Draft:Political career of Rab Butler (1951-1956)

Richard Austen Butler, Baron Butler of Saffron Walden, (9 December 1902 – 8 March 1982), also known as R. A. Butler and familiarly known from his initials as Rab, was a prominent British Conservative Party politician which included a long stint as Chancellor of the Exchequer.

Spin off from main article, need to integrate the Jago, Dell and Ball material (see below), polish up prose, move some ROBOT detail to that article, will create the article when I am ready.

Appointment
When the Conservative Party returned to power in 1951, Butler was appointed Chancellor of the Exchequer in the absence of other candidates. Oliver Stanley, who had been Chair of the Conservative Finance Committee, had died on 10 December 1950. Oliver Lyttleton being seen as too close to the City of London. Macmillan later claimed in his memoirs “Tides of Fortune” that Eden vetoed Lyttelton's appointment because of the unfortunate impression which might have been made by his City connections.

The outgoing Labour chancellor Hugh Gaitskell wrote in his diary that Churchill gave Butler “whom he dislikes very much” the Exchequer as it was an intolerable job. Lord Woolton wrote in his diary that Churchill “fell back on Butler”. Butler was the youngest member of the Cabinet and the only one born in the twentieth century. Butler was, in Edmund Dell’s description, made “chancellor faute de mieux” and he lacked professional qualifications (unlike Gaitskell who had been an economics don), standing in his party or backing of the Prime Minister.

Whereas Stafford Cripps had been given an enhanced role with control over economic planning, Churchill wanted to “box in” the Treasury.Sir John Anderson declined Churchill's suggestion that he be “Overlord” of the Treasury, the Board of Trade and the Ministry of Supply, as he thought such an arrangement inappropriate in peacetime. Instead Churchill appointed Sir Arthur Salter, with whom Butler did not get on, as Minister of State for Economic Affairs. Churchill also set up a Treasury Advisory Committee including Lords Woolton and Swinton. Lord Cherwell, also a member of the Advisory Committee, reluctantly accepted the position of Paymaster-General and moved into 11, Downing Street, normally the Chancellor’s official residence. Cherwell was advised by Donald MacDougall.

Initial Situation
He inherited a balance of payments crisis that was partially caused by the increase in defence spending as a result of the Korean War. On his first day in office Sir Edward Bridges and Sir William Armstrong took Butler for lunch at the Athenaeum. Butler later wrote (Art of the Possible p157) of how, with a Balance of Payments deficit of £700m, they warned of “blood draining from the system and a collapse greater than had been foretold in 1931”.

Butler discussed the dire economic situation in the House of Commons on 7 November 1951. Foreign Exchange reserves were less than £1.1bn. The amount of sterling allowed for personal overseas travel was cut from £100 to £50. Bank rate was hiked from 2% to 2.5%. Butler told the House of Commons on 21 January 1952 that the recent meeting of Commonwealth finance ministers had agreed on convertibility and an end to import controls.

The travel allowance was cut further to £25. The Cabinet refused to allow Butler to cut food rations (despite support from Gwilym Lloyd George, Minister for Food), even a cut in sweet rations. Macmillan was able to secure Cabinet support to prevent a reduction in timber imports, which were vital for house building. Butler gave a public broadcast using the analogy of preventing lifeblood draining out of the system.

The Tories were determined not again to be the party of unemployment or opposed to trade unions or the welfare state. By the fourth quarter of 1951 wages were rising by 11% per annum, but the Tories wouldn’t confront the TUC. Woolton’s pledge to build 300,000 houses was also a source of inflation, but Butler couldn’t rein it in despite almost unanimous economists’ advice to do so. Late in 1953, contrary to Butler’s wishes, the rail strike was settled on the railway union’s terms (“theirs, old cock” he recorded Churchill telling him). By now it was clear that wage inflation was a general problem, not just a postwar one.

He had lunch at the Athenaeum with Bridges and Armstrong (his Principal Private Secretary). The Labour Government had been negotiating with Washington, and it was clear that little further financial help would be forthcoming. Butler took the measures which Gaitskell would have taken after the election. On 7 November 1951, during the debate on the address, he announced a cut in imports of £360m. Rearmament was rephased over a longer period, but in Dell’s view Gaitskell probably would have done the same. Bank rate was raised from 2% to 2.5% (BOE would have preferred 4%). The cut in imports was discriminatory and a breach of Anglo-American Financial Agreement. The US administration was sympathetic to need to postpone convertibility but Snyder asked Butler for a letter confirming Britain’s commitment to convertibility and non-discrimination. Butler, who was not especially pro-American, declined to give him such a hostage to fortune.

At the meeting of Treasury Second Secretaries on 27 November 1951 Edward Bridges, Sir Leslie Rowan (Head of OF - wft?), Sir Norman Brook (Cabinet Secretary) and Robert Hall, warned that reserves were still draining and had deteriorated since the start of the month. Bridges wanted cuts in food subsidies, which Woolton had pledged during the election campaign would not be cut; Hall thought all this exaggerated and liable to antagonise the trade unions, and that it was too early to see what effect Butler’s cuts in imports would have. On 28 November 1951 a small group of ministers was convened to discuss the economy.

In January 1952 the government introduced hire purchase controls on cars and other consumer durables. Butler announced a further £150m cut in imports. The Commonwealth Finance Ministers met from 8 to 21 January and agreed to cuts in their own imports, however they wanted a long-term plan to make sterling convertible. Sir Arthur Salter, discussing the conditions for convertibility, added that it would be necessary to decide whether sterling should become convertible at a fixed or a floating rate, the only hint that ROBOT was in the air.

Snyder was reluctant to give much US aid to Britain, especially in a US election year, and gave that message to Churchill and Eden on their visit to Washington in January 1952. On 8 February 1952 an Emergency Action Paper from the Overseas Finance Division of the Treasury (OF), in consultation with Robert Hall and Sir George Bolton of the BOE, attacked US policy since July 1950 as seemingly designed to damage rather than weaken the UK.

The usual meeting of Treasury Second Secretaries, chaired by Sir Edward Bridges on 27 November 1951. Sir Leslie Rowan head of OF, Sir Norman Brook Cabinet Secretary and Robert Hall were present. They agreed that the position on reserves had deteriorated further since the start of the month. They favoured spending cuts, and Bridges especially was very keen to cut food subsidies, although Lord Woolton had promised during the election that these would not be cut. Hall was less pessimistic, and thought that cuts would antagonise the unions and might lead to a repetition of the political crisis of 1931 (when a Labour Cabinet had resigned rather than impose spending cuts) wanting to wait until the results of the November import cuts were known, and if necessary to order more import cuts. On 28 November the Cabinet set up a small group to consider its options. In January 1952 hire purchase controls were introduced on cars and other consumer durables. Butler cut £150m of imports. At a meeting on 8-21 January the Commonwealth Finance Ministers also agreed to make import cuts. The Commonwealth Finance Ministers expressed concern at the frequency of crises and proposed that a plan be drawn up for the convertibility of sterling; Salter floated the idea that the pound sterling should be floated. Plans were being made for a deflationary budget on 4 March 1952.

Operation Robot
Butler initially planned to let the pound float (which would in practice devalue it) and become partially convertible ("Operation ROBOT"). The latter was struck down by Lord Cherwell and his adviser Donald MacDougall, who prepared a paper for Churchill. The counterargument was that the balance of payments would have worsened, as any reduction in demand for imports would have been swamped by the rise in prices of imported goods. Furthermore, 90% of other countries' sterling balances, kept in London, were to be frozen. They too would effectively have been devalued, which would have angered Commonwealth countries, would have broken the rules for the International Monetary Fund and would not have been allowed under the new European Payments Union. He was also opposed by his junior minister, Arthur Salter, while Lord Woolton insisted Eden should be involved since the policy would affect foreign relations. Eden opposed it in a rare intervention in domestic politics. It was finally buried at two Cabinets, on 28 and 29 February 1952.

Treasury officials grew used to lengthy discussions, followed by Butler saying that nothing had been decided yet. ROBOT was named after Leslie Rowan, George Bolton and Otto Clarke, and was opposed by the US Treasury. ROBOT was rejected by the Cabinet after two meetings on 28 and 29 (WHAT MONTH?) The Budget, which had been pencilled in for 4 March 1952, now had to be postponed.

Butler was supported by Lyttlelton, who passed him a note during the meeting which said “The water looks too cold to some of them. They prefer a genteel bankruptcy”. Cherwell thought it “a reckless leap in the dark” which might have “appalling political and economic consequences”.

Butskellism and 1952 Budget
Butler followed to a large extent the economic policies of his Labour predecessor, Hugh Gaitskell, by pursuing a mixed economy and Keynesian economics as part of the post-war political consensus. The name "Butskellism", referring to the generally similar economic policies pursued by both Conservative and Labour governments, was coined partly in response to Butler's extension of Gaitskell's NHS charges in 1952, the issue over which Aneurin Bevan and other Labour left-wingers had resigned in April 1951. In 1954, The Economist published an editorial headed "Mr Butskell's Dilemma", which referred to the "already... well-known figure" Mr Butskell as "a composite of the present Chancellor and the previous one". However, Butler had more interest in monetary policy and in convertibility, whereas Gaitskell was more inclined to exchange controls, investment and planning. Butler later wrote that the invention of Butskellism was “as damaging as it was absurd”.

The budget trumpeted the rise in Bank Rate as a sign of the government’s success. Social security was cut by £30m, criticised by Waldron Smithers as “not enough”. An excess profit tax of 30%, or 18% of total profits, was imposed, as well as a tax on distributed profits to discourage payment of excess dividends. Petrol tax was hiked from 10 1/2d to 1s 6d (a 71% increase) and food subsidies were cut to £250m per annum. This was partially offset by a rise in family allowance from 5s per week to 8s per week. Pensions, including those for war widows and industrial injury, were increased.

Butler increased the individual tax free allowance. Butler was very much the tool of his economists.

Channon commented on Butler’s mastery of the Commons on 11 March and 12 May 1952. By September 1952 Butler was chairing Cabinet meetings whilst Churchill and Eden were away visiting the USA, a sign of his increased stature.

On 5 June 1952 Butler was given a DCL from Cambridge with Leo Amery. Later in the month he received a DCL from Oxford with Oliver Franks and Dean Acheson.

Britain had transformed her $1bn deficit in the second half of 1951 into a $150m surplus in 1952.

The Budget speech, which Butler compared to Mahler symphony, was “a triumph”.

Butler maintained import controls and began a more active monetary policy. In the March 1952 budget, he raised the official bank rate to 4%, cut food subsidies by 40%, reduced taxes and increased pensions and welfare payments, the cumulative effect being to increase foreign exchange reserves but depress domestic demand.

Budget 11/3/52 cut income tax, and announced that bank rate would be raised to 4%. Cut imports and spending, and £160m off food subsidies. Hall expected the rate hike to be deflationary. The Australian government was also cutting imports from the UK. In the event, sterling strengthened, and the outflow of reserves reversed. 1952 eventually saw a balance of payments surplus of £300m, a turnaround of £700m from the previous year, despite a 10% fall in export volume. There would not be another sterling crisis until autumn 1954; non-resident sterling became partly convertible in February 1955 and fully in December 1958. Britain had been saved partly by a stock-building boom (EXPL) and an improvement in the terms of trade (decline in world commodity prices).

18 March 1952 Macmillan noted that Butler, whom he saw as a rival for power, had made “a very fine speech” while Lyttelton, with whom he was on friendly terms “made a poor one”.

On 23 May 1952 the Spectator tipped Butler as Prime Minister if Eden “fell out”. Maxwell-Fyfe had worked on the “Industrial Charter” and was also seen as a potential leader. Churchill’s inner circle – Cherwell, Woolton, Ismay and Salisbury – were all elderly peers.

1953
Macmillan Diary 12 & 17 Jan 1953 despite their mutual dislike was reaching an understanding that he would support Eden for the premiership in return for the Foreign Office.

Salisbury made a decent defence of his recent trip to Washington, at which he had pushed Churchill’s wish for a Summit Meeting with the USSR, a policy of which the Americans disapproved and with which he himself privately disagreed. Butler was attacked “for having whittled [Churchill]’s glorious initiative … down to a mundane and and routine Foreign Ministers confined to the topic of Germany.” (Evelyn Shuckburgh Diary 21 July 1953 – Colville’s Diary for that date and Macmillan’s for 31 July and 2 August record similar thoughts). His 1953 budget cut income tax and purchase tax and promised an end to the excess profits levy. When Churchill suffered a stroke in the summer of 1953, an illness that was concealed from the public, Butler acted as head of the Government since Churchill's presumed successor, Eden, was in the United States having medical treatment. Between 29 June and 18 August 1953, Butler chaired sixteen Cabinet meetings. In July, Macmillan recorded a conversation with Walter Monckton, who was willing to serve under Eden but not Butler, whom he considered "a slab of cold fish".

Britain's economic problems were worsened by Monckton's appeasement of the trade unions (the 1954 rail strike was settled on the union's terms with Churchill's backing) and by Macmillan's drive to build 300,000 houses a year.

It had been clear from Eisenhower’s victory that he would agree peace in Korea, and an armistice was signed for the Korean War on 27 July 1953. Eden and Butler and their wives visited Washington for talks in February 1953. Butler recorded that he got on well with George Humphrey but that Eisenhower “gazed at him in silence”. The Americans were obsessed with the convertibility of sterling, whilst Britain wanted “Trade not Aid” in return for the convertibility of sterling at some future date. After the Washington talks Butler made a speech in New York early in March 1953.

Butler also visited Ottawa in March 1953. On 14 April he presented his second budget. By this time the £398m current account deficit of 1951 had become a £291m surplus for 1952. Butler stressed freer trade and private enterprise. Income tax was cut by 6d and purchase tax was lowered on many items. Chips Channon recorded (15 April) that the country “thinks his budget is a masterpiece”.

Eden had his disastrous bile duct operation in April 1953.

Macmillan Diary 6 May 1953 alliance with Butler unlikely despite coming from the same sector of the party.

Churchill had a stroke on 23 June. Butler, whose mother was on her deathbed, was summoned to Chartwell by an urgent phonecall and given a letter from Jock Colville telling him how serious things were. There was a meeting at Chartwell at which Salisbury agreed that Butler would run the government for the time being, with Salisbury running the Foreign Office.

Churchill was made to cancel a planned meeting with Eisenhower in Bermuda. Butler and Salisbury on their own tightened the press release by Churchill’s doctors Lord Moran and Sir Russell Brain, omitting all reference to “cerebral disturbance”. Churchill told his family that he intended to carry on until the autumn when Eden could take over. Between 29 June and 18 August Butler presided over 16 Cabinet meetings. Churchill returned for two meetings but soon departed for Balmoral and Cap d’Ail. His conference speech was scheduled for 10 October.

Butler’s father died on 7 November 1952. On his mother’s deathbed (26 June 1953) Butler recorded the “hardness of expression and apparent forgetfulness of love”. Butler’s mother died on 23 July.

Butler spoke to the House of Commons on Foreign Affairs for 50 minutes on 21 July 1953. His speech was thought to be “uninspiring” and Chips Channon recorded (26 July) that it had been “a flop”. Attlee kept asking about the planned summit with the USSR. Churchill and Eden were back in harness by the end of the year.

Industrial Production reached an all-time high in 1953, with a Balance of Payments Surplus of £320m, and a rise in gold and dollar reserves of £240m. Unemployment fell from 452,000 to 373,000.

In the summer of 1953 Colville warned Salisbury to be ready for a caretaker government, but Boyle thought the 1922 Committee would not have put up with this.

On 26 June 1953 Churchill told his doctor Lord Moran “Rab is very efficient up to a point, but he is narrow and doesn’t see beyond his nose” Whereas Churchill and Eden agreed “nine cases out of ten” on decisions.

Medical bulletins were amended to hide the extent of Churchill’s illness. Anthony Howard (RAB p198) believes that the amendments were Butler’s personally, but it is unclear whether this was so or whether he was acquiescing in Colville’s amendments. Cherwell believed that Butler could have seized power. Butler later stated in a radio interview (29 June 1978) that he had been “forbidden” to mention it (?what) because of the young Queen’s involvement. In the Art of the Possible pp 170-1 he discusses how James Stewart, Secretary of State for Scotland, wrote to him warning him of how Stafford Cripps had been broken by taking on too many jobs, and of how Jane Portal had told him that Churchill ought to retire and work on the “History of the English Speaking Peoples”; Jago suggests that this may have been Butler’s dry way of hinting at his true feelings.

Butler’s ineffective speech on foreign policy in July 1953 may well have been a factor in Churchill deciding to stay on as Prime Minister.

1954
The Economist wrote of “Mr Butskell” on 13 February 1954.

Butler attended a meeting of Commonwealth Finance Ministers in Australia. He was appointed a CH in the 1954 New Year Honours.

Gaitskell called the 1954 budget “dull” five times. Woolton called the 1954 budget “the dullest thing that anyone ever created”. Butler called it a “carry on” budget. Churchill had hinted that he would retire when the Queen returned from her Commonwealth tour in May 1954. In March 1954 he suggested that he might retire in June. In April 1954 he decided not to lead the Conservatives into the next General Election, which was not due until October 1956.

In May 1954 Churchill spoke of retiring in July, and in June he spoke of retiring in September. In May 1954 Churchill asked Butler to decide MPs’ salaries; Butler asked the Commons to decide. The Commons voted by 276-205 for an increase from £1,000 to £1,500 per annum. However, the Cabinet rejected the Commons vote, leaving Butler isolated. Churchill and Eden, then on board the “Queen Mary”, cabled Molotov to propose a meeting. The Cabinet attacked Butler for forwarding it to Moscow without Cabinet approval.

“The Economist” argued on 3 July 1954: “The miracle has happened – full employment without inflation, and this despite the heavy burden of defence, the rising burden of the social services, and some reduction in taxation”.

In November 1952 Sydney began to suffer pains in her jaw. By November 1953 Sydney had been admitted to hospital with a persistent “sore” on her jaw. Sydney died on 9 December 1954. She predicted that Butler would marry Mollie, although they were not close at the time.

Butler was appointed to the Order of the Companions of Honour in 1954. He supported Churchill's proposal for Eden to take "command of the Home Front" in summer 1954, not least as he hoped to succeed Eden as Foreign Secretary. Butler was one of the ministers who demanded to Churchill's face (22 December 1954) that he set a date for his retirement.

1955 Budget
Butler's political judgement was affected by the death of his first wife, Sydney, on 9 December 1954. In February 1955, he increased the bank rate and restored hire purchase restrictions, and the 1955 budget reduced income tax by 6d, which was allegedly based on faulty Treasury statistics. In April, Anthony Eden succeeded Churchill as Prime Minister. After the Conservatives won the May 1955 general election, Butler declined a request he move from the Exchequer and later admitted that was a mistake.

Butler recorded that he had “eight gargantuan dinners with (Churchill) alone” “in his last months he often made funny little advances to me”. Eden succeeded Churchill on 5 April 1955. On 24 February 1955 Butler told the House of Commons that although the economy was “fundamentally stronger than it (had) been at any time since the war” he needed to trim domestic demand. He put in place restrictions on hire-purchase of cars, wireless sets, TV sets and other items. Gaitskell and Morrison asked whether posters claiming that “Conservative Freedom Works” should now be taken down. Bank rate was raised to 4.5%. In 1954 Butler had predicted a doubling of living standards in 25 years.

Butler gave a pre-election budget on 19 April 1955. Aneurin Bevan had called him an “unprepossessing personality”. Butler commented that in 1952 he’d aimed to protect the value of the pound sterling, the 1953 budget had been about enterprise and expansion, and in the 1954 budget people had wanted him to expand more. He used lots of “I” and “my” in his speech, and cut 6d off income tax.

In AOP p.180 he wrote “If I had been less scrupulous about the economy I would have retired in May 1955”. On Eden’s first day as Prime Minister, 6 April 1955, Woolton urged him to replace Butler.

1955 Pots and Pans Budget
10 August 1955 Macmillan wrote to Butler urging defence cuts. 23 August Macmillan wrote to Butler and Eden calling for housing cuts and even expressing openness to the floating pound which he had opposed in 1952. Stuart Ball believes that Macmillan, already in his sixties, probably did not realistically hope to become Prime Minister at this stage but thought that he could dominate Eden and Butler and become the dominant figure in the government as Neville Chamberlain – another late developer of similar age - had been in the 1930s.

In an unfortunate speech on 18 October, he commented that the country must not sink into "easy evenings with port wine and over-ripe pheasant". The Daily Mirror commented that he had "dropped his silver spoon upon the polished floor". By now, it was apparent that the economy was "overheating" since inflation and the balance of payments deficit were rising sharply. The Cabinet refused to agree to cut bread subsidies, and there was a run on the pound. His final budget in October 1955 reversed several of the measures from the spring budget, which led to charges of electoral opportunism. Hugh Gaitskell accused him of having deliberately misled the electorate, which amused Macmillan, who wrote in his diary of how Butler was always talking of "honour" in Cabinet. The introduction of purchase tax on kitchen utensils caused it to be labelled the "Pots and Pans" budget. Macmillan was already negotiating with Eden for Butler's job.

Butler went grouse shooting in August. In September 1955 Butler attended an IMF meeting at Istanbul, and returned to find a reshuffle imminent.

On 18 October 1955, speaking to the Royal Society of St George “port wine and overripe pheasant”. Butler’s last budget was on 26 October 1955. By the then the export gap had narrowed and the loss of reserves halted but there were concerns at the increase in wages and dividends.

Butler opposed “dividend-stripping” in his second 1955 Budget. Attlee, Leader of the Opposition, attacked him as “a most temperamental chancellor of the exchequer” in whom it was “very difficult to find any clear policy whatever”. Attlee attacked Butler’s public spending cuts, his profits for “moneylenders” but encouragement of “private interests” like “dog-racing tracks, cinemas or anything like that”. Attlee also complained that it “hit the small man”.

Gaitskell launched a 54-minute attack on 27 October. He argued that nothing extraordinary or unpredictable had happened since May 1955, but that Butler had “gravely misled” the electorate and that he was “always an expert in evasion”. His April budget had been “a masterpiece of deception” “having bought his votes with a bribe, the Chancellor is forced, as he knew he would be, to dishonour the cheque” “behaved in a manner unworthy of his high office. He began in folly, he continued in deceit, and he has ended in reaction. He is a sadly discredited minister – let him lay down the burden of his office, which he is so plainly unable to carry with credit any longer.”

Dr Horace King, MP for Southampton (CHECK) drew attention to the lukewarm reception which Butler received from the Tory benches, for insisting on sacrifice for ordinary people and profits for bankers and businesses. On 31 October 1955 a motion of censure by Herbert Morrison accused Butler of incompetence and deceit, as in the promise not to touch food subsidies in the 1951 General Election, only to cut them in 1952. He also attacked Churchill as well. He also referred to his record at the Foreign Office in 1938 for “evasion, of promise-breaking, of misleading the House and of misleading the country”.

Butler dismissed Gaitskell and Morrison as being engaged in “the trial gallops for the leadership of the Labour Party”. However, Christopher Soames and Bob Boothby both criticised Butler for failing to live up to Conservative fiscal principles in speeches on 31 October.

Move from the Exchequer
Dec 1955 reshuffle Stuart Ball writes “Eden had replaced Butler who was often disloyal in word but rarely in deed with a man who was disloyal to his core” and who intended to dominate the government.

In December 1955, Butler was moved to the post of Lord Privy Seal and Leader of the House of Commons. Although he continued to act as a deputy for Eden on a number of occasions, he was not officially recognised as such, and his successor as Chancellor, Harold Macmillan, insisted on an assurance from Eden that Butler was not senior to him. Harry Crookshank warned that he was committing "political suicide" by giving up a big department. He recorded that after December 1955 that "it was never again said of me, or for that matter of the British economy either, that we had la puissance d'une idée en marche".

Butler suffered from what his biographer calls an "inability to take Eden wholly seriously". A number of his sardonic witticisms about Eden, who was already subject to press criticism, surfaced, and The Sunday People reported on 8 January 1956 that Eden was to resign and hand over the premiership to Butler. When it was officially denied, on 9 January, Butler told The Guardian that he was determined to "support the Prime Minister in all his difficulties" and that Eden was "the best Prime Minister we have".

Butler threatened resignation in March 1956 over Macmillan's plans to reverse the 6d cut in income tax. Macmillan himself then threatened resignation unless he was allowed to make spending cuts instead. Butler also served as Rector of the University of Glasgow from 1956 to 1959.

Suez
Butler was ill when Gamal Abdel Nasser nationalised the Suez Canal and was not formally a member of the Cabinet Egypt Committee. Butler later claimed that he had tried to keep Eden "in a political straitjacket" and advocated an open invasion of Egypt. Gilmour wrote that this would have attracted even more international opprobrium than Eden's pretence of enforcing international law.

Butler seemed to be doubtful of Eden's Suez policy but never said so openly. Macmillan recorded on 24 August that Butler was "uncertain" and "wanted more time" before resorting to force. On 13 September, he recorded that Butler preferred to refer the matter to the UN, as Labour and the churches wanted. After the UN voted for an emergency force and an Israeli-Egyptian ceasefire seemed imminent, Butler tried to have the Anglo-French invasion halted. He ended up pleasing neither those who were opposed to the invasion nor those who supported it.

On the evening of 6 November 1956, after the British ceasefire had been announced, Butler was observed to be "smiling broadly" on the front bench and astonished some Conservatives by saying that he "would not hesitate to convey" to the absent Prime Minister the concerns expressed by Gaitskell. Eden's press secretary, William Clark, an opponent of the policy, complained, "God how power corrupts. The way RAB has turned and trimmed". He later resigned, along with Edward Boyle (Economic Secretary to the Treasury), as soon as the fighting was over. Butler was seen as disloyal because he aired his doubts freely in private while he was supporting the government in public, and he later admitted that he should have resigned. On 14 November, Butler blurted out all that had happened to 20 Conservative MPs of the Progress Trust in a Commons Dining Room (his speech was described by Gilmour as "almost suicidally imprudent").

Butler had to announce British withdrawal from the Canal Zone (22 November), which made him once again appear an "appeaser" to Conservative supporters up and down the country. That evening, Butler addressed the 1922 Committee of Conservative backbenchers, where his pedestrian defence of government policy was upstaged by a speech by Macmillan. Powell “one of the most horrible things that I remember in politics … the way in which Harold Macmillan … succeeded in false footing Rab. The sheer devilry of it verged upon the disgusting.” (Bracken to Beaverbrook 7 December) Macmillan wanted to push Eden out and he had the support of “the so-called Canal diehards”.

Butler was seen to be an indecisive leader who was not up to Macmillan's stature. However, the Press Association were briefed that Rab was "in effective charge" during Eden's absence in Jamaica from 23 November. Eden was not in telephone contact and did not return to Britain until 14 December.

Shadow Chancellor Harold Wilson said that Butler had "the look of a born loser" (20 December). Butler spent most of his Christmas break shooting. He later recorded that during his period as acting Head of Government at Number 10, he had noticed constant comings and goings of ministers to Macmillan's study in Number 11, next door, and that those who attended all later received promotion when Macmillan became Prime Minister. Butler, unlike Macmillan, preferred the assessments of the Chief Whip (Edward Heath) and Chairman of the Party (Oliver Poole), who believed that Eden could survive as Prime Minister until the summer recess if his health held up.

However, there is circumstantial evidence that Butler may have colluded with Eden's doctor, Sir Horace Evans, to exaggerate the state of Eden's health to encourage him to resign. Evans wrote Butler an ambiguous letter about "your help and guidance over my difficult problems with AE" and added, "Here we have made, I have no doubt, the right decision". Anthony Howard observes that any interpretation of the letter is "purely speculative" and that there is "no concrete evidence" of what actually occurred.

Succession to Eden
Eden resigned as Prime Minister on Wednesday 9 January 1957. At the time, the Conservative Party had no formal mechanism for determining a new leader, but Queen Elizabeth II received overwhelming advice to appoint Macmillan as Prime Minister instead of Butler, rather than wait for a party meeting to decide. Churchill had reservations about both candidates but later admitted that he had advised her to appoint "the older man", Macmillan. In the presence of Lord Chancellor Kilmuir, Lord Salisbury interviewed the Cabinet one by one and with his famous speech impediment asked each one whether he was for "Wab or Hawold". Kilmuir recalled that three ministers were for Butler: Walter Monckton, Patrick Buchan-Hepburn and James Stuart, all of whom left the government thereafter. Salisbury himself later recorded that all of the Cabinet were for Macmillan except for Patrick Buchan-Hepburn, who was for Butler, and Selwyn Lloyd, who abstained. Salisbury may not have been an entirely impartial returning officer, as Butler had replaced Salisbury (Lord Cranborne as he had been at the time) as Under-Secretary for Foreign Affairs in 1938, when the latter had resigned over policy towards Italy. Julian Amery, who was not a member of the Cabinet at the time, alleged that Salisbury interviewed ministers in the order of their loyalty to Macmillan and kept the tally in plain view on the table so that waverers would be more inclined to plump for the winning candidate.

Heath (Chief Whip) and John Morrison (Chairman of the 1922 Committee) advised that the Suez group of right-wing Conservative backbenchers would be reluctant to follow Rab. The whips rang Boothby (pro-Macmillan) in Strasbourg to obtain his views, but there is no evidence that they were very assiduous in canvassing known pro-Butler MPs.

Butler later claimed to have been "not surprised" not to be chosen in 1957. In fact, he appears to have fully expected to be appointed and aroused his sister's misgivings by asking, "What shall I say in my broadcast to the nation tomorrow?" Heath, who brought him the news that he had not been chosen, later wrote that he appeared "utterly dumbfounded" and that for years afterwards, he was known to ask colleagues why he had been passed over. Heath suggests that caused a loss of confidence, which prevented him from gaining the premiership in 1963. The media were taken by surprise by the choice, but Butler confessed in his memoirs that there was a sizeable anti-Butler faction on the backbenches, but there was no such anti-Macmillan faction. Butler spoke bitterly the next day about "our beloved Monarch".

Butler attributed his defeat to Macmillan's "ambience" and "connections". He said "savage" things to Derek Marks of the Daily Express, who protected Butler's reputation by not printing them and years later told Alistair Horne, Macmillan's biographer that he "could not understand" why he had been passed over after "picking up the pieces" after Suez. Nigel Nicolson, who had conceded that "in the circumstances", Macmillan was the right choice, wrote of the "melancholy that right had not triumphed" with which Butler proposed Macmillan as leader at the party meeting on 22 January.

In Gilmour's view, Butler did not organise a leadership campaign in 1957 because he had expected Eden to hang on until Easter or summer. Campbell wrote, "The succession was sewn up before Rab even realised there was a contest". Richard Crossman wrote in his diary (11 January), "This whole operation has been conducted from the top by a very few people with great speed and skill, so that Butler was outflanked and compelled to surrender almost as quickly as the Egyptians at Sinai". Brendan Bracken wrote that besides his perceived stance of pursuing Labour policies, the "audience (was) tired of" Butler who had been the heir apparent for too long, an analysis that is echoed by Campbell, who likens Macmillan's sudden emergence after a quick succession of senior jobs to that of John Major in 1989–1990 and points out that like Major, Macmillan pretended to be "right wing" to win the leadership despite having views similar to his opponent's.

Oliver Poole believed that the party made Butler a scapegoat for his indiscreet talk. Macmillan told Harry Crookshank (Crookshank diary 5 March 1957) that Butler had “acted silly”. Cabinet Secretary Norman Brook refused to believe that Butler would have been so humiliated in a free vote of the Cabinet or of the Conservative Party, or that there would have been serious resignations had Butler become Prime Minister. Salisbury recorded in his private account of the incident that Heath had told him that the right wing MPs would not follow Butler but the left wing ones would follow Macmillan. Conspiracy theorists believed that Lord Salisbury, Macmillan’s brother-in-law, had used his influence with the Queen to ensure Macmillan’s appointment.

Nicolson wrote that “In all his public speeches he supported the Prime Minister up to the hilt” but his private scepticism “percolated down to the backbench members”. Macmillan was “quite rightly” Prime Minister despite being “the arch criminal”.

Nicolson thought Butler’s past as an appeaser influenced Churchill’s support of Macmillan.

Others
Churchill resisted Eden’s demand that he be given the title “Deputy Prime Minister”, claiming that it would infringe on the King’s prerogative of choosing the next Prime Minister – an odd claim as Churchill had given Attlee the title – the first time it had ever been bestowed - during the war and Herbert Morrison had held the job under Attlee. George VI died suddenly on 6 February 1952.

Macmillan had wanted Defence but agreed to take Housing after a long walk around the lake at Chartwell. Sir Leslie Rowan commented (5 January 1952) that Churchill could no longer remember figures and walked like an old man. Moran wrote (26 January) that “Winston’s mind is only alert when England’s security is at stake … the old appetite for work has gone, everything has become an effort”.

Churchill had a stroke in Monte Carlo in August 1949. On 21 February 1952 Churchill had an episode in which he was unable to put his thoughts into speech. The next day Moran called on Jock Colville, who took him to Lord Salisbury’s office to discuss reducing Churchill’s burden. Salisbury proposed that the Queen urge Churchill to go to the Lords. Moran and Colville talked to Tommy Lascelles about the matter. Moran pressed Churchill, who told him to get stuffed. On 13 March 1952 Moran admitted failure.

Jago
Churchill at dinner with Butler (11 March 1954) likened himself to “an aeroplane at the end of its flight, in the dusk, with the petrol running out, in search of a soft landing”. Macmillan’s diary recorded that Eden was considering resigning (1 July 1954). Macmillan appears to have been the only minister to speak his mind to Churchill about the need for the latter to retire. Butler, still upset at Sydney’s death, did not.

Woolton’s diary for 23 and 30 March 1955 records Rab saying about the moves to encourage Churchill to retire “We’ve got the fish on the hook, but he hasn’t been gaffed yet”. On 14 March Eden attacked Churchill at Cabinet, and was backed by the meeting. Butler kept the peace by pointing out that what really mattered was the question of who would lead the Conservatives into the next general election. Churchill’s resignation was discussed. Macmillan waved to the crowd on the way to the meeting in what one observer thought an “an early pitch for the succession”.

Dalton commented at the lack of Tory support for Butler in the debate on 27 October and 31 October, as did Wilson on 13 Dec 1955.

The Telegraph called for “the smack of firm government” (3 January 1956) while the Observer demanded that “Eden Must Go” on 9 January 1956. This prompted an official denial that he was to resign.

“Socialist Circle” attacked Eden on 14 January 1956 as “stand-offish” and for having failed to defeat inflation. Clark suspected Macmillan was leaking to the press against Eden and Butler. On 3 July 1956 the “Daily Mail” suggested that Butler might go to the House of Lords.

Macmillan met Butler in December 1951. He wanted to build 230,000 houses in 1952, 265,000 in 1953 and 300,000 in 1954, and threatened to resign if he didn’t get his own way.

At Cabinet on 28 December Butler proposed another committee before building up to 300,000 houses in 1954. Macmillan threatened resignation by handing in his papers to Norman Brook at the end of the meeting, likening it to throwing “the double six”.

Macmillan launched the “Battle of the Capital Investment Programme”, demanding an amendment to the Town and Country Planning Act and abolition of the Development Charge to make private property development more profitable. He lobbied for this, over Butler’s resistance, from January to October 1952, as well as fighting a running battle for a rise in the exemption limit for stamp duty on the purchase of new homes.

Reginald Bevins recorded that Macmillan, invited by Churchill to resolve matters through bilateral talks with Butler, wore him down through a series of late night meetings. Rumours even reached the press, the “Observer” writing (3 August 1952) of a “weakness in Mr Butler’s own makeup”.

Macmillan observed (30 July 1952) that Butler had given a “dull, lifeless and academic speech, full of lofty platitudes but saying and doing nothing to justify the tremendous “build up” which the press (stimulated by himself and his propaganda) have given to the occasion. In other words … a great flop … just Cripps and water as before”. Macmillan refused Butler’s suggestion of a compromise over the reduction in the development charge and recorded (14 October) that Butler had given way altogether.

In 1953 310,000 houses were built. Butler later told Anthony Seldon “he used to press me like hell”. Macmillan also muscled in on Foreign Affairs, sending Eden papers on European Federation on 27 January 1952, and completing a paper for the Commonwealth Economic Conference (4 August1952).

Macmillan scoffed (September 1952) at Butler’s subservience to his officials and was angry that Butler was asked to preside over Cabinet meetings whilst Churchill and Eden were away. He believed that Crookshank, Lord Privy Seal, should have done so.

Macmillan wrote (31 July 1953) of Butler’s “comparative youth, his oriental subtlety, his power of quiet but offensive intrigue”.

Macmillan wrote to Eden from Paris on 24 October 1955, three days before the budget, demanding that he be “not inferior” to Butler, that he be recognised as “Head of the Home Front” and that Butler not have the title Deputy Prime Minister.

Eden replied that an unofficial “Batting order” had already been circulated.

In his diary for 27 and 30 October 1955 Macmillan scoffed at Butler’s frequent talk of “honour” in Cabinet. Gaitskell noted in his diary (16-21 January 1956) the friction between Eden, Macmillan and Butler. Thorpe argues that Macmillan sensed Butler’s weakness because of ROBOT.

Macmillan brought out a document “First Thoughts from a Treasury Window” on 1 August, likening the economy to an overflowing bath. He called for more mechanisation (e.g. more bus ticket machines), a halt to the fall in the money supply. He called early on for “a short paper, very pessimistic, to make their flesh creep and to use on the Cabinet at an early meeting. He often frequented the Smoking Room of the House of Commons, making himself available to backbenchers for chats.

Maudling later wrote in his memoirs (pp44-5) that Butler “lifted his skirts to avoid the dirt”. In July 1956 Butler was ill with an inner ear virus. By the time he attended his first Cabinet meeting on 2 August people’s positions had already entrenched.

In the 1954 Agreement, which had so annoyed the Tory Right, Egypt had agreed to uphold the 1888 Constantinople Convention, allowing free passage for all powers. The Baghdad pact annoyed Nasser, and in September 1955 he signed an arms deal with the Czechs. In December 1955 Dulles announced $70m aid from the US and UK for the Aswan High Dam. The offer was withdrawn on 19 July 1956, at which Nasser took the British Government by surprise by nationalising the Canal.

From the start Eden argued so strongly for the use of force that the Duty Secretary had to warn him that not all those present at the meeting were bound by the Privy Council Oath of Secrecy.

Eden established a six-man Egypt Committee (effectively a War Cabinet) consisting of himself, Salisbury, Macmillan, Lloyd and Monckton. Butler chaired meetings in Eden’s absence but was not formally a member. Eden saw him as a “weak sister”. It met 46 times between 21 July and 21 November. The Egypt Committee decided to use force on 30 July, with Lloyd hoping to rustle up a conference of maritime powers to censure Nasser as a casus belli. The Egypt Committee met three times on 31 July, with Eden impressing all by his grasp of detail, especially at the first meeting. On 1 August the chiefs of staff presented a plan for an attack in six weeks’ time using everything short of nuclear weapons.

Between 3 August and 5 September Macmillan sent ten papers and memoranda to the Egypt Committee, ranging over a broad range of strategy.

Gaitskell in the House of Commons (4 August) likened Nasser to Mussolini and Hitler. Eden cabled Eisenhower on 27 July demanding a firm stand and maximum pressure. Eisenhower sent Robert Murphy to London. Eisenhower wanted the maximum number of maritime nations consulted (27 July 1956).

Gaitskell and Liberal Leader Clement Davies were still, at this stage, giving Eden qualified support in the House of Commons. Murphy arrived in the UK on 29 July, and that evening he and Field Marshal Alexander had dinner with Macmillan at Number 11 (to reminisce about North Africa). He realised that Eden was bent on war and “had not adjusted his thought to the altered status of Great Britain, and he never did”.

Macmillan confessed in his diary (30 July) that his object had been to “frighten Murphy out of his life”. Murphy’s view was that the broadest possible basis of support in world opinion was needed. Murphy cabled Washington (31 July). Eden and Macmillan both told him “the British government has decided to drive Nasser out of Egypt” and had the support of the people and Parliament. Eisenhower thought all this was “very unwise” and sent Dulles to London. Dulles thought that the British wanted to go to war and that US support would eventually follow as in the two world wars. Eisenhower cabled Eden on 31 July to urge restraint and a conference.

Dulles arrived in London on 1 August. Eden agreed to “give a conference a try” provided it was quick. Macmillan hosted a meeting with Dulles, Murphy and Aldrich at 11 Downing Street, supposedly about economics but actually Macmillan spoke a lot about the need for Britain to fight to remain a first class power instead of the equivalent of Holland. Dulles’ mission was much criticised in the UK press for seeking compromise, eg “The Times” on 31 July and 1 August.

Butler, when he returned to business, was inclined to agree with Dulles and favoured international supervision of the canal. Eden persuaded himself and wrote in “Full Circle” that Eisenhower had not ruled out the use of force, despite the clarity of Eisenhower’s letter of 31 July 1956. Cabinet decided on 2 August on force if negotiation failed within a measurable period of time.

On 7 August Macmillan questioned the chiefs of staff plan and on the same day chaired a meeting at Number 11 on arrangements for control of the canal. Salisbury was on the committee. He also circulated a paper, drafted by Sir Leslie Rowan, on the use of Egyptian sterling balances. Butler no longer had a department and was often tasked with ascertaining House of Commons opinion. Butler disapproved of comparing Nasser to Hitler, as Eden did in his 8 August broadcast to the nation, or of using the canal issue to seek regime change. After the 8 August broadcast Nasser refused to attend the 22-nation Suez Conference in London.

On 12 August Nasser announced that the conference had no jurisdiction over Egypt. On 13 August announced that nationalisation was not wrong per se, only when done arbitrarily, and demanded that force only be used under UN auspices. The British government had assumed all along that the talks would fail; Norman Brook minuted on 14 August that he foresaw a taskforce sailing on 7 September. Eisenhower and Dulles saw the conference as a delaying tactic. On 16 August Dulles reported to Eisenhower that the atmosphere was calmer. The conference agreed on cooperation with Egypt on the management of the canal, but Egypt refused to cooperate.

The Australian Prime Minister Sir Robert Menzies went to Cairo on 23 August to talk to Nasser, but was undermined by President Eisenhower declaring that the USA was committed to “a peaceful solution”.

William Clark recorded in March 1956 that Eden, Butler and Macmillan “watched each other like hostile lynxes”. Clark also recorded that Butler was dismayed at the thought of bombing Cairo, believing that it would antagonise world opinion. On 22 August 1956 Macmillan took a pblic walk from 10 Downing Street to the Foreign Office and back to No 10, acknowledging the crowd theatrically. Clark thought at this point that he might succeed Eden.

Eden insisted that the UK was upholding the 1888 Convention. Lloyd wrote on 20 August that a complete defeat of Egypt would see Nasser ousted. Throughout August 1956 Gaitskell demanded that the matter be referred to the UN. The USA did not want to see Labour in power. On 30 November, chairing a national Security Council meeting, Vice-President Nixon said that he was “scared to death at the prospect of Bevan in a position of power in a future British Government”.

Butler did not resign or speak out openly. On 27 August Macmillan wrote a 12-page memo on the economic consequences of Suez and the need to persuade the USA to support sterling. On 28 August Monckton, the only Cabinet minister to resign over Suez, questioned the use of force in Cabinet. Salisbury lectured him about the lessons of the 1930s, namely that prompt action was needed against aggressors lest greater efforts be needed to defeat them later on. Butler stressed the need for the greatest possible support in Parliament and the country. Eden summed up the Cabinet on 28 August as united in favour of force “in the last resort”.

On 2 September Eisenhower wrote to Eden warning him to concentrate on settlement of the Canal Issue with justice to all concerned, not demonising Nasser.

Lloyd reported back from Washington (11 September 1956) that Eisenhower was opposed to the use of force and was uncertain as to the benefit of referring the matter to the UN (Britain wanted to refer the matter to the Security Council before the Soviets did). Dulles invented SCUA (CASU) in the UK and arranged an 18-power conference of canal-users in London, Nasser denounced it as a figleaf to cover the British and French intention to use force.

By the last week of September Macmillan was having talks with Eisenhower, who found him surprisingly moderate. As was to be his habit for the next five years, Macmillan stressed broader strategy, unlike Eden and Lloyd who tended to focus on detail.

Macmillan was not invited to the first emergency meeting on Suez on 26 July, as Eden was angry with him for exceeding his ministerial brief.

Macmillan flew to the USA on 20 September. He was beginning to disengage from Eden. He visited his mother’s birthplace at Spencer, Indianapolis, then visited Washington for talks with President Eisenhower and Roger Makins, who thought him overconfident of US support (CHECK). Macmillan reported to Eden on his return (29 September) that Eisenhower was “really determined to bring Nasser down”. It is unclear whether this was deliberate conspiracy on Macmillan’s part. At the Conservative Conference in Llandudno, Butler praised Eden for having greater “courage, integrity and flair” than the other four Prime Ministers under whom he had served. At the meeting at 10 Downing Street on 18 October Butler acquiesced in Eden’s plan to retake the Canal. That day Mollet and Pineau met Lloyd in Paris. Lloyd told Butler (and Lloyd’s account is similar) that there might be a preemptive strike by Israel against Jordan, Egypt and Syria.

Moshe Dayan (Israeli Army Chief of Staff) had been approached by Admiral Barjot at the talks in Paris and had learned that Operation “Musketeer” was already being planned. On 22 October Ben Gurion, Dayan, Shimon Peres, Modechai Bar-On went to Paris for talks. Selwyn Lloyd joined them at 7pm with the British plan.

At Cabinet on 23 October Eden declared “grave decisions would have to be taken by the Cabinet in the course of the next few days.” Further consultation took place with the French that evening before the Cabinet could decide. The Sevres Deal was signed on 24 October. Israel was to invade Egypt at 0500 on 29 October. Britain and France were to give a 12-hour ultimatum to Israel and Egypt to withdraw their troops 10km away from the canal. The bombing of Egypt was to start at dawn on 31 October. Ben Gurion was offended at Israel not being treated as an equal and being expected to “mount the rostrum of shame”. Dayan was shocked at the callousness with which the British talked at bombing Egyptian cities. Butler scornfully referred to Nasser as “un grand marchand de tapis” (the phrase was in fact Pineau’s).

William Clark thought that the UK was “still caught up in an imperial dream” and that “Eden’s Cabinet all, not excluding Butler, with his family background of India, possessed an exaggerated view of what Britain in the mid-1950s could do on its own” (From Three Worlds p.146). Jago thinks that Lloyd was out of his depth, hence his gripping of Butler’s arm. Jago believes that Butler thought it necessary to be hawkish and did not speak out against the invasion (which, had it succeeded, would have been portrayed as an act of genius), but did not foresee that Macmillan would rat, and was unwise to let Macmillan dominate dealings with the USA. The Anglo-French plan was presented to the Cabinet on 25 October. Monckton had resigned a week earlier.

At the White House Conference on 29 October Eisenhower was suspicious that France “may be playing us false” over the supply of Mystere jets to Egypt. On 30 October he cabled Eden that “certain phases of this whole affair are disturbing me very much”. Pierson Dixon, British Ambassador to the UN, refused to consider action against Israel and referred to the Tripartite Statement of May 1955 as “ancient history”. Eisenhower was sure that the British were lying and, as he told Eden on 30 October, was concerned that the USSR might support Egypt. Eisenhower was furious that he could not intervene to save Hungary on 4 November.

On 30 October Eden sent a cable to Eisenhower “replete with falsehoods” in Jago’s description. He claimed that he was acting to safeguard free passage through the canal and that the UK had urged restraint on Israel. He repeated the latter claim in the House of Commons, talking of how the UK had urged restraint on Israel in responding to the guerrilla raids of the Egypt-Jordan-Syria Joint Military Command.

On 31 October 1956 Butler deputed for the Prime Minister at a luncheon of the British Newspaper Editors Society. He attacked the USA for her failure to cooperate with Britain’s long-term economic plans since 1951 and over Suez. In the car back to Downing Street Butler told Clark that Eden was unwise to ignore the UN; Clark retorted that it was dangerous to be anti-American. At the Egypt Committee meeting on the afternoon of 4 November it looked as though Israel and Egypt might be on the verge of a ceasefire. Members thought it would be unwise to proceed with the Anglo-French landings as “it would be difficult to counter the allegation that our real objective all along had been to attack Egypt”.

The Israelis had reached their objective and were on the point of ceasefire. Butler believed that there was no point in going on with the invasion. Butler later claimed that Eden “said he must go upstairs [i.e. to the Prime Minister’s private flat, which is above the government offices at 10, Downing Street] to consider his position” Rhodes James disputes the accuracy of this. 12 members of the Cabinet were for continuing. Butler, Kilmuir and Heathcote-Amory wanted a postponement and Salisbury, Buchan-Hepburn and Monckton (who threatened to resign) wanted a halt. Butler said he would go along with the wishes of the majority. At the end of the meeting, news arrived that Israel was after all not prepared to accept a ceasefire on UN terms, so the invasion went ahead. Eden told Butler, Salisbury and Macmillan that he might have to resign. Butler replied that there was nobody to take over; the other two minister concurred. Eden was later shocked at Macmillan and Salisbury turning against the invasion, but told Hugh Massingham of “The Observer” “I do not care who it is going to be, but I shall make absolutely certain it isn’t Rab”.

The landings in Port Said took place on 5 November, the day before the US election. Eden wrote to Ike to regret “that the events of the last few days have placed such a strain on the relations between our two countries.” Ike replied “Harold’s financial problem is going to be a serious one, and this itself I think would dictate a policy of the least possible provocation”.

The IMF stonewalled Macmillan about the selling of sterling, the reply coming not from New York but from Washington, and demanding a ceasefire. Butler spoke to 20 members of the Progress Trust “Whenever I moved in the weeks that followed, I felt the party knives sticking into my innocent back”. Clark’s “God how power corrupts” was 4 November.

In a phone conversation on 7 November Ike urged a ceasefire. Eden pretended that the reception was poor, causing Ike to retort “the … connection seemed very satisfactory” and urged him to keep in touch. Eden called Ike again on 8 November. Ike was initially open to the suggestion that Eden and Mollet fly to Washington for talks, but was talked out of this by Dulles and Herbert Hoover Jr., and called back to withdraw the invitation. A UN resolution on 8 November demanded that Britain withdraw her troops. Egypt had been left free to block the canal, to reorganise her troops and to threaten British troops. The British Commander-in-Chief reported that British troop morale was low.

At a Buckingham Palace reception on 12 November, Butler approached Aldrich and hinted that he had not supported Eden’s policy, and told Aldrich how important he was at briefing the US Government. He urged him to speak to Macmillan. On 13 November Aldrich saw Macmillan, who was keen to go to Washington and talk to Humphrey, although Aldrich advised him to wait until Eden visited Washington. Macmillan told Aldrich that Selwyn Lloyd was “too young and inexperienced”.

[Thorpe Supermac, p365 – Macmillan realised Eden had to go on 16 November).

Macmillan saw Aldrich again on 19 November, referring to himself as “Eden’s deputy” and told of how the Cabinet realised a mistake had been made and that he himself would take over if Eden was too ill to continue. p298 Aldrich and Macmillan met again on 20 November. Aldrich was told that Eden would be taking a break and might resign. Either Butler would become Prime Minister (with Macmillan as Foreign Secretary and Lloyd as Chancellor), or else Macmillan himself would. Macmillan asked “if you can give us a fig leaf to cover our nakedness”. The majority of the Cabinet might vote for withdrawal without conditions about the location of UN forces or about the reopening of the Canal. Macmillan was “especially anxious” to see Ike.

Meeting 20 November of Ike, Goodpaster, Hoover and Humphrey, who was pro-Butler. It was decided to deal with both Butler and Macmillan until the situation was clearer.

On 21 November Aldrich reported that Macmillan and “possibly” Butler should see the President “as soon as the situation has reached a point where this would be in accord with Presidential policy”. On 22 November Hoover told Aldrich that there would be no meeting with Macmillan or Butler until the first week of December, and that the withdrawal of troops took priority. On 23 November Ike expressed a preference for another meeting with Butler.

The Cabinet (16 November and 19 November) favoured only token withdrawals of troops until there were assurances about the future administration of the Canal. General Raymond Wheeler, not a fan of the British, came to take charge of Canal clearance, a complete humiliation for Britain. Eden left for Jamaica on 22 November. p301-2 Ike wanted full withdrawal before canal clearance and economic assistance could begin. The Cabinet wanted only token withdrawals until assurances had been received. Butler was, in Jago’s view, more naiive than Macmillan in believing that there might be room for negotiation with the Americans.

Butler took charge of the Cabinet with a view to organising withdrawal, salvaging the pound sterling, restoring relations with the USA and UN and keeping public opinion on side.

On 22 November the Cabinet agreed to Butler’s suggestion that only a single battalion be withdrawn until assurances had been received. Even this angered Tory backbenchers, although Gaitskell demanded a full British withdrawal.

That evening was the infamous 1922 Committee. Despite Butler’s later claims, Ian Orr-Ewing recorded that Butler had taken care to prepare his remarks. Powell wrote of “the different pose, if you like, of the two poseurs” People believed that Butler, not Macmillan, had been the one advocating withdrawal, which was in fact the opposite of the truth. (NB backbenchers did not have a “vote” per se, but the need to keep their support was taken into consideration).

Macmillan commented that politics was “still a game more worth playing than any other”, which may have been a sly reference to the c1930 letter. On 24 November the UN voted 63-5 to condemn Britain and France. Macmillan realised that withdrawal was inevitable to get US support. ON 26 November Ambassador Aldrich reported on anti-US feeling in the UK.

Macmillan had been visiting Churchill at Chartwell. Butler was unable to solve the problem of pulling out fast enough for the Americans without annoying Conservative opinion. On 26 November Selwyn Lloyd, who had been in talks with the UN Secretary-General, told other senior ministers that there was nothing to be gained by delaying withdrawal. On 27 November Monckton reported on his visit to Port Said that 700 Egyptians, more than previously thought, had been killed.

On 28 November Macmillan urged immediate withdrawal to placate the USA. There were two Cabinets on 29 November. Butler suggested asking the UN Secretary-General for assurances that the Canal would be cleared, so events could be portrayed as a British victory of sorts.

At the National Security Council (30 November 1956) Vice-President Nixon, in the chair, declared himself “scared to death at the prospect of Nye Bevan in a position of power in a future British government”. It was decided to pledge US financial support, but discreetly, so Butler could keep the Conservatives united in favour of withdrawal. Ike told Dulles (17 Nov 1956) that he had had “an exceedingly high opinion of Eden but had had to downgrade it”.

The official British figure as of 1 December was that 300 Egyptians had been killed, although the world gave more credence to the higher Egyptian figure. Butler agreed, to the anger of the Tory Right, to speak to the French about the wording of the withdrawal announcement and about their wish to keep a strategic reserve in Cyprus. The second Cabinet that day discussed how Butler was to announce withdrawal on 3 December.

On 3 December Selwyn Lloyd made a statement, there was an angry scene, then Butler announced withdrawal, leading people to ask why he had allowed Lloyd to make the first speech. The following day (4 December) Macmillan made a strong speech on the figures, answering questions from Wilson, Gaitskell and Healey and hinting that there was no need for an emergency budget provided there was a moratorium on interest payments on the US and Canadian loans.

Reginald Bevins, PUS at the Ministry of Works, commented on this period that getting a decision out of Butler about anything was like “getting blood out of a stone”. Butler had been very indecisive after hearing about Challe’s plan on 14 October. In the No Confidence debate on 5 December Bevan accused Butler of “Freudian lapses”. The government won the confidence vote on 6 December by 327 votes to 260.

At Cabinet on 12 December, Macmillan not being present, there was discussion of General Wheeler’s refusal to begin canal clearance or to use British ships until Britain and France withdrew from Port Said. France was dragging her feet about pulling out by the agreed date of 22 December, making Butler look feeble to both the USA and the Conservatives again.

On 13 Dec Cabinet were told that Britain could not legally retain Egyptian POWs as a bargaining chip for the release of Canal Contractors. Butler decided to postpone a decision on that issue until Eden’s return. By now Sir Edwin Herbert was reporting that 650 Egyptians had been killed, 800 seriously injured and 1000 lightly injured.

The satirical newspaper “Forward” printed the headline “Prime Minister visits Britain”; “The Times”, “The Guardian” and “The Economist” all called openly for Eden’s resignation. Butler later claimed that he had had no idea Eden was about to resign, which Jago believes “beggars belief” and was a rationalisation after he had lost the leadership.

On 20 December 1956 Gaitskell questioned Eden about the exact date on which intervention had been decided. Eden was defended by Sir Henry Studholme and Dame Florence Hosburgh and was “saved by the bell” when the Speaker adjourned the session.

On 27 December, after a lunch at which Butler had been present, Eden consulted Kilmuir at Chequers. Kilmuir advised him to stay, but thought he’d go. At Eden’s request Lord Salisbury spoke to Eden’s doctors to obtain a more objective diagnosis, and was told that he ought to resign. Eden held his last Cabinet on 7 January, visited the Queen at Sandringham on 8 January, and formally resigned at Buckingham Palace on 9 January. Eden “acknowledged debt” to Butler but cannot have endorsed him, as Jago points out.

Dulles and Humphrey came to London on 12 December. They met Macmillan but not Butler.

Dell
Edmund Dell wrote that Monckton was not even allowed to attend the Conservative Party Conference for several years.

Also known as the External Sterling Policy. Either meant automatic regulation or Leslie Rowan (OF at Treasury), George Bolton (Executive Director of Bank of England, mainly concerned with overseas financial relations) and ?. OF closely linked to BOE and overseas opinion. Leslie Rowan had been Principal Private Secretary to Attlee. Clarke was proof that “someone who can draft well and quickly can acquire enormous influence. The influence this acquired is not always benign. Paper from Governor Cameron Cobbold presented to Butler on 14 February, with supporting paper from Bolton. Plan was non-resident sterling convertibility, together with a floating rate in place of the 1% band under Bretton Woods. Fixed rates were seen as a form of discipline and an avoidance of the competitive devaluations of the 1930s. Also there were to be hikes in interest rates and cuts in food subsidies, housing (which used up lots of dollars) and defence spending planned. Sterling balances were to be blocked (80% for sterling area (with India, Pakistan and Ceylon, with whom private treaties were in place, being told that they could access their sterling balances if they really had to), 90% for non sterling area) so that they could be funded with long-dated bonds with low yields. Only the unblocked “overseas sterling” would be fully convertible. A lot of people in the Treasury and the BOE opposed ROBOT, including Plowden and Robert Hall.

In January 1952 Cobbold had argued that convertibility would have to wait until reserves had increased, the balance of payments had improved and the USA was willing to act as creditor. Churchill claimed to believe in a “free pound”.

The BOE wanted wider bands (15%) whereas Salter and the Treasury wanted a free float, as did Oliver Lyttelton. Butler favoured the former and eventually got his way by mid-March when the Treasury backed down. p173-4 Reserves were now to $1.8bn having lost $2bn since June 1951, and it was widely expected that another $800m might be lost in 1952, leaving the government little choice but to float. It was hoped that alongside ROBOT the government could borrow from the USA, Canada and the IMF. Robbins was asked his opinion informally on 27 February and submitted them in writing in mid-March. He favoured rate hike to 5% and stiff spending cuts.

On 19 February Governor Cobbold dined with Churchill, Butler and Crookshank (Leader of the House). It was agreed to combine ROBOT with the budget, which was to be postponed from 4 March to 11 March, but before the April reserve figures, which were expected to be dire, came out.

There was expected to be trouble over the blocking of the sterling balances. Churchill felt that Britain had carried an unfair burden as a result of the war. Secondly it was expected to ruin the EPU, which would anger the USA, although the ROBOTEERS thought, wrongly, that the large German deficit would destroy the EPU anyway; in fact it lasted until 1958. Thirdly people might convert into dollars and buy more imports; ROBOTEERS believed devaluation would help, but opponents believed British economy could not adapt quickly enough, although it had in fact done so in 1949. Fourthly small majority in Parliament and risk to inflation and unemployment.

Salter, Plowden and Hall (who conceded that non-resident sterling balances should be blocked) proposed postponing ROBOT until the effect of the budget could be seen, not abandoning it altogether. Hall, Plowden and Robbins were not entirely opposed to floating in principle.

A paper was presented to the Committee of Ministers on 22 February, which they were expected to read at the meeting and leave behind – Cherwell insisted on taking his for his economic adviser MacDougall to examine. At a ministerial meeting on 27 February he was strongly opposed by Cherwell and Salter, and only backed by Lyttelton. There were three Cabinet meetings on 28 and 29 February. The Cabinet were worried at the effect on the Commonwealth, on the sterling area, memories of the 1947 convertibility disaster, a the risk of inflation and above all unemployment, which was politically risky for the Conservative Party. It might not pass Parliament with such a small majority. The public would be very hostile and even if there was a looming crisis it was better to keep open the possibility of a national government later in the year. Plowden was with Eden in Lisbon and tipped him off, angering Butler and Bridges.

Cobbold continued to forecast even greater disaster, and the Bank and Treasury produced massive research reports into ROBOT in the summer of 1952, far more so than they had done before the decision had been taken. Butler presented another paper to ministers in June. Cherwell and Salter both strongly opposed ROBOT, whilst the elderly Churchill, who was no longer capable of following difficult arguments, was persuaded by the fact that they both agreed (they disliked one another, and Salter had defeated Cherwell in a by-election for an Oxford University by-election in 1937). Butler himself later wrote that ROBOT had been a missed opportunity, and wrote that if the pound had been allowed to float the word “Butskellism”, which did him harm, would never have been heard. But in 1953 he had changed his mind and no longer supported ROBOT, telling Hall that he had been right all along and apparently saying so to Bridges as well; on his retirement from government Churchill praised Salter for having helped to block ROBOT. “transition from crisis, with Treasury officials almost hysterical as they contemplated collapse and disaster for the British economy, to the more normal state of amiable drift”.

It was now hoped to achieve convertibility by a collective approach with the Commonwealth (who were in fact not supportive) and Europe (who were opposed), and with US support. It was thought that Britain needed a $2.5bn standby from the IMF, whereas only $1.3bn was available. In March 1953, without consulting the EPU first, Eden and Butler, in talks with the new Eisenhower administration, demanded US financial assistance and lower tariffs; the USA opposed floating, thought Britain not yet ready for convertibility, and put non-discrimination ahead of convertibility (EXPLAIN).

Cherwell and Salter, and Plowden, Hall and MacDougall, had defeated ROBOT. The latter argued that ROBOT would have led to inflation and unemployment and antagonised other countries. However, Samuel Brittan and Eric Roll both believed that floating could have helped exports and avoided the balance of payments crises of subsequent decades. Dell believed that ROBOT would have antagonised Europe and the USA, not least because the USA favoured European integration, whilst the Cabinet, especially Macmillan who was conducting a major house-building drive, would not have agreed to spending cuts. However, ROBOTERS recognised that there was a problem, whereas many anti-ROBOTERS thought the British economy had no problems apart from US bad behaviour (EXPLAIN). Hall believed that US protectionism (“violent swings in US buying”) was the problem, and when asked for his opinion, wrote on behalf of the Economic Section of the Treasury what Dell describes as “an absurd paper” in March 1952, recycling an idea from the Attlee era: namely that the world should be divided into a dollar and a sterling zone (the latter to include Europe). He believed that the current system was unsustainable as it expected the weaker party (the UK) to do all the adjusting, whereas, Dell argues, in the real world it is usually the weaker party which has to adjust. Clarke, a ROBOTER, wrote a strong response on behalf of OF, arguing that it was absurd to blame the USA for Britain’s problems after all the financial aid they had given the UK: in the three years from March 1951 the USA had given $14.3bn $13.4bn, so their gold reserves had fallen whilst Britain’s had risen. In the end, Britain ran modest balance of payments surpluses from 1952 onwards, but these were nowhere near as big as they could have been if sterling had been devalued. Britain lost ground relative to Germany which was racking up huge surpluses. Butler was entirely dependent on official advice, and infuriated Eden by trying to push ROBOT through when Eden was away at a NATO Summit in Lisbon. He was thought to have tried to misuse budget secrecy to get it through, and to have exaggerated the risks of economic downturn, and was still disliked by many for his role in appeasement. Butler was lucky to be chancellor during a time of prosperity, and later acquired sympathy for his humour and disappointments. AJ Cummings of the “News Chronicle” correctly reported on 8 August 1952 that Butler had been overruled about the budget and by Cherwell about several other matters in Cabinet. The Bank now decided that it was no longer necessary to force-fund the sterling balances. Bridges and Rowan (Second Secretary in charge of OF) were also at fault in not squaring the Commonwealth. Plowden and Hall (whose advice had been absurd, but whose Economic Section Butler now moved from the Cabinet Office into the Treasury) gained influence at the expense of Rowan and Clarke and Bolton. Bridges was the most culpable for not providing cool advice. ROBOT was the last chance to take charge of Britain’s economic destiny and trying to create an export-led economy; instead the path of “slithering from crisis to crisis” was chosen, pursuing full employment and growth by manipulating the domestic economy whilst worrying about how to control the inflation generated thereby. In February 1955 Butler decided that the Bank of England should support the transferable rate, permitting non-residents to convert their pounds into dollars within 1% of $2.80. The EPU were not keen and rejected the BOE’s wish for a wider margin. Cabinet were supportive. It was a step towards convertibility. OF would have preferred full convertibility and floating, while Treasury wanted to defer and distance itself from the BOE. Reserves averaged around $2.5bn were never more than $4bn while sterling balances (a liability) never less than $4bn; furthermore $2.5bn was only enough to pay for three months’ imports even in the first half of the decade. So there were sterling crises in 1955, 1956 and 1957. The budget surplus desired by the Treasury was only attained during the recessionary year of 1958, were lower at the end of 1960 than they had been in 1950, despite imports doubling over the period. Although Treasury officials were amenable to Butler’s wishes for a tax-cutting budget in what was likely to be an election year, he gave in to their wishes to hike bank rate. Butler raised Bank rate to 3.5% in January 1955 and 4.5% in February 1955, although it fell to the Bank of England to announce these. Butler later claimed that he had been informed that the increases in interest rates would cancel out the effect of his tax cuts. In fact Treasury officials were unsure of the effect of monetary policy (a tool being revived for the first time in a generation), a debate which led to the setting up of the Radcliffe Committee in 1958, whilst the Governor of the Bank of England sent Butler a formal letter urging that spending cuts be carried out rather than simply relying on rate hikes. The 19/4/55 Budget included £150m in tax reliefs, including a 6d cut in income tax, in the midst of a boom. Along with 1959 it is one of the few examples of a Prime Minister picking an election date and stoking up the economy successfully to help ensure victory – in the 1960s and 1970s it would never be so clearcut again. Sterling was under pressure even before the election, partly because of a deterioration in the balance of payments and partly because it was still rumoured that the government might float the pound. On 25 July Butler announced a series of measures restricting hire purchase, urging banks to cut their loans (which had little effect), cutting the investment programmes of nationalised industries (this part of the plan was criticised for being insufficiently specific) and increasing the prices of coal and steel to soak up purchasing power. Eden refused to support his wish to cut bread and milk subsidies. It was soon clear that the measures had been inadequate. On 26 July Butler publicly pledged that the government would defend the value of the pound. On 27 July Bridges warned that Parliament might have to be recalled, and on 2 September Hall urged more cuts. In September Butler again pledged to defend the $2.80 exchange rate at the Bretton Woods conference at Istanbul, brushing aside for the time being his advisers’ demands for cuts. Butler asked for Parliament to be recalled in September, but was overruled. In his October budget he was obliged to reverse almost all his April measures except for the 6d cut in income tax. Eden had been toying with moving him all year, and Harry Crookshank warned him that he was “committing sheer political suicide”. Butler later wrote in his memoirs that he should have moved in May. Bridges tried to get Butler a stay of execution at the Treasury. Butler’s early years as Chancellor saw his reputation among the public soar, but not amongst his colleagues after the ROBOT business. Edmund Dell later wrote that Butler had nobody but himself to blame for his mistakes in April 1955: although his advisers were giving him poor advice, a chancellor of four years’ experience should have known better. Some say ROBOT would have been a disaster, others that Butler lacked the courage of his convictions, both then and two years later. Butler, although beloved by some MPs and some sections of the media for his witty asides, was an ambivalent and indecisive character “The undoubted fascination of Butler’s character has been allowed to obscure the fact that he was a poor Chancellor and would probably have been a poor Prime Minister.” “Because he was no leader, he was condemned simply to be useful,” filling a string of top jobs (although if Butler ever was a safe pair of hands, he gave no sign of it in his time as chancellor) and being a useful deputy, but twice rejected for the premiership by a clear majority of his Cabinet colleagues (although less so by the MPs who were also consulted in 1963) who “knew him well and looked elsewhere”. Butler’s loss of his wife in 1954 did not make his judgement any worse than it had been in previous years.

Ball
The Watching Committee had given up on the Central African Federation but wanted Butler to grant independence to Southern Rhodesia, which had a large white minority. This didn’t happen.