity of his present position. And with the
Isaacs brothers in mind, one sees the point.
IV. AFTER THOUGHTS
Four days after the verdict against Cecil Chesterton, the
Parliamentary Committee produced its report. There had been a draft
report somewhat critical of the Marconi-buying Ministers by the
Chairman, Sir Albert Spicer; and another considerably more critical
by Lord Robert Cecil. Lord Robert's report said that Rufus Isaacs had
committed "grave impropriety in making an advantageous purchase of
shares . . . upon advice and information not yet fully available to
the public. . . . By doing so he placed himself, however unwittingly,
in a position in which his private interests or sense of obligation
might easily have been in conflict with his public duty. . . ." Of
his silence in the House, Lord Robert said: "We regard that reticence
as a grave error of judgment and as wanting in frankness and in
respect for the House of Commons."
Upon this Rufus Isaacs' son comments: "The vehemence of this language
was not calculated to commend the draft to the majority of the
Committee." Vehemence seems hardly the word; but at any rate the
Committee did not adopt either Lord Robert's report or Sir Albert
Spicer's.
By the usual party vote of 8 to 6, it adopted a report prepared by
Mr. Falconer (one of the two whom Rufus Isaacs had approached
privately) which simply took the line that the Ministers had acted in
good faith and refrained from criticising them.
Parliament debated the matter a few days later on a Conservative
motion: "That this House regrets the transactions of certain of its
Ministers in the shares of the Marconi Company of America, and the
want of frankness displayed by Ministers in their communications on
the subject to the House." Rufus Isaacs' son speaks of the certain
ruin of his father's career if "by some unpredictable misadventure"
the motion had been carried. It would indeed have had to be an
"unpredictable misadventure" for the voting was on the strictest
party lines: which means that the House did not express its real
opinion at all: the motion was defeated by 346 to 268. Lloyd George
and Rufus Isaacs expressed regret for any indiscretion there might
have been in their actions: Rufus explained that he would not have
bought the shares--"if I had thought that men could be so suspicious
of any action of mine." In the debate the Leader of the Opposition,
Arthur Balfour, somewhat disdainfully refused to make political
capital out of the business. Lloyd George and Isaacs were loudly
cheered by their own Party--though whether they were cheered for
having bought American Marconis or for having concealed the purchase
from the House there is now no means of discovering. At any rate
their careers were not damaged: the one went on to become Lord Chief
Justice of England and later Viceroy of India: the other became Prime
Minister during the war of 1914-1918.
One question arising from the episode is whether it meant what Cecil
Chesterton and Belloc thought it meant in the world of party
politics, or something entirely different. They seem throughout to
have assumed that their thesis of collusion between the Party Leaders
was proved by this scandal: it seems to me quite as easy to make the
case that it was _disproved_.
A Conservative first raises the matter by inconvenient questions in
the House. A group of young Conservatives pay the costs of Cecil
Chesterton's defence. When a Parliamentary Committee is appointed to
enquire into the alleged corruption, the story of every session
becomes one of a Conservative minority trying hard to ferret out the
truth and a ministerial majority determined to prevent their
succeeding. Finally the leading Conservative Commissioner, Lord
Robert Cecil, issues a restrained but most damning report which is,
as a matter of course, rejected by the Liberal majority.
A Conservative M.P. told me he thought the great mistake made was
that it had all been made "too much of a party question." Unless you
already disbelieved quite violently in the existence of the two
parties this would certainly be the effect upon you of reading the
report of the Commission Sessions, and all that can be set against it
is the fact that Mr. Balfour did, in the House of Commons, utter a
conventional form of words which, as has been said, really amounted
to a refusal to make political capital out of the affair.
I do not say, for I do not pretend to know, if this is the correct
interpretation: it is certainly the obvious one.
Douglas Jerrold in a brilliant article on Belloc,* treats his theory
of the Party System as a false one, and maintains that he mistook for
collusion that degree of co-operation that alone could enable a
country to be governed at all under a party system. A certain
continuity must be preserved if, in the old phrase, "The King's
Government is to be carried on"--but such continuity did not spell a
corrupt collusion. If at this distance of time such a view can be
held by a man of Mr. Jerrold's ability it could certainly be held at
the time by the majority--and it may be that the continual assumption
of an unproved fact got in the way in the fight against more obvious
evil.
[* "Hilaire Belloc and the Counter Revolution" in _For Hilaire
Belloc_.]
For bound up with this question is another: _The Eye Witness_ seemed
so near success and yet never quite succeeded. Might it have done so
had it been founded with a single eye to creative opportunity--to the
attack on the Servile State and the building of some small beginning
of an alternative? _G.K.'s Weekly_ was a slight improvement from that
point of view--for it did create the Distributist League; but both
papers, I think, had from their inception a divided purpose that made
failure almost inevitable.
The fight against corruption which had been placed equal with the
fight for property and liberty at the start of the _Eye Witness_ is a
noble aim. But, like the other, it is a life work. To do it a man
must have time to spend verifying rumours or exploding them,
following up clues, patiently waiting on events. I began to read the
files with an assumption of the accuracy of the claims of the _Eye_
and _New Witness_ as to its own achievement in all this, but when the
dates and facts in the Marconi case had been tabulated for me
chronologically I began to wonder. Again and again the editor stated
that _The New Witness_ had been first to unearth the Marconi matter.
But it hadn't. As we have seen, questions in the House and attacks in
other papers had _preceded_ their first mention of the subject.
So too the statement that the Marconi affair had proved how little
Englishmen cared about corruption seemed almost absurd when one read
not only the Conservative but also the Liberal comment of the time.
"Political corruption is the Achilles heel of Liberalism," said an
outstanding Liberal Editor; while Hugh O'Donnell in the _New Witness_
paraphrased the wail of the "Cadbury" papers:
'Tis the voice of the Cocoa
I hear it exclaim
O Geordie, dear Geordie
Don't do it again.
Just how scandalous _was_ the Marconi scandal? At this distance of
time it is difficult to arrive at any clear view. There are two main
problems--the contract and the purchase of American Marconis.
The contract seems very definitely to have been unduly favourable to
the Company; clauses were so badly drawn that they had to be
supplemented by letters which had no legal effect; documents were
lost, other tenders misinterpreted, other systems perhaps not fully
examined, the report of a sub-committee shelved, Godfrey Isaacs
allowed to issue a misleading report without correction from the Post
Office. It all may spell corruption: but it need not. No one familiar
with the workings of a Government department is likely to be
surprised at any amount of muddle and incompetence. Matters are
forgotten and then in the effort to make up for lost time important
steps are simply omitted. Officials are pig-headed and unreasonable.
And as to lost documents--
What of the ministers' dealings in shares? Godfrey may have been
using Rufus to purchase ministerial favour. If so, he could hardly
have done so on the comparatively small scale of the dealings known
to us. The few thousand involved could not have meant an enormous
amount to Rufus. He had, it is true, begun his career on the Stock
Exchange, found himself insolvent and been "hammered." But he had
gone on to make large sums at the Bar--up to thirty thousand pounds a
year; and his salary as Attorney-General was twenty thousand a year.
There may, of course, have been far heavier purchases than we know
about: the piece-by-piece emergence of what we do know gives us no
confidence that all the pieces ever emerged. We have only the word of
the two brothers for most of the story and one comes to feel that
their word has no great meaning. But, allowing for all that, it is
possible that Godfrey may have wanted Rufus to have the American
shares out of family affection; of the shares Godfrey personally
disposed of, a very large number went to relations and close
friends--mother, sisters, his wife's relations--who certainly could
not help to get his contract through Parliament. If this, the most
charitable interpretation, is also the true one, Rufus and his
political friends acted with considerable impropriety in snatching at
this opportunity of quick and easy money. The rest of the story is of
their efforts to prevent this impropriety being discovered. Had they
mentioned it openly in Parliament on October 11, the matter might
have ended there. But they lacked the nerve: the occasion passed: and
nothing remained, especially for Rufus, but evasion, shiftiness,
half-truth passing as whole truth, the farce of indignant virtue--a
performance which left him not a shred of dignity and ought to have
made it unthinkable that he should ever again be given public office.
The perfect word on the whole episode was uttered, not by either
Gilbert or Cecil Chesterton or by any of their friends, but by
Rudyard Kipling. The case had meant a great deal to him. On June 15,
a Conservative neighbour of Kipling wrote to Gilbert:
I cannot let the days pass without writing to congratulate you and
your brother on the result of the Isaacs Trial. . . . I do feel, as
many thousands of English people must feel, that the _New Witness_ is
fighting on the side of English Nationalism and that is our common
battle. My neighbour, Rudyard Kipling, has followed every phase of
the fight with interest of such a kind that it almost precluded his
thinking of anything else at all and when he gets hold of the _New
Witness_ (my copy) I never can get it back again. You see, however
much we have all disagreed--do disagree--we are all in the same boat
about a lot of things of the first rank. . . . We can't afford to
differ just now if we do agree--it's all too serious.
When Isaacs was appointed Viceroy of India, Kipling wrote the poem:
GEHAZI
Whence comest thou, Gehazi
So reverend to behold
In scarlet and in ermine
And chain of England's gold?
From following after Naaman
To tell him all is well;
Whereby my zeal has made me
A judge in Israel.
Well done, well done, Gehazi,
Stretch forth thy ready hand,
Thou barely 'scaped from Judgment,
Take oath to judge the land.
Unswayed by gift of money
Or privy bribe more base,
Or knowledge which is profit
In any market place.
Search out and probe, Gehazi,
As thou of all canst try
The truthful, well-weighed answer
That tells the blacker lie:
The loud, uneasy virtue,
The anger feigned at will,
To overbear a witness
And make the court keep still.
Take order now, Gehazi,
That no man talk aside
In secret with the judges
The while his case is tried,
Lest he should show them reason,
To keep the matter hid,
And subtly lead the questions
Away from what he did.
Thou mirror of uprightness,
What ails thee at thy vows,
What means the risen whiteness
Of skin between thy brows?
The boils that shine and burrow,
The sores that slough and bleed--
The leprosy of Naaman
On thee and all thy seed?
Stand up, stand up, Gehazi,
Draw close thy robe and go
Gehazi, judge in Israel.
A leper white as snow!
As the _Times_ leading article of June 19, 1913, put it: "A man is
not blamed for being splashed with mud. He is commiserated. But if he
has stepped into a puddle which he might easily have avoided, we say
that it is his own fault. If he protests that he did not know it was
a puddle, we say that he ought to know better; but if he says that it
was after all quite a clean puddle, then we judge him deficient in
the sense of cleanliness. And the British public like their public
men to have a very nice sense of cleanliness."
That, fundamentally, was what troubled Gilbert Chesterton then and
for the rest of his life. He was not himself an investigator of
political scandals--in that field he trusted his brother and Belloc,
and on this particular matter Cecil had certainly said more than he
knew and possibly more than was true. But it did not take an expert
to know that some of the men involved in the Marconi Case had no very
nice sense of cleanliness: and these men were going to be dominant in
the councils of England, and to represent England in the face of the
world, for a long time to come.