Born in Leigh, in Lancashire, England on 9 September 1900, he was the son of John Hilton, the headmaster of Chapel End School in Walthamstow. His father was one of the inspirations for the character of Mr. Chipping in Goodbye, Mr. Chips. (Hilton was born on Wilkinson Street in Leigh — there is a teacher in Goodbye, Mr. Chips called Mr Wilkinson.) The setting for Goodbye, Mr. Chips is believed to have been based on the Leys School, Cambridge, where James Hilton was a pupil. Chipping is also likely to have been based on W. H. Balgarnie, one of the masters of the school who was in charge of the Leys Fortnightly, where Hilton's first short stories and essays were published.
Hilton wrote his two most famous books, Lost Horizon and Goodbye, Mr Chips while living in a rather ordinary Semi-detached house on Oak Hill Gardens, Woodford Green. The house still stands, with a blue plaque marking Hilton's residence.
He was married and divorced twice, first to Alice Brown and later to Galina Kopineck. He died in Long Beach, California from liver cancer on December 20, 1954, aged 54.
The novel tells the story of a much-loved schoolteacher through the long years of his tenure at Brookfield, the fictional boys' public boarding school where he has taught. Arthur Chipping conquers his inability to connect with the boys at the school, as well as his initial shyness, when he marries Katherine, a young woman he meets on holiday who quickly picks up on calling him by his nickname, "Chips". Despite his own mediocre academic record, he goes on to have an illustrious career as an inspiring educator at Brookfield.
Although the book is unabashedly sentimental, it also depicts the sweeping social changes that Chips experiences throughout his life: he begins his tenure at Brookfield in 1870, as the Franco-Prussian War is breaking out, and lies on his deathbed shortly after Hitler's rise to power. At times, the book is rather ethnocentric. On numerous occasions, Chips ruminates on his faith in "English blood," and at one point makes a mildly anti-Semitic joke about a "boy named Isaacstein." (Later editions of the book eliminated the Jewish reference and simply said that Chips "made fun of a boy's name.") He is seen as an individual who is able to connect to anyone on a human level, beyond what he (by proxy of his former wife) views as petty politics, such as the strikers, the Boers, and a German friend.
Clearly discernible is a nostalgia for the Victorian social order that had faded rapidly after Queen Victoria's death in 1901 and whose remnants were fully destroyed by the First World War. Indeed, a recurring leitmotif throughout is the devastating impact of the war on British society. When the war breaks out, Chips, who had retired the year before at age sixty-five, agrees to come out of retirement to fill in for the various masters who have entered military service. Despite his being taken for a doddering fossil, it is Chips who keeps his wits about him during an air raid, averting mass panic and sustaining morale. Countless old boys and masters die on the battlefield, and much of the story involves Chips's response to the horrors unleashed by the war. At one point, he reads aloud a long roster of the school's fallen alumni, and, defying the modern world he sees as soulless and lacking transcendent values of honour and friendship, dares to include the name of an Austrian former master who has died fighting on the opposite side.
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