A 1945 photo of British Prime Minister Winston Churchill stepping into his car on Downing Street.
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WASHINGTON — Britain’s uncertain economic and political outlook, caused by Brexit, is reminiscent of its most celebrated statesmen — who flirted with financial and political ruin.
In “No More Champagne: Churchill and His Money, ” David Lough explains how Winston Churchill projected a seemingly extravagant image of wealth despite living on the edge of crippling financial debt.
“He was a very high-risk operator both in his personal finances and in his politics,” Lough told CNBC. “And what was most surprising was the extent of his gambling and his continuous search for excitement and taking risks. He didn’t listen to advisers on money and he didn’t listen to advisers on politics.”
Lough, a retired banker who spent four years researching Churchill’s finances, said the “British Bulldog” accumulated a debt equivalent to $4 million in today’s dollars by the 1930s.
“I think bankers basically believed in him,” Lough explained, adding that Churchill kept a good relationship with lenders while avoiding to pay his debts.
In 1925, Churchill took out an emergency bank loan, bringing his borrowings to £30,000 or $2.1 million at current exchange rates and adjusting for inflation (inflation multiples: UK£ x 50). The following summer, he made several budget cuts to Chartwell, his country estate.
“Nothing expensive is to be bought, by either of us, without talking it over,” Churchill wrote to his wife Clementine, according to Lough.
“No more champagne is to be bought. Unless special directions are given only white or red wine, or whisky and soda will be offered at luncheon, or dinner. The Wine Book to be shown to me every week. No more port is to be opened without special instructions.”
“Cigars must be reduced to four a day. None should be put on the table; but only produced out of my case.”
Winston Churchill and his wife Clementine, on their way to No. 10 Downing Street.
H. F. Davis | Hulton Archive | Getty Images
Despite cost reductions, Churchill mismanaged a multimillion-dollar inheritance and eventually continued to rack up expenses.
“At one point, he inherited today’s equivalent of $7.5 million and at that time his borrowings came to $3 million in today’s money. So, he could have repaid his borrowings and still have had another $3 or $4 million left over. But that wasn’t his style, he kept all of his debt and blew out his balance sheet,” Lough told CNBC.
“Within five or 10 years he had blown the whole of that inheritance on spending, gambling, and on mismanaging Chartwell.”
All the while, Churchill was still dodging bills from his architect Philip Tilden who was hired in 1923 to build an addition to the Chartwell estate.
The Churchill’s wanted “larger bedrooms, new bathrooms and kitchen, a library, a large study, and a room for entertaining,” according to Lough.
The modernization costs soared, resulting in a series of allegations, delayed payments and threats of legal action on both sides. In 1927, the Chartwell estate and its furnishings are estimated to have cost at least $2,783,400 (£40,000).
Churchill went on to become prime minister in 1940 and helped craft a successful Allied strategy against the Nazi’s during World War II. He was elected prime minister again in 1951, however, his financial woes shadowed the remainder of his life.
