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.