THE MACMILLAN MEMOIRS-2
Resignations and recovery
ENOCH POWELL
'I prepared my letter of resignation (of which I have the draft in my records) and waited for the crucial cabinet which must decide my future. Butler, Heathcoat Amory and Thorneycroft came to see me in my room to try to find a solution. They said PM (Eden) was absolutely determined not to give in on bread or milk. In that case, I replied, he must find another Chancellor. The same ministers came again (after dinner) with the idea of a compromise. I said I would consider this, but did not much like compromises.
It is February 1956. and the Chancellor of the Exchequer is Harold Macmillan. He sees himself obliged to secure a series of cuts in government expenditure; for 'the Bank rate was not controlling demand as had been hoped, partly because so large a proportion of spending was, even then, generated by Government itself.'
Eighteen months later the Prime Minister is Harold Macmillan and the Chancellor is Thorneycroft. The Prime Minister's reason- ing is impeccable: 'It was useless to have a head-on col- lision with the unions if an inflationary situation was at the same time creating an ever increasing demand for labour. De- mand must be reduced by reducing the money available. Money and credit must be controlled through the banks. At the same tithe we must somehow reduce ordinary Government expenditure'.
On 19 September, public spending on capital account was cut and Bank rate hoisted from 5 per cent to 7 per cent. There remained 'ordinary Government ex- penditure': its turn would come at estimate time, in December-January. Meanwhile, when Parliament reassembled, 'our general line was now becoming clear; in dealing with our own employees, we would accept arbitral awards, but the money must be found within the particular vote or from the total Govern- ment expenditure. In nationalised in- dustries we wOuld require the boards to make savings to balance any wage in- creases resulting from arbitration. In private industry we must expect the monetary policy to exert a healthy check on unreasonable wage demands.'
Impeccable again, and still so when on New Year's Day 1958 the Prime Minister minuted that 'in our present economic circumstances it is essential that the Govern- ment should be seen to be applying to its own• expenditure the same disinflationary discipline as it is imposing on the rest of the economy.' Less than a week later after a Sunday cabinet, the Chancellor of the Ex- chequer had resigned. During an interval of the cabinet, though Macmillan does not mention it, a deputation comprising this time Heathcoat Amory and Lord Kilmuir had come to see the Chancellor 't6 try to find a
solution' and assured him that the 'PM was
absolutely determined not to give in.' In his resignation letter Thorneycroft said he was `not prepared to approve estimates for the Government's current expenditure next Year at a total higher than the sum that will be spent this year', because he 'regarded the limitation of Government expenditure as a prerequisite to the stability of the pound, the stabilisation of prices, and the prestige and standing of our country in the world.'
The selection of turning points is a slippery business. Neither 1956 nor 1957 was the first, nor the last, occasion when the weary path of argument was trodden forth and back between inflation and industrial unrest, bank rate and credit restriction, money supply and public expenditure. The features vary slightly from one episode to the next but the repetitiveness of the pattern is un- mistakable. Nevertheless 1957-58 has some of the qualities of a turning point which the other episodes lack. The year 1957 marked the end of seven years of decline in govern- ment expenditure as a proportion of national income, Through the subsequent six years of Conservative and six years of Socialist ad- ministration it rose again steadily and rapidly. Again, 1958 marked the end of the undervaluation of the pound achieved by devaluing in 1949: thereafter deficits on ex- ternal account preponderated until the balance was redressed again by the devalua- tion of 1967. More subjectively. 1958 appears in retrospect the point where the bogey of inter-war deflation was at last dethroned in the British mind in favour of 'growth'.
Was it, that breach over what now seem trivial sums in the estimates for 1958-59, an aberration or a portent? And if it was a por- tent, how far was what it portended bound up with the person of the Prime Minister?
There is no doubt in my mind that those who took part regarded the clash of personalities as being also a parting of the ways in some historical sense. It was not that the Prime Minister emerged from it with a personal ascendancy that was not again to be challenged until the early months of 1963 when the repulse of Britain's application to join the Common Market seemed to give the signal for a series of disasters. Perhaps every Prime Minister needs to show, preferably at a fairly early stage in the enjoyment of power, that he can dispense with any col- league, whoever he may be. In retrospect the resignations of January 1958 came at the right point of time for this purpose. The elimination of Lord Salisbury in March 1957 was too early to perform that function; and it was also too silent.
The preference of Makarios over the Mar- quess of Salisbury might seem to presage the Macmillan of 'the wind of change', no less than the preference of larger estimates over a Chancellor of the Exchequer presaged the Macmillan of 'never had it so good'; but the contrasts are as instructive as the similarities. The resignation of Lord Salisbury was not fought through as a duel, nor even as a debate. If there ever was any alternative to the accelerated liquidation of British Imperial power, first in the Mediterranean and then in Africa, it was not spelt out, either in personal or in theoretical terms. Consequently, perhaps to our misfortune, the process was never given dialogue form on the stage of politics, so that its implica- tions could be made explicit. Moreover, Macmillan's African journey and his 'wind of change' speech conveyed the suggestion, which the usage of journalism has perpetuated, that he personally threw one of the great switches of history and took a dar- ing but deliberate step; whereas in all prob- ability he neither did, nor imagined that he was doing, more than to observe and describe the inevitable. In fact, in contrast with the sense in which his phrase gained currency. Macmillan was saying just that.
Like other phrases, some of which—such as 'exporting is fun'—Macmillan never even used, his famous 'never had it so good' ac- quired a meaning and a context which did not originally belong to it; but in this case, legend had grasped a truth. It was not undeserved that the words came to symbolise deliberate preference for inflation and rising expenditure, and to connect with it the elec- toral triumph of 1959 which afterwards seemed to have been purchased at that price. Politicians are always less cynical in real life than the external record suggests; and I do not believe now, whatever I thought at the time, that the Prime Minister cold-bloodedly planned, two years in advance, to fight and win an election at the boom point of a deliberately contrived inflation. There is too much evidence that he was still influenced by what proved to be the groundless anticipa- tion of slump as a practical possibility.
Nevertheless, the personality of the Prime Minister was in more than accidental con- gruence with the mood and the outcome of those years from 1958 to 1963. More sud- denly than anyone anticipated, the shame of Suez was obliterated by the discovery that 'life was better', and better, too, 'under the Conservatives'; and then, with equal sud- denness, the country seemed to find itself back again, with the added bitterness of disappointment, among the humiliations of inflation, of rejection by France, of con- fusion in Africa, perhaps of deteriorating morality at home. The brief recovery proved to have no sufficient foundation. The nation had been enabled for a time to avoid facing and answering the fundamental questions about its future : it had taken no decision about the management and value of its money; it had taken no decision about its real place and power in the world; it had taken no decision about the nature of its economy. In consequence, what appeared to be achievements turned out to be illusions. As always, we are left in the end asking whether it is in the power of any individual, even the leader of a party and a Prime Minister, to be more than the exponent of a phase in his nation's life, which is decreed by causes so deep as to be inaccessible; but we can suspect that the pattern which the last five years of Conservative government took was already set when the leadership which the Conservative party chose after Suez had survived the early months of its existence.
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