Callaghan was Chancellor of the Exchequer from 1964 to 1967 during a turbulent period in the British economy in which he had to wrestle with a balance of payments deficit and speculative attacks on the pound sterling. In November 1967, the Government was forced to devalue the pound sterling despite having denied he would do this publicly including to the House of Commons. Callaghan offered to resign, but was persuaded to swap his ministerial post with Roy Jenkins, becoming Home Secretary from 1967 to 1970. In that capacity, Callaghan took the decision to deploy the British Army in Northern Ireland, after a request from the Northern Ireland Government.
The Labour Party lost the general election in 1970, but Callaghan returned to office as Foreign Secretary in March 1974, taking responsibility for renegotiating the terms of Britain's membership of the European Economic Community (the EEC, or "Common Market"), and supporting a 'Yes' vote in the 1975 referendum for the UK to remain in the EEC. When Harold Wilson resigned in 1976, Callaghan was elected the new Labour leader.
Labour had already lost its majority in the House of Commons when he became Prime Minister and lost further seats at by-elections and through defections, forcing Callaghan to deal with minor parties such as the Liberal Party especially in the Lib-Lab pact from 1977 to 1978, the Ulster Unionists, Scottish National Party and even Independents. Industrial disputes and widespread strikes in the "Winter of Discontent" of 1978–79, made Callaghan's government unpopular and the defeat of the referendum on devolution for Scotland led to the passage of a motion of no confidence on 28 March 1979. This was followed by a defeat by Margaret Thatcher's Conservative Party in the ensuing general election.
At the age of 17 Callaghan left to work as a clerk for the Inland Revenue. While working as a Tax Inspector, Callaghan was instrumental in establishing the Association of Officers of Taxes as a Trade Union for those in his profession and became a member of its National Executive. Whilst at the Inland Revenue offices in Kent, in 1931 he joined the Maidstone branch of Labour Party. In 1934 he was transferred to Inland Revenue offices in London. Following a merger of unions in 1937, Callaghan was appointed as a full-time union official and to the post of Assistant Secretary of the Inland Revenue Staff Federation and resigned from his civil service duties.
His union position at the Inland Revenue Federation brought Callaghan into contact with Harold Laski, the Chairman of the Labour Party's National Executive Committee and a respected academic at the London School of Economics. Laski encouraged him to stand for Parliament. Callaghan joined the Royal Navy Volunteer Reserve as an ordinary seaman in World War II from 1942 where he served in the East Indies Fleet and was promoted to the rank of Lieutenant in April 1944. Whilst training for his promotion his medical examination revealed that he was suffering from tuberculosis and was admitted to the Royal Naval Hospital Haslar in Gosport near Portsmouth. After he recovered he was discharged and assigned to duties with the Admiralty in Whitehall. He was assigned to the Japanese section and wrote a service manual for the Royal Navy The Enemy Japan.
Whilst on leave, Callaghan was selected as a Parliamentary candidate for Cardiff South. He narrowly won the local party ballot with 12 votes against the next highest candidate George Thomas with 11 votes. He was encouraged to put his name forward for the Cardiff South seat by his friend Dai Kneath, a member of the IRSF National executive from Swansea, who was in turn an associate and friend of the local Labour Party secretary Bill Headon. During 1945 he was assigned to the Indian Fleet and served on HMS Queen Elizabeth in the Indian Ocean. After VE Day, along with other prospective candidates he returned to Great Britain to stand in the general election.
Labour won a landslide victory on 26 July 1945 bringing Clement Attlee to power. Callaghan won his Cardiff seat in the 1945 UK general election (and would hold a Cardiff-area seat continuously until 1987). He won with a stunning 6,000 majority over the sitting Conservative incumbent candidate, Sir Arthur Evans, the two in total respectively polling 17,489 to 11,545 votes. He campaigned on such issues as the rapid demobilisation of the armed forces and for a new housing construction programme. At the time of his election, his son Michael was born.
Callaghan was soon appointed Parliamentary Secretary to the Ministry of Transport in 1947 where, advised by the young chief constable of Hertfordshire Sir Arthur Young, his term saw important improvements in road safety, notably the introduction of zebra crossings, and an extension in the use of cat's eyes. He moved to be Parliamentary and Financial Secretary to the Admiralty from 1950 where he was a delegate to the Council of Europe and resisted plans for a European army.
Callaghan was popular with Labour MPs and was elected to the Shadow Cabinet every year while the Labour Party was in opposition from 1951 to 1964. He was Parliamentary Adviser to the Police Federation from 1955 to 1960 when he negotiated an increase in police pay. He ran for the Deputy Leadership of the party in 1960 as an opponent of unilateral nuclear disarmament, and despite the other candidate of the Labour right (George Brown) agreeing with him on this policy, he forced Brown to a second vote. In 1961 Callaghan became shadow chancellor. When Hugh Gaitskell died in January 1963, Callaghan ran to succeed him but came third. It was too early for Callaghan to win. However, he did gain the support of right-wingers, such as Denis Healey and Anthony Crosland, who wanted to prevent Wilson from being elected leader but who also didn't trust George Brown.
On 11 November Callaghan gave his first budget and announced increases in income tax, petrol tax and the introduction of a new Capital Gains Tax, actions which most economists deemed necessary to take the heat out of the balance and sterling deficit, though international bankers disagreed.
Increasing difficulties with the economy were evident by late November when the surcharge of imports under the previous Conservative government were forcing the reserves to be depleted by as much as £50 million per day . On 23 November it was decided to increase the bank rate from 2% to 7% which generated a large amount of criticism. Handling the crisis was made more difficult by the attitude of Lord Cromer, the Governor of the Bank of England, who argued against the fiscal policies of the new Labour government. When Callaghan and Wilson threatened to call a new general election, the governor soon raised a £3 billion loan to stabilise the reserves and the deficit. His second budget came on the 6 April 1965 in which he announced efforts to deflate the economy and reduce home import demand by £250 million. Shortly after the bank rate was reduced from 7% down to 6%. For a brief time the economy and British financial market stabilised, allowing in June for Callaghan to visit the United States and to discuss the state of the British economy with President Lyndon Baines Johnson and the International Monetary Fund (IMF).
In July the pound came under extreme pressure and Callaghan was forced to create harsh temporary measures to demonstrate control of the economy. These include suspending all current government building projects and postponing new pension plans. The alternative was to allow the pound to float or to devalue it. Callaghan and Wilson however were again adamant that a devaluation of the pound would create new social and economic problems and continued to take a firm stance against it. The government continued to struggle both with the economy and with the slender majority which by 1966 had been reduced to one. On 28 February Harold Wilson formally announced an election for the 31 March 1966. On the 1 March Callaghan gave a 'little budget' to the commons and announced the historic decision that the UK would adopt the decimal system. (It was actually not until 1971, under a Tory government, that Britain ended the system of pounds, shillings and pence, and entered a decimal system of 100 pence to the pound.) He also announced a short term mortgage scheme which allowed low wage earners to maintain mortgage schemes in the face of economic difficulties. Soon after Labour won 363 seats compared to 252 seats against the Conservatives, giving the Labour government a large majority of 97.
Callaghan introduced his next Budget on 4 May. He had informed the house that he would bring a full Budget to the House when he made his 'little budget' speech prior to the election. The main point of his budget was the introduction of a selective Employment tax focusing on services rather than manufacturing. Twelve days after the budget the National Union of Seamen called a national strike and the problems facing Sterling were multiplied. Additional strikes caused the balance of payments deficit to increase and the 3.3 billion loan was now due. On 14 July the bank rate was increased again to 7 percent. On the 20 July Callaghan announced an emergency ten point programme with a six month freeze on wage and salary increases. By 1967 the economy had begun to restabilise once again and the bank rate was reduced to 6% in March and 5.5% in May.
However the economy was soon in turmoil again with the Middle East crisis between Egypt and Israel raising oil prices. Furthermore the economy was hit in mid-September when a national dock strike lasted for eight weeks. A run on Sterling began with the six day war and with the closure of the Suez Canal and with the dock strike, the balance of payments deficit grew to a critical level. A Common Market report suggested that the pound could not be sustained as a reserve currency and it was suggested again that the pound should be devalued. Wilson and Callaghan refused a contingency fund offered from the IMF because of several conditions attached, and on Wednesday 15 November the historic decision was taken to commit the government to a 14.3% devaluation. The situation was a great political controversy at the time. As Denis Healey in his autobiography, notes:
Nowadays exchange rates can swing to and fro continually by amount greater than that, without attracting much attention outside the City columns of the newspapers. It may be difficult to understand how great a political humiliation this devaluation appeared at the time - above all to Wilson and his Chancellor, Jim Callaghan, who felt he must resign over it. Callaghan's personal distress was increased by careless answer he gave to a backbencher's question two days before the formal devaluation, which cost Britain several hundred million pounds."''
Before the devaluation, Jim Callaghan had announced publicly to the press and the House of Commons that he would not devalue, something he later said was necessary to maintain confidence in the pound and avoid creating jitters in the financial markets.
Callaghan immediately offered his resignation as Chancellor and increasing political opposition forced Wilson to accept it. Wilson then moved Roy Jenkins the home secretary to the Chancellor of the Exchequer and Callaghan became the new Home Secretary on 30 November 1967.
Callaghan was also responsible for the Immigration Act 1968; a controversial piece of legislation prompted by Conservative assertions that an influx of Kenyan Asians would soon inundate the country. It passed through the Commons in a week and placed entry controls on holders of United Kingdom passports who had "no substantial connection" with Britain by setting up a voucher system. In his memoirs Time and Chance, Callaghan wrote that introducing the Commonwealth Immigrants Bill had been an unwelcome task but that he did not regret it. He claimed the Asians had "discovered a loophole" and he told a BBC interviewer: "Public opinion in this country was extremely agitated, and the consideration that was in my mind was how we could preserve a proper sense of order in this country and at the same time do justice to these people - I had to balance both considerations". An opponent of the Act, Conservative MP Ian Gilmour, asserted that it was "brought in to keep the blacks out. If it had been the case that it was 5,000 white settlers who were coming in, the newspapers and politicians, Callaghan included, who were making all the fuss would have been quite pleased".
Also significant was the passing of the Race Relations Act in the same year, making it illegal to refuse employment, housing or education on the basis of ethnic background. The Act extended the powers of the Race Relations Board at the time, to deal with complaints of discrimination and unfair attitudes. It also set up a new supervisory body, the Community Relations Commission, to promote "harmonious community relations". Presenting the Bill to Parliament, the Home Secretary, Jim Callaghan, said, "The House has rarely faced an issue of greater social significance for our country and our children."
After Wilson's unexpected defeat by Edward Heath in the 1970 general election, Callaghan declined to challenge him for the leadership despite Wilson's vulnerability. This did much to rehabilitate him in Wilson's eyes. He was in charge of drawing up a new policy statement in 1972 which contained the idea of the Social Contract between the Government and Trade Unions. He also did much to ensure that Labour opposed the Heath government's bid to enter the Common Market — forcing Wilson's hand by making his personal opposition clear without consulting the Party Leader.
When Wilson was again appointed Prime Minister in March 1974, he appointed Callaghan as Foreign Secretary which gave him responsibility for renegotiating the terms of Britain's membership of the Common Market. When the talks concluded, Callaghan led the Cabinet in declaring the new terms acceptable and he supported a Yes vote in the 1975 referendum.
During his second term Wilson announced his surprise resignation on 16 March 1976, and unofficially endorsed Callaghan as his successor. Callaghan was the favourite to win the leadership, although he was the oldest candidate, he was also the most experienced and least divisive. Popularity with all parts of the Labour movement saw him through the ballot of Labour MPs to win the leadership vote. On the 5 April 1976 at the age of 64 years and 9 days Callaghan became Prime Minister (the oldest person to become Prime Minister at time of appointment since Winston Churchill).
During his first year in office, Callaghan started what has since become known as 'The Great Debate', when he spoke at Ruskin College, Oxford about the 'legitimate concerns' of a public about education as it took place in the nation's maintained schools. This discussion led to greater involvement of the government, through its ministries, in the curriculum and administration of state education, leading to the eventual introduction of the National Curriculum some twenty years later.
Callaghan's time as Prime Minister was dominated by the troubles in running a Government with a minority in the House of Commons: he was forced to make deals with minor parties in order to survive - including the Lib-Lab pact, and he had been forced to accept referendums on devolution in Scotland and Wales (the first went in favour but did not reach the required majority, and the second went heavily against).
Despite these difficulties, by late 1978, most opinion polls showed Labour ahead, and the expectation grew that Callaghan would call an autumn election. Famously he strung along the opposition and was expected to make his declaration of election in a broadcast in early September 1978. His decision to go on was at the time seen by many as a sign of his domination of the political scene and he ridiculed his opponents by impersonating old-time music hall star Marie Lloyd singing "Waiting at the Church" at that month's Trades Union Congress meeting: now seen as one of the greatest moments of hubris in modern British politics but celebrated at the time. Callaghan intended to convey the message that he had not promised an election, but most observers misread his message as an assertion that he would call an election, and the Conservatives would not be ready for it.
Callaghan's decision not to call an early election has been described as the biggest mistake of his premiership.
What is your general approach, in view of the mounting chaos in the country at the moment?Callaghan replied:
Well, that's a judgment that you are making. I promise you that if you look at it from outside, and perhaps you're taking rather a parochial view at the moment, I don't think that other people in the world would share the view that there is mounting chaos.
This reply was reported in The Sun under the headline:
Crisis? What Crisis?.
Callaghan was forced to advise The Queen to call an election when the House of Commons passed a Motion of No Confidence by one vote on 28 March 1979. The Conservatives, with the advertising agency Saatchi and Saatchi, ran a campaign on the slogan "Labour isn't working". Margaret Thatcher won the election.
In 1983, Callaghan became Father of the House as the longest continuously serving member of the Commons and one of only two survivors of the 1945 general election - Michael Foot being the other, but he had been out of the House from 1955 to 1960. In 1987 he was made a Knight of the Garter and stood down at the 1987 general election after forty-two years as a member of the Commons. Shortly afterwards, he was elevated to the House of Lords as Baron Callaghan of Cardiff, of the City of Cardiff in the Royal County of South Glamorganshire. In 1987, his autobiography, Time and Chance, was published.
In 1988, Callaghan's wife Audrey, a former chairman (1969 - 1982) of Great Ormond Street Hospital, spotted a letter to a newspaper which pointed out that the copyright of Peter Pan, which had been assigned by J. M. Barrie to the hospital, was about to expire. Callaghan moved an amendment to the Copyright Bill then under consideration in the Lords to extend the term under which the hospital could continue to collect royalties despite the lapse of copyright, and this was accepted by the government.
On 14 February 2005, he became the longest-lived British Prime Minister, surpassing Harold Macmillan, and had the longest life of any British prime minister when he died at his farm in Ringmer, East Sussex on 26 March 2005, on the eve of his 93rd birthday. At the time of his death Callaghan had lived 92 years 364 days, exceeding by 42 days the life span of Macmillan.
James Callaghan's interests included rugby, tennis and agriculture. According to the official history of 10 Downing Street, he is believed to have been the tallest prime minister in British history at 6'1". He married Audrey Elizabeth Moulton, whom he had met when they both worked as Sunday School teachers at the local Baptist church, in July 1938 and had three children — one son and two daughters. Lady Callaghan died on 15 March 2005.
James Callaghan died on 26 March 2005, just 11 days after his wife's death.
The song "Time For Truth" from The Jam's debut In the City, a scathing critique of the state of the British nation, directly addresses Callaghan: "I think it's time for truth, and the truth is you lost, Uncle Jimmy."
In 1977 James Callaghan was immortalised in a cartoon strip, debuting in issue # 17 (2 February 1977) of Captain Britain comic, published by Marvel. He is briefed by Nick Fury of a Nazi plan by supervillain the Red Skull to take over Great Britain. In issue # 21 (2 March 1977) Callaghan is kidnapped by the baddies and sentenced to death, by firing squad, alongside Captain Britain and Captain America, before making his escape. It is not known what Callaghan's reaction was to his appearance in cartoon form.
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