Carroll Quigley - Tragedy and Hope - A History of the World in Our Time

This complex scheme meant that the British government accepted the events of March 15th except for feeble protests. These were directed less against the deed itself than against the risk of agitating public opinion by the deed. On March 15th Chamberlain told the Commons that he accepted the seizure of Czechoslovakia, and refused to accuse Hitler of bad faith. But two days later, when the howls of rage from the British public showed that he had misjudged the electorate, he went to his constituency in Birmingham on March 17th and denounced the seizure. However, nothing was done except to recall Henderson from Berlin “for consultations” and cancel a visit to Berlin by the president of the Board of Trade planned for March 17-20. The seizure was declared illegal but was recognized in fact at once, and efforts were made to recognize it in law by establishing a British consulate general accredited to Germany at Prague. Moreover, £ 6,000,000 in Czech gold reserves in London were turned over to Germany with the puny, and untrue, excuse that the British government could not give orders to the Bank of England (May 1939).

The German acquisition of the Czech gold in London was but one episode in an extensive, and largely secret, plan for economic concessions to Germany. For Chamberlain and his friends, the Czechoslovak crisis of March 1939 was merely an annoying interruption to their efforts to make a general agreement with Germany in terms of the seven points we have already mentioned. These efforts had been interrupted after March 3, 1938 by the Czechoslovak crisis of that year, but they remained the chief item in Chamberlain’s plans, and he tried to get Hitler to discuss these projects when the two leaders came face to face on September 15th at Berchtesgaden. Hitler interrupted, and turned the discussion at once to the crisis. Again, after the Munich agreement was signed on September 30th, Chamberlain tried to get Der Führer to discuss a general settlement, but he was evaded. This process was continued for a year, Chamberlain and his friends proposing concessions and Hitler either evading or ignoring them. There was a slight change, however, after September 1938: Chamberlain’s project was widened to include economic concessions, and the efforts to achieve it became increasingly secret, especially after the events of March 1939.

After September, 1938, the seven-point project was broadened by adding an eighth point: economic support for Germany, especially in exploiting eastern Europe. The German economic situation was critical at the end of 1938 because of the speed of rearmament, the expense and economic disruption arising from the mobilization of 1938, and the great shortage of foreign exchange, which hampered the importation of necessary commodities. Göring, as commissioner of the Four-Year Economic Plan, presented these facts at a secret conference on October 14, 1938. In the course of his speech he spoke roughly as follows:

“I am faced with unheard-of difficulties. The Treasury is empty; industrial capacity is crammed with orders for many years. In spite of these difficulties, I am going to go ahead under all circumstances. Memoranda are no help; I want only positive proposals. If necessary, I am going to convert the economy with brutal methods to achieve this aim. The time has come for private enterprise to show if it has a right to continued existence. If it fails, I am going over to state enterprise regardless. I am going to make barbaric use of the full powers given me by the Führer. All the aims and plans of the state, the party, and other agencies which are not along this line must be rejected pitilessly. Ideological problems cannot be solved now, there will be time for them later. I warn against making promises to labor which I cannot keep. The desires of the Labor Front must sink into the background. Industry must be fully converted. An immediate investigation of productive plants is to be started to determine whether they can be converted for armaments or export, or whether they are to be closed down. The problem of the machine-tool industry comes first in this.... It remains now to decide who is going to carry out this task—the state or self-administered industry.”

The Entente governments were aware of these German problems, but, instead of seeking to increase them, they sought to alleviate them. When economic and political duress was put by Germany on the countries of southeastern Europe in October and November 1938, Chamberlain defended Germany’s right to do so in the House of Commons. No economic support was granted to these countries to help them to resist, except for a loan to Turkey. On the contrary, the British government, through the Federation of British Industries, began to negotiate with Germany to create a complete system of industrial cooperation, with cartels dividing the world’s markets and fixing prices for over fifty industrial groups. A coal agreement was signed, at Britain’s request, at the end of January 1939, and a general agreement was signed between the Federation of British Industries and the Reichsgruppe Industrie on March 16, 1939.

In his speech of January 30, 1939, Hitler had said, “We must export or die.” Two weeks later the British government sent Frank Ashton-Gwatkin to Berlin “to find out, if possible, what roads are still open to economic recovery and reconstruction and might, therefore, be worth pursuing, and what roads are closed.” On March 5th he reported that Germany’s critical economic situation was caused by its political actions in 1938 and that it must now turn to economic actions for 1939. This, he felt, “implies though it does not necessitate, some limitation of the armaments race; secondly, it means that Germany must look towards the United Kingdom for assistance or cooperation in the economic sphere.” He listed the concessions that the Germans wanted, and concluded, “We should not ignore the possibilities of a more peaceful development; and we should not put Hitler in a position to say that once again he made an offer of cooperation to England and that that offer was pushed aside.” Accordingly, the discussions continued and the British government announced that the president of the Board of Trade, Oliver Stanley, would go to Berlin on March 17th.

The British military attaché in Berlin protested as violently as he dared against this economic appeasement in a letter of February 27th, saying: “We can only reduce the speed and scope of the universal armaments race by forcing a reduction of tempo on Germany. Germany is apparently now in dire economic straits. We have not applied the economic screw—Germany has tightened it down herself—and it is surely unsound for us to ease it before Germany has made an effort to do so herself. From the military point of view, concessions made by us to the present regime in Germany are generally to be deplored. The opposition in Germany and our potential allies in a possible war-above all, America, are becoming more and more convinced of our weakness and lack of will or power to stand up to Germany.”

When the Bohemian crisis broke on March 15, 1939, Chamberlain announced that Oliver Stanley’s visit to Berlin that weekend would be postponed but that the economic conversations between the British and German industrial associations were continuing. Public outcry continued so high that on March 28th it was announced that these negotiations were being broken off because of disturbed public opinion. However, on April 2nd, only five days later, the German commercial attaché in London was secretly informed that the British were ready to reopen the discussions. The amazing fact is that the British unilateral guarantee to Poland was given on March 31st, exactly halfway between the public breaking off and the secret resumption of the economic negotiations. It should perhaps be mentioned that France throughout this period was also negotiating trade agreements to send raw materials to Germany as a result of a preliminary agreement signed during Ribbentrop’s visit to Paris early in December 1938. Although the documentation is not complete, we know that this French-German agreement was in final draft by March 11th.