Friend's Friend's Friend

Sandwiched between two black-gowned barristers acting temporarily as judges, Sir Samuel Lowry Porter sat in his own courtroom, King's Bench No. i, not to try a criminal case, but to act as a court of inquiry in a scandal that for a time threatened last week to upset the British Cabinet.

Before grey-lipped Neville Chamberlain took a little key from his watch chain and opened the battered red leather Budget box to announce to the House of Commons last month a rise in the tax on tea and another threepence to the pound of income tax, somebody must have peeked (TIME, May 4). In a last-minute rush British companies were swamped with orders for insurance against a rise in the income tax. Lloyd's alone lost over $500,000. The only people who see Britain's Budget before it is announced in Commons are high Treasury officials and members of the Cabinet, and Britain takes care that Cabinet secrets shall not leak out accidentally. Far from the least important official in Whitehall is a character known as the Confidential Waste Man. A trusted secret service employe, it is his duty to empty every Government trash-basket in Whitehall, burn the contents himself.

All Britain believed that some Cabinet Member was responsible for last month's Budget leak. Three years ago when the British Government took over the defaulted bonds of Newfoundland, there was a similar leak which made fortunes on Newfoundland bonds for a favored few. Among the biggest plungers then was the brokerage house of Belisha & Co., whose senior partner is the uncle of Minister of Transport Leslie Hore-Belisha. A potent partner in Belisha & Co. is Leslie Thomas, son of dumpy James Henry Thomas, Britain's Secretary of State for the Colonies. One of the first facts discovered about last month's Budget-leak scandal was that Belisha & Co. had taken out $20,000 worth of income tax insurance on behalf of an advertising agent named Alfred Bates. Alfred Bates was one of Jim Thomas' most intimate friends. Another Thomas intimate is Sir Alfred Butt, Conservative M. P., theatrical producer and insurance underwriter. Sir Alfred had bet heavily against a rise in the income tax, only to hedge on all these bets the morning of Chancellor Chamberlain's Budget Speech and add $39,000 worth of Budget insurance on his own account.

Pudgy Jim Thomas started his career as an errand boy in a chemist's shop, became a wiper in a locomotive yard, later helped organize the railwaymen's union. It was Jim Thomas who made it possible for British railway employes to have the highest wage scale of any union in the realm. With James Ramsay MacDonald and Philip Snowden, Thomas was one of the founders of the British Labor Party. In the House of Commons since 1910, he has served as a Cabinet Minister for the past seven years.

As a major figure in British politics, Jim Thomas seemed to grow away from his old friends in the railways. London Society took him up to discover that Jim Thomas was one of the best bridge players in town. No after dinner speaker was more in demand because, after the formal speaking was over, Jim Thomas could generally be found in a corner, regaling his friends with a rare collection of off-color stories. Ever since the night when he dined at Buckingham Palace with the buckles of his knee breeches held together with safety pins, he was one of King George V's favorite politicians.

Serious Laborites have called Jim Thomas a traitor to his party for joining the National Government. Jealous socialites call him a vulgar little bounder. Last week both groups were after his hide when Colonial Secretary James Henry Thomas appeared before Mr. Justice Porter to testify on the Budget leak.

Earlier testimony had brought out the fact that Adman Bates had contracted to buy Jim Thomas' unwritten memoirs for $100,000 and had just given him a $76,000 house as part payment. For three days immediately after the Cabinet Ministers were told the contents of Neville Chamberlain's red leather Budget box, Alfred Bates and Jim Thomas played golf together. On the stand last week Jim Thomas' hearty voice became the humblest murmur.

"I am supposed to be a charwoman's statesman," said he, "because ever since I have been a Cabinet officer I have never arrived at my office later than 9 o'clock. . . . I have heard nine Budget statements--which is very near a record--and this is the very first time I ever heard any question of a leakage, and I have never disclosed one word to anyone.

"On Friday afternoon, April 24, someone came to my room in the House of Commons and said to me: 'As a friend I ought to tell you that your son's name is being coupled with this business. . . .' "My son [Leslie] arrived home at 7 the next morning. I was up to meet him. I said to him at once: 'What is it you have been doing?' He resented it and said to me: 'What right have you to say that to me, father?'

"My son told me exactly what had been done and that the amount involved was about -L-4,000. I said to my son: 'Is that everything that you have done?' and he said yes. I asked him: 'Have you done anything for yourself?' My son replied: 'Not a copper, father.'

"I immediately sent for Bates. I was going to the Cup Final [professional football] and I found Bates was also going. I said to Bates: 'As an old friend, what do you mean by letting Leslie in in this way?' Bates said: 'What do you mean letting him in? He is my broker, and as my broker he is entitled to do my business. . . .'

"Sir Alfred Butt is a good friend who invariably comes either into my room in the House of Commons or into my office. To be quite frank he invariably comes and tells me when he thinks he is going to win on a horse race."

None of Jim Thomas' good friends was a better one last week than Doorman William Robinson of the Colonial Office. Evidence soon came out that Sir Alfred Butt had called on the Colonial Secretary the morning of the momentous Budget Speech. Called to the stand, Doorman Robinson swore:

"I announced him [Sir Alfred] and showed him in. Mr. Thomas to the best of my recollection said he was frightfully busy and could not see him. The visit did not last more than a minute or a minute and a half at the most. I was in the room holding the door, ready to close it."

"Did you hear any discussion between Thomas and Butt?" asked Mr. Justice Porter, emphasizing the question with stabs of a yellow pencil.

"Definitely there was no discussion," said good friend William Robinson.

Despite the testimony of Doorman Robinson, at least one witness was able to get the name of Jim Thomas on record as the source of the Budget leak. The evidence came from a dapper stockbroker named Reginald Marriott. Broker Marriott has in his office a customer's man named Edward Alfred Waterton, who has as a customer one Harold Eves, solicitor and secretary to Alfred Bates.

"On April 20, the day before the Budget," testified Mr. Marriott last week, "Waterton burst into my office and told me there was going to be an increase in the income tax. Waterton said he heard it from Eves. . . . Eves got it from a great friend of his."

"Was there nothing to identify this great friend of your friend's friend?" asked Mr. Justice Porter.

"Yes, he said he was a great friend of somebody else."

"Who else?"

"Mr. J. H. Thomas."

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