Monday, March 4, 2013

Something Old

Not everything worth reading is hot off the press. In this section, Nicholas Reid recommends "something old" that is still well worth reading. "Something old" can mean anything from a venerable and antique classic to a good book first published five or more years ago.

“THE MARCONI SCANDAL” by Frances Donaldson (first published 1962)
            How odd to read a book published fifty years ago about a scandal that took place one hundred years ago. As a reader, I am as many years away from the book as the book’s author was from the scandal. As a reader, I am also inclined to see the author’s values and attitudes as being almost as antique as those of the people about whom she was writing.

            The “Marconi Scandal”. For a brief time it was a sensational affair in the British press. Then it was quickly forgotten. It took place in 1912-13 and it went like this:

The British Liberal government, under its prime minister Herbert Asquith, had entered into negotiations with the Marconi company for a chain of Marconi wireless stations to be constructed throughout the British Empire for essential military communications. (This was years before anybody thought of radio as anything other that an official transmission system. Private radios for home entertainment were still years away.)

            While negotiations were going on, the Postmaster-General Herbert Samuel, the Chancellor of the Exchequer David Lloyd George and other members of the Liberal cabinet bought and speculated in shares in the American Marconi Company, being fairly certain that American Marconi shares would greatly increase in value once it became known publicly that the British Marconi Company had secured a valuable British government contract. One of those “other members of the cabinet” was the Attorney-General Sir Rufus Isaacs, who was advised in his investments by his brother Godfrey Isaacs, a financial speculator and one of the directors of the British Marconi Company.

            The British and American Marconi companies were quite separate entities, as later defenders of the ministers’ sharp dealings (including the author of this book) never tired of saying. And there is no suggestion that there was anything corrupt in the British government’s contract with British Marconi. Even so, this whole situation was clearly an example of what later generations would call “insider trading” – people using privileged knowledge to get an edge on the stock market and make an easy fortune.

            Rumours ran wild – especially as, in October 1912, Rufus Isaacs and other Liberal ministers denied, in a debate in the House of Commons, that they had made any speculations in Marconi at all. A Commission of Enquiry was set up, which deliberated and heard evidence in 1913. Its documents are extensively picked over by Frances Donaldson in this book. There was a second parliamentary debate in mid-1913. The government ministers were all cleared of charges of corruption, but it was clear that they had not made a full disclosure of their financial interests in the first parliamentary debate.

            In all this, the opposition Conservative party (under its leader Balfour) was incredibly restrained and asked no really pointed questions. However, on the hustings for some months the word “Marconi” became a hecklers’ catch-cry, implying government corruption, whenever a Liberal candidate appeared.

            Rumours first reached print in articles by Wilfred Ramage Lawson in a small-circulation journal “The Outlook”. Under cross-examination at the Commission of Enquiry, Lawson was forced to retract most of the statements he had made in print and to admit that they were pure guesswork. However, far more vociferous denunciations of the government ministers’ behaviour were written by Cecil Chesterton (brother of G.K.Chesterton) in Hilaire Belloc’s journal “The Eye Witness” (later called “The New Witness”). At first the prime minister Asquith advised his ministers to ignore these statements, as the journal in which they appeared had such a tiny circulation. However, when Cecil Chesterton’s and Wilfred Ramage Lawson’s accusations were reprinted in a major French newspaper “Le Matin”, Rufus Isaacs sued the French newspaper for libel and he then sued Cecil Chesterton.

Chesterton lost and was fined.

            And that seemed to be the end of the matter, although it left a nasty after-taste.

There was undeniably a minor strain of anti-semitism in the whole affair. Among the sharp dealers, Godfrey and Rufus Isaacs, and Herbert Samuel, were Jewish. Cecil Chesterton played this up in some of his articles. The Anglo-Frenchman Hilaire Belloc had briefly been a Liberal MP himself, but he had also been an anti-Dreyfusard in the much bigger controversy that had rocked France in the previous decade. When he appeared, as publisher of potentially libellous articles, before the Commission of Enquiry, Belloc specifically denied that he had any anti-Jewish motive, but the wording of his denial showed that he had an uneasy conscience about this. A few years later, Asquith promoted Rufus Isaacs to the role of Chief Justice of England. Coming after the “Marconi Scandal”, this led Rudyard Kipling to write his highly sarcastic satirical poem “Gehazi” (“a leper white as snow”) – far more anti-Jewish than anything Belloc had written. (Meanwhile, most extraordinarily, Godfrey Isaacs converted to Catholicism.)

There was another awkward sidelight on the affair. By the outbreak of the First World War, German “wireless telegraphy” (the Telefunken system) was much better organized than its British equivalent. So much so that, within hours of the outbreak of war in 1914, the Germans were able to signal to their entire merchant fleet to make for neutral ports. They thus saved most of their merchant marine from either capture or destruction. Technically, the British Marconi system was the equal of the German Telefunken system, but the proposed British construction of an empire-wide chain of radio stations had been retarded by all the squabbling over speculation in Marconi shares. To that extent, this shabby little scandal of insider trading had important consequences.

This far, I have given as full a summary as you need of the scandal as reported in this book.

But what of the book itself?

Frankly, I found it a tedious and rather questionable production. For the record, Frances Donaldson (1907-1994) was the daughter of a West End playwright (Frederick Lonsdale) and the wife of a minor aristocrat. She specialised in memoirs of people who moved in her own social circles and is best known for having written the first book to show (with reference to gossipy contemporary diaries) what a vacuous twit King Edward VIII, the one who abdicated, was.

But in The Marconi Scandal she resolutely refuses to admit that there was anything morally wrong in the insider trading that she chronicles. She holds the Liberal ministers guilty only of imprudence in not disclosing their financial affairs when they were asked in parliament. She also makes much of a rather cloudy argument, which holds that the scandal was only the result of MPs of similar background – on both the Liberal and Conservative sides of the House of Commons – being too nice about points of “honour” in one another’s affairs.

As a result of her obfuscations, I found myself liking Lawson and Cecil Chesterton a lot more than she obviously intended me to. I see Lawson and Chesterton as bona fide whistle-blowers who lacked finesse. These two journalists got some of their facts wrong, were certainly guilty of some libel, and may have been guilty of anti-semitism. But they were right to sense that there was something wrong in elected officials misusing privileged knowledge for private gain. And in the end, even if Frances Donaldson can’t see it, that is what the “Marconi Scandal” was all about. Sharp practice is still sharp practice, even if it is not on the scale of some of the world’s major financial and political scandals.

Incidentally, the insider-trading ministers’ investments made them very little money. Some of them even lost money by their dodgy speculations. This has sometimes been advanced in their defence. What does their misbehaviour matter when they didn’t even profit from it?

But doesn’t a crime remain a crime even when it doesn’t pay?

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