THE ATTORNEY-GENERAL AND THE CHANCELLOR OF THE EXCHEQUER.
SIR RUFUS ISAACS has been under examination by the Marconi Committee during the week, and as we write on Friday morning his evidence has not been con- cluded. Mr. Lloyd George will probably not be examined till next week. This fact, however, need not prevent us from commenting upon the general aspects of the case, on the admissions made by Sir Rufus Isaacs in regard to the position of himself and Mr. Lloyd George at the trial of Le Matin, and upon the amplification of those admis- sions contained in his statements to the Committee. We want to be absolutely fair both to Sir Rufus Isaacs and to Mr. Lloyd George, but we also want to enable our readers to find their way through the wilderness of words which renders difficult an understanding of the great issues involved. We must again deal with the two cases apart, for they have very different aspects. The case of the Master of Elibank need not detain us. Whatever judg- ment is arrived at as to Mr. Lloyd George applies to him, though we admit in a lesser degree, since be was not a member of the Cabinet, and did not hold that peculiar position which is held by a Chancellor of the Exchequer. A Chancellor of the Exchequer can never say of any Department of State that it has nothing to do with him, and that its business is none of his business. In a certain sense, though we do not wish to push it too far, the Chancellor of the Exchequer is a party to every action of the Government, or, at any rate, to every action that involves the expenditure of money, for no such expendi- ture can take place without Treasury sanction, and the Chancellor of the Exchequer is the Treasury. While a Whip imight conceivably say that he had no more to do with the Marconi Contract than the man in the moon, no Chancellor of the Exchequer could say this with regard to it or any other act of State involving money. What was the nature of the transaction in regard to the American Marconi shares to which Sir Rufus Isaacs confessed in Le lifatin action ? Sir Rufus Isaacs pur- chased 10,000 Marconi shares for the sum of £20,000, nominally from his brother Mr. Harry Isaacs, but really from his brother Mr. Godfrey Isaacs, who had originally offered them to him. Two days after, these shares, which had been bought at £2 per share, rose to ..P.4 per share. Therefore if Sir Rufus haws, who bought on the 17th, had liked to sell on the 19th, he could have made a profit of £20,000. It is true that he did not sell and
that he tells us he did not want to sell, but that does not matter, except to himself. As far as the public is concerned we know that he obtained through his brother Godfrey at one remove, his brother Harry being the link in the chain, the potentiality of making £20,000. No doubt Sir Rufus Isaacs contends that he bought at the market price, and that anybody else could have obtained the potentiality of making as much by buying in the open market, but this we must beg leave to doubt. At any rate our contention is that he obtained the oppor- tunity to benefit himself to this amount. That he did not actually benefit was his own affair.
Who placed him in this beneficial position? Who gave him the opportunity to make £20,000 in two days ? It was given to him, as we have said, by Mr. Godfrey Isaacs, the managing director and controller of the English Marconi Company, a company which at that moment had a contract hanging in the balance with the British Government, of which Sir Rufus Isaacs was the chief legal adviser. No doubt the contract had already been agreed to, but it had not yet been, as we under- stand, formally passed by the Cabinet, and further, it had not been ratified by the House of Commons, which ratification was absolutely necessary. Therefore legally it was only a contract which a Department had decided to recommend first to the Cabinet and then to the Government, or, to put it in another way, a contract which was liable to be upset. Now we do not say that this transaction was necessarily corrupt. As a matter of fact, we do not believe that it was corrupt. To create corruption there must be a corrupt intention—a willing- ness to commit a breach of duty for money. What there was, however, in our opinion, was a culpable lack of delicacy and discretion and a failure to avoid doing anything which may cause suspicion and so poison the public mind. Such a standaid of propriety we have an absolute right to demand from every member of the Government. Everyone knows that it is a common practice for company promoters who wish to interest important people in their concerns to give them an opportunity to get possession of shares when they are low, in order that they may either keep them as an investment or sell them at a profit. For example, we remember one of Mr. Rhodes's agents at the Cape giving evidence before a committee of the Cape Parliament upon the question of a list of people who were given Chartered Company shares at par when the shares stood a great deal over par. The agent explained that shares at par were issued to a certain number of people—people, he explained, who "wanted to be satisfied on this Charter." The question with regard to the grant of the Charter was at that time before the Imperial Parliament. Sir Rufus Isaacs, of course, must know of this habit of giving important people an oppor- tunity to get in when the price is comparatively low, but almost certain to go higher at once. Therefore if he had acted with the delicacy and discretion which we have described, he would certainly have had nothing to do with a valuable Stock Exchange tip, to put it no higher—a tip which had come to him through a person who was practically in the position of a contractor or would-be contractor with the Government. Whether the shares were American Marconi shares or diamond mine shares or gold mine shares or South American railway shares mattered not in the least. It was the question of a pecuniary obligation.
But we shall no doubt be told that this criticism is, in Sir Rufus Isaacs' case, entirely met by the fact that Mr. Godfrey Isaacs was his brother. It may be true that the brother was also the contractor or would-be contractor with the Government, but when he offered the chance of a good deal in American Marconis to Sir Rufus he was acting not in this capacity in the very least but solely in the capacity of an affectionate brother who wanted to let his brother have a good thing. In fact, it was a case of brotherly love and affection, and therefore Sir Rufus Isaacs was not required to show the prudence which he would have been required to show had the chairman of the English Marconi Company not been his brother. We fully admit that there is a good deal in this point, and that the desire of a man that his brother should get a good thing is an explanation. Again, we grant that it is not the same thing for an Attorney-General to be laid under a pecuniary obligation by his brother as to be laid under a pecuniary obligation by a man who is a
would-be contractor with the Government and nothing else.. But even giving the fullest possible weight to these considerations we cannot hold that Sir Rufus Isaacs acted with the delicacy and discretion with which he ought to have acted, and which we have a right to exact from him. Let us take an illustration, the force of which will be seen by all business men. Suppose the proprietors of a news- paper to be making a contract with a firm of paper-makers for supplying paper, and that it happened that the brother of one of the chief members of the staff was the chairman of the firm of papermakers in question. Suppose that after the contract had been practically agreed to, though not actually ratified by the Board of Directors, it was discovered that the managing director of the paper coin- pa.ny, had helped his brother, the leading member of the staff, to a very lucrative deal in an associated American paper company, though one which could never be in a position to supply paper to the newspaper. Would not the proprietors of the newspaper feel that in entering upon this deal the member of their staff, even though they had never asked his advice on the contract, had not behaved with the delicacy and discretion which they had a right to expect from him ? We might press the illustration still harder, but we refrain from doing so, for, as we have said, the last thing we want to do is to press Sir Rufus Isaacs harshly or unfairly.
We must now take the case of Mr. Lloyd George, and here we are bound to say that the want of delicacy and discretion is far more pronounced and far less susceptible of excuse and explanation—though here again we must be careful to say, and we say it from no sense of caution but from belief, that there was no corruption in the sense of taking money in order to betray the public interest, but only an extreme and amazing want of delicacy and discretion, and a positively astonishing willingness to risk giving cause for suspicion. As we have said above, Mr. Lloyd George as Chancellor of the Exchequer is interested in every department of Government, and so under a moral obligation to have no Stock Exchange transactions of the kind which he confesses to have engaged in in American Marconis. Of course, we do not suggest for a moment that a Chancellor of the Exchequer should be debarred from investing his savings in ordinary companies, that is, in ninety per cent. of the companies in existence. No one is foolish enough to say that he should have recourse to a stocking for his savings. What we do say is that while he may make ordinary " family " investments, he must not speculate in differences or buy or sell on a bull or bear account, as apparently he did in this case. He has no business with stocks and shares except as trustees have business with them, that is, to buy them not for a rise but to keep. This we have always understood has hitherto been the rule in regard to Chancellors of the Exchequer. We cannot imagine Mr. Gladstone "bulling" or" bearing" even £1,000 worth of stock while he was Chancellor of the Exchequer.
Let us return to the central point. What was the nature of the transaction between Sir Rufus Isaacs and the Chancellor of the Exchequer ? Substantially it was this. Sir Rufus Isaacs bestowed upon the Chancellor of the Exchequer the power to make £2,000, that is, he let him have one thousand shares at £2, which two days after- wards he could, if he liked, have sold for £4 per share, that is £4,000. The true nature of the transaction was, in fact, a gift. Who was it gave this gift to the Chancellor of the Exchequer ? The brother of a contractor or would-be contractor with the Government. No doubt it will be said that this is not a fair way of putting it, because, as Sir Rufus Isaacs explained, he was on such very intimate terms with Mr. Lloyd George. We cannot, however, see that this makes any difference, or rather, the only difference it makes is that it would have been easier for Mr. Lloyd George to get out of this embarrassing offer of shares at a bargain price. What one would have expected him to say when the shares were offered to him, and what, indeed, we are perfectly amazed that he did not say, was something of this kind, "Thank you very much, my dear Rufus, for the chance you are proposing to give me, but I am afraid we unfortunate Chancellors of the Exchequer are bound by our position not to take advantage of such friendly offers. If we did, the public would be certain to mistake the nature of the transaction and to hold that we were making money in a nefarious way." And he might well have added, "It would be specially indiscreet and wrong of me of all men to engage in Stock Exchange transactions of this kind or to break the established rule or etiquette, because it was I, I am very proud to say, who in 1900 laid down a specially stringent set of principles for governing the action of Ministers in doubtful financial cases. I publicly applauded the rule of Caesar's wife then, and I must abide by it now."
We have just alluded to Mr. Lloyd George's action in 1900. Last week we gave one or two quotations from his speech, and also quoted his amendment. We may, however, enforce the point that we are making here by one or two further quotations. We quote them with a double object, first, to show what astonishing indiscretion and want of delicacy has been shown by Mr. Lloyd George personally, and next, because we do not know where to find a better statement of our own position in regard to what should be the duty of Ministers in a case such as that which occurred when Sir Rufus Isaacs offered his shares to Mr. Lloyd George. Here are the extracts from Mr. Lloyd George's speech upon which we rely. In connexion with the first extract we must explain that Mr. Lloyd George was then dealing with the very stringent but thoroughly sound series of regulations which the Colonial Office, then presided over by Mr. Chamberlain, had issued in regard to Civil Servants in Ceylon :— " It was not merely enough, in the opinion of the right hon. gentleman [Mr. Chamberlain], that an officer of the State should be incorruptible, but he must have no association with companies, either past or present association, which would make him open to suspicion. That is the rule which I call the rule of Caesar's wife. That is what he lays down, and I accept it fully," Mr. Lloyd George went on to quote with approval another of the regulations :— "All officers shall confidentially consult the Government as regards any investment which may be reasonably open to doubt."
We know that Mr. Lloyd George consulted Mr. Asquith after the event. It was unfortunate that he did not remember 1900 and do it before. We quote once more from Mr. Lloyd George's speech :— " May I suggest, then, that there is a necessary and inevitable corollary of these two rules, and it is this, that unless these rules are observed by, and enforced against, officers of State in high places, you cannot possibly enforce them against subordinate officials ? That is one of the principal points I propose to make. When once these rules are broken by any person in high position it leads to the complete demoralization of the whole Civil Service. It is setting a dangerous precedent."
In another part of his speech Mr. Lloyd George laid down a series of propositions which exactly express our view "Although there is no charge or suggestion of corruption, still things have been done which would set up a precedent which could legitimately be used later on to justify corruption itself. Corruption is a question of intention and of motive, but the House of Commons, in framing regulations of this kind, cannot inquire into motives. You cannot say that because A has a small interest, infinitesimal it is true, he is exactly the sort of man who would not do a thing corruptly. B has a large interest. His family have huge influence, but B is a high-minded man, and who shall profess that he is disinterested ? You cannot say that. You are bound to examine the facts and to judge upon them. These rules are laid down not altogether to prevent corruption or to hit corruption, but to prevent circumstances that might justify corruption in others."
At the end of his speech Mr. Lloyd George returned to this point :— "What I do say is that they have given legitimate ground for uneasiness, and, above all, they have established precedents which, if they are followed, would lead to something infinitely worse than anything I have spoken of to-day."
That is our case.
. We have one more point to make in regard to the Com- mittee.. Again and again Sir Rufus Isaacs, in the course a his indignant repudiations of the charges made against him, spoke as if the only charges made had been charges of gorruption, or of virtual corruption. These, he seemed to think, were the only charges he had to meet. He treated the Spectator's allegations of want of delicacy and discretion on the part of himself and the other Ministers concerned as non-existent. We may venture to point out to him, however, that these allegations, though always coupled With a refusal to suggest in any shape or form any charge of corruption, and, indeed, with a denial of those charges, were made at the very beginning. We should further like to point out to Sir Rufus Isaacs that he made a curious mistake in his suggestion that you could not bring a libel action unless the charge was made in a specific form. Surely that is an error in law. An innuendo of corruption, the barest suggestion or insinuation is quite enough basis for an action for libel. Very properly the law will not allow a man to shelter himself behind vague insinuations. If they hint corruption they are actionable. Sir Rufus Isaacs might then at any moment have brought a libel action against those newspapers which, as he says, suggested corruption. He might also have brought an action against the Spectator for saying that he had acted without delicacy and discretion, for he insists that in the whole transaction to which he has confessed he acted with perfect delicacy and discretion, and did nothing which anyone had the right to say might give cause for the growth of suspicion. If Sir Rufus Isaacs is in a position, as he declares he is, to prove to all reasonable men that he was not guilty of indiscretion or want of delicacy, we do not doubt that a jury would have given him a verdict.
We desire once more to put our allegation specifically. We do not accuse either Sir Rufus Isaacs or Mr. Lloyd George of being guilty of corruption in any shape or form, for the very good reason that we do not believe them guilty of corruption. We do say, however, that their conduct has not been marked by the delicacy and discretion which it is of the utmost importance should mark the conduct of Ministers. We must go further, and say that so wanting in delicacy and discretion was it that it was bound to give rise to those suspicions in the public mind which we all agree are most dangerous and most undesirable.
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