Market Musings - January 5, 2018
We continue our blog series: Market Musings, Volume 2, Edition 2, giving our (hopefully not too random) thoughts on recent goings-on in the markets. Today, we present Book Review: No More Champagne - Churchill and His Money.
OK, so technically this post doesn't directly concern "recent goings-on in the markets", yet it covers finances generally and we have just read most of the book (only have about a quarter remaining), so...let's review it, shall we? (Link here for the book on Amazon.)
Winston Churchill is an endlessly fascinating character. We recently saw the movie Darkest Hour, which is sort of "Churchill's Greatest Hits" summarized on film, and quite well acted with Gary Oldman in the lead role. This led to the discovery of "No More Champagne", which was published a few years ago by Englishman David Lough, who was a private banker professionally before becoming an author (see his background here). The book meticulously documents Churchill's personal finances over the course of his life, based mainly on Churchill's own private papers. What is amazing about Sir Winston was that he never--literally never--lived within his means financially during the first 65 years of his life, despite consistently ranking among the top 1% of wage earners in Britain during that period. If he earned 10,000 pounds in a year (around $1 million in modern money), he was sure to spend 13,000 pounds; and if he earned 15,000 pounds, he would consequently spend 20,000 pounds, almost as if it were some kind of perverse financial strategy to get into as much debt as possible. What is amazing is that Churchill could pull off this relentless spending-beyond-his-means act for decades on end without ever going bankrupt (it helps in this respect to be the Prime Minister and not Joe Sixpack).
Churchill was an insanely prolific individual and something of an adrenaline junkie. Not only did he occupy ministerial level offices for the vast majority of his adult life (from the age of 36 to 81, he consistently held positions in the highest levels of the UK government), which for a normal person would leave time for little else, but he actually engaged in massive amounts of journalism and historical writing, as well as found ample time for leisure activities such as painting, bricklaying(!) and gambling. He even won the Nobel Prize for literature for his writing in 1953. And, unlike JFK with "Profiles In Courage" (ghostwritten by Theodore Sorensen), Churchill actually wrote the vast majority of his articles and books personally (admittedly he received ample help from secretaries and researchers, and in a pinch would have an article or particular section of a book ghosted).
[Above: Churchill working at an upright desk that had once belonged to Benjamin Disraeli]
Why and how was he such a prolific writer? For the simple reason that he had no choice--writing was his main source of income (being a cabinet minister paid well but, being dependent on the electorate, was not a secure source of income). Churchill was constantly wheeling and dealing with various newspapers and book publishers, and later movie producers, to try to make money. Five articles for 100 pounds apiece here; a 12,000 pound book deal for a life of his ancestor the Duke Marlborough there; 3,000 pounds for a collection of wartime speeches; 50 pounds for the U.S. syndication of each article he wrote; 50,000 pounds for the film rights to Marlborough; etc etc etc, the deals never stopped.
Churchill had to write like mad because he lived like mad: he had many expensive hobbies (gambling and stock speculation), tastes (champagne and cigars) and financial sinkholes (Chartwell, his wife Clementine's shopping habits) in his life. An aristocrat by blood and at heart (although with a relatively modest inheritance, since his father was the 2nd son of a Duke--the 1st son, Churchill's uncle, inherited the mother load including Blenheim Palace), Churchill loved to live large--the lists of his expenditures detailed in "No More Champagne" is mind-boggling. He would spend the equivalent of around $50,000 in a year just on champagne and spirits, and perhaps $20,000 per year on cigars (Churchill was in a sense the P. Diddy of his era, albeit a much tamer version in his romantic life). He would visit the French Riviera for a month-long winter holiday and consistently throw money away gambling (despite his wife's constant pleading to avoid casinos). Then he would try to make back his losses with quick forays in the stock market based on tips received from the likes of Bernard Baruch, invariably losing large amounts of money (Churchill lost a fortune being long the stock of Simmons and Montgomery Ward in the 1929-32 bear market). [Interesting side note, Baruch actually made $2 million in 1929, despite being long stocks during the stock market crash that year.] He constantly was taken out one loan to pay off an existing loan, borrowing from his future inheritance, mortgaging other assets, and trying to find loopholes by which he could avoid paying tax on his income (during WWII the top income tax bracket in England was 97.5%). During the 1940s he actually received loans and payments from various businessmen, as well as preferential treatment from the U.K. Inland Revenue Service, that by today's would be considered outright corruption (perhaps he deserved this, though, as he DID save the world from Nazi domination).
Below is a list of just the non-fiction books Churchill authored, quite a few of which were multi-volume works (source):
The Story of the Malakand Field Force 1898 [free ebook here]
The River War 1899 [free ebook here]
London to Ladysmith via Pretoria 1900 [free ebook here]
Ian Hamilton's March 1900 [free ebook here]
Lord Randolph Churchill 1906 [free ebook here]
My African Journey 1908 [free ebook here]
The World Crisis 1923-31
My Early Life 1930
Thoughts and Adventures 1932
Marlborough: His Life and Times 1933-38
Great Contemporaries 1937
The Second World War 1948-53
Painting as a Pastime 1948
A History of the English-Speaking Peoples 1956-58
He also penned a novel, Savrola (published in 1900 - free ebook here), published 28 books of his speeches, and was credited with various miscellaneous works that were published under his name.
[Above: Churchill painting "Near Breccles", 1920s]
Reading "No More Champagne" is somewhat exhausting (albeit fascinating). One can only imagine how exhausting it must have been for Churchill to actually live such a frantic hand-to-mouth 90-year-long life crammed with activity (and the book, by design, doesn't even cover the main bulk of his professional life, his political career, which Randolph Churchill and Martin Gilbert have covered in no less than eight bulging volumes!). The cool thing about Churchill's personal peccadilloes is that, because of them, we can now enjoy the significant amounts of great literature which he authored in the exact same manner as his contemporaries, by reading it ourselves (unlike musical recordings, film and TV, a book is from 1898 still reads exactly the way it did the year it was published). And in certain instances we can do this for free, since the copyrights for many of his works have now expired and these are available on the Internet (see, e.g., the "free ebook" links above).
So thank you Winston for being so prolifgate and—consequently—so prolific!