Chapter 117: Lagaan, is it?

HM Treasury, London

April 2, 1949

The treaty was signed at four in the afternoon in a plain room at the Treasury, without cameras or ceremony. Cripps signed first, then Ram, then Eady as witness, with Shroff and Deshmukh countersigning for the Reserve Bank. Bevin did not attend. Attlee sent a short, handwritten note, regretting that pressing business detained him.

Schedule A was read for the record, since the Treasury insisted on a formal reading of any instrument transferring public assets. Eady read it in his dry, unhurried voice:

"The Government of India acquires, in satisfaction of arrears of interest of one hundred and forty-four million pounds sterling and a reduction of principal of three hundred million pounds, the following holdings:

The whole of the Burmah Oil Company Limited, including its holding in the Anglo-Iranian Oil Company and the associated nomination rights, subject to the undertakings in Schedule B, and the company’s claim in respect of war damage being waived.

Rolls-Royce Limited, thirty per cent. De Havilland, Bristol, Hawker Siddeley, and Vickers-Armstrongs, twenty-five per cent each.

English Electric, including Marconi’s Wireless Telegraph Company, thirty per cent. Associated Electrical Industries and Babcock & Wilcox, twenty-five per cent each.

Stewarts & Lloyds, Dorman Long, Colvilles, Richard Thomas & Baldwins, and Guest Keen & Baldwins, twenty-five per cent each, concurrent with the stake to be taken by His Majesty’s Government.

The Peninsular and Oriental Steam Navigation Company, including the British India Steam Navigation Company, thirty per cent. Cunard-White Star, Shaw Savill, Alfred Holt & Company, and Swan Hunter & Wigham Richardson, twenty-five per cent each.

A twenty-five per cent interest in the overseas subsidiaries of Imperial Chemical Industries.

Ferranti, Plessey, Lucas, Tube Investments, British Aluminium, Dunlop, Decca, and Alfred Herbert, twenty-five per cent each."

No one spoke when he finished. Cripps laid down his pen.

"I want to say something," he said, "not as Chancellor, but as a man. I campaigned for Indian independence when it was unfashionable. I went to Delhi in 1942 and was rebuffed by your Mr. Gandhi, and I confess I never fully understood why. Today I have signed away some of the finest companies in Britain, and I find I do not regret it as much as I expected."

"You are generous, Sir Stafford," Ram said.

"I am tired, Prime Minister, but honest." Cripps rose and offered his hand. "I hope India uses these assets to feed her people rather than to threaten her neighbours."

"I intend both. I shall try to do the first more than the second."

Cripps’s lips twitched.

That evening, in his suite at Claridge’s, Ram stood at the window looking down on lamplit Brook Street. The rain had cleared. Shaktidas entered with two cables.

"The treaty is safe," Shaktidas said, "and Shroff-ji is drawing up the board nominations. And Patel-ji has approved the Games and the intelligence wing in principle. He sent a private note."

Ram unfolded it. The handwriting was cramped and uneven.

Ram. The Games will make strangers into countrymen. The new service will make blind men into seers. Come home soon. The Punjab is quiet, and I do not trust it. V.

He read it twice and folded it into his pocket.

"What does Mullick say?" he asked.

Shaktidas glanced at the second cable. "A fragment from the British registry. Another letter from one of Gracey’s brigadiers to an old friend. ’Training now reported at five locations across the Chenab and Ravi doabs. Total strength estimated twenty thousand. Local British consul in Lahore suggests unusual movement of ammunition by night.’ Nothing definitive, Ram. But the picture grows."

"It does," Ram said quietly. He turned back to the window. Somewhere across the rooftops, Big Ben struck the half hour. "They are building their weapon in the dark, Shaktidas. They believe it is forged. They believe we are asleep."

10 Downing Street

The same night

The Cabinet Room was dark except for the single lamp on the table. Attlee sat with his pipe unlit, looking at nothing in particular. Across from him sat Cripps, and beside Cripps, Eady, who had removed his jacket and rolled his sleeves. Sir Edward Bridges, the Cabinet Secretary, stood by the door with a folder under his arm. Bevin arrived last and heavily, and lowered himself into a chair without speaking.

"Gentlemen," Attlee said. "The treaty is signed. I have asked you here to settle one more thing before the Cabinet meets in the morning. It will not be minuted."

Bridges’ eyebrows moved a fraction. He set down his folder.

"Wilfrid," Attlee said. "You have been closer to this than any of us. What did we do wrong?"

Eady rubbed his eyes. "We defaulted, Prime Minister. That is what we did wrong. It is the whole of it."

"Explain."

"In August of 1947, we failed to meet our obligations on the sterling balances. We did so because we had no dollars, and the convertibility crisis left us nothing to spare. The Government of India demanded their gold. In forty-eight hours, we had signed away five island groups, fixed the exchange rate on the remaining debt, and agreed to service it in dollars with American guarantees.

Last spring we deferred interest again. Thirty-six million for the second half of ’47-48, thirty-six for the first half. We called it a provisional deferment. We told ourselves it was a courtesy between friends. Mr. Gupta wrote it in his ledger."

"And this month," Cripps said, "he has taken Burmah Oil, a fifth of AIOC, a quarter of Rolls-Royce, and thirty per cent of P&O, all against the arrears we could not pay."

"Which we should have paid," Eady said flatly. "Every time we fail to meet an obligation, he turns it into an acquisition. He has not once raised his voice. He has not once threatened to withdraw gold, or he has threatened it only in the most oblique terms, because he has no need. The arrears are the threat. They are the weapon, and we hand it to him every six months."

Bevin leaned forward, his heavy hands clasped. "You are suggesting we pay."

"I am suggesting we pay on time. Every pound, every half-year, in dollars, as the agreement requires." Eady laid a sheet on the table. "On the balance remaining after the cut, one point five billion, at four per cent, the annual interest is sixty million pounds. About two hundred and forty million dollars. It is a great deal of money. It is also about what it costs us to feed the army of occupation in Germany for a quarter of a year."

"We do not have two hundred and forty million dollars to spare," Bevin said.

"We do not. We shall have to find them. We shall find them by cutting something else, and I do not mean the Health Service." Eady looked at Cripps. "Chancellor, I know what I ask."

"You ask me to give up a quarter of what remains of my reserves each year to pay an Indian who is already richer than we are in the things that matter," Cripps said.

"I ask you to remove his reason to come back."

Silence. Attlee struck a match, lit his pipe, drew twice, and blew out the smoke.

"Say more, Wilfrid."

"Prime Minister, consider what Mr. Gupta wants. He does not want our money. He wants our failure to pay it. Every missed instalment is a lever. He has never needed to press hard because the pressure is automatic. If we pay every instalment, punctually, in dollars, I do not see what he can do. He cannot demand the gold. He cannot take another island. He cannot ask for a company. He will be left holding a perfectly performing asset, and his only pretext for further action will be gone."

"And if he ceases to be friendly?" Bevin asked.

"Then he does so with nothing in his hand." Eady spread his palms. "Foreign Secretary, you told him yesterday that you would not be blackmailed. I understood the feeling. But the only way to be sure you are not blackmailed is to give the blackmailer nothing to hold. He cannot hold a payment that has been made."

Cripps sat very still. At last he said, in a low, dry voice, "There is a further consideration. If Mr. Gupta is right about the autumn, and I fear he may be, we shall be in need of friends in Washington. The Americans guaranteed the dollar servicing. If we default on a guaranteed obligation, we shall be in default to the United States Treasury as well. That I cannot survive."

"Then it is settled," Attlee said quietly.

"It is not settled, Prime Minister," Bevin growled. "I do not like it. We pay him two hundred and forty million dollars a year. For what? To make him go away?"

"For exactly that, Ernest."

"It is humiliating."

"It is. I did not say it was not." Attlee took the pipe from his mouth. "I have been in politics a long time, and I have learned that the cheapest humiliations are the ones you accept voluntarily. The expensive ones are the ones that are done to you." He turned to Eady. "Wilfrid, you will arrange it. A standing instruction between the Treasury and the Bank. The interest on the Indian balances is paid on the due date, in dollars, whatever else has to wait. It ranks before anything discretionary. It does not go through the Cabinet again."

"It will go through me, Prime Minister."

"Good. Stafford, you will find the dollars."

"I shall find them," Cripps said grimly. "God knows where."

"Ernest, you will say nothing to the Foreign Office about this arrangement. If Mr. Gupta learns that we pay because we are afraid of him, he will no longer be afraid of us." Attlee looked at Bridges. "Edward, there is no minute. There is no note. If anyone asks, the Treasury has simply resolved to honour its contracts, as any government might."

"It is the most boring explanation, Prime Minister," Bridges said.

"It is the best kind." Attlee set the pipe in the ashtray and stood. "We shall be paying that man for twenty years. I would like it to be the only thing we ever pay him."

No one answered. Bevin sat looking at his hands. Cripps gathered his papers slowly, as if each sheet weighed more than the last. Eady alone looked oddly at ease, like a man who has put down a heavy case.

Outside, in Downing Street, a single car idled at the kerb. In Claridge’s, six streets away, the light in one window went out. 𝒻𝑟ℯℯ

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