The War of the World: History's Age of Hatred (54 page)

From a military standpoint, owing to the extreme weakness of France, the possibility of an understanding between Germany and Japan, and even in some circumstances Italy, and because of the immensity of the risks to which a direct attack upon Great Britain would expose the Empire, the present situation dictates a policy directed towards an understanding with Germany and a consequent postponement of the danger of German aggression against any vital interest of ours.

What precisely were Britain’s military commitments in Europe? In 1925 the Baldwin government had signed the Treaty of Locarno, guaranteeing the Franco-German and Belgian-German borders as they had been redrawn at Versailles. But Locarno conspicuously made no such international commitment with respect to Germany’s eastern frontier. Moreover, just as had been the case before 1914, formal commitments to the security of Western Europe were not followed up by meaningful military contingency planning. As A. J. P. Taylor put it, Locarno seemed to imply that ‘Splendid isolation had come again.’ As a result, when Britain sought to broker an agreement between France and Germay over disarmament – or, rather, German rearmament, since the British proposals of January 1934 envisaged a trebling of the German army to 300,000 – the French could legitimately ask what kind of practical reassurance London could offer them for the eventuality of another German invasion. The answer was: None. Britain’s commitment to the defence of Belgium was arguably less binding than it had been in 1914.

Yet Britain could not pretend that she had no stake in the security of Belgium and France. The May 1934 report of the Defence Requirements Committee reminded the Cabinet of the rather obvious reality that Germany posed a bigger strategic threat to the United Kingdom than Japan and that therefore, as in 1914, Britain might be called on to send troops to the aid of Belgium (and possibly also Holland) in the event of a German invasion. Indeed, the growing importance of air power made it even more imperative than in the past that the Channel coast should not fall into the hands of a hostile continental power. Germany was therefore ‘the ultimate potential enemy against whom all our “long-range” defence policy must be directed’. What form should that ‘long-range’ policy take? If there was one lesson that
might have been learned from 1914 it was that a small standing army in Europe was unlikely to deter the Germans. Yet the option of building up a large land force, available for deployment in Western Europe, was rejected in favour of enlarging the ‘Metropolitan’ (that is, British-based) air force to eighty or more squadrons, leaving the army with little more than five regular divisions available to send across the Channel as a ‘Field Force’ – almost exactly as few as there had been in 1914. By the end of 1937 its size had actually been reduced. By 1938 it had been turned into an expeditionary force for use only in imperial trouble-spots. The ineffectual Minister for the Co-Ordination of Defence, Sir Thomas Inskip, was not oblivious to the risk that was being run:

If France were again to be in danger of being overrun by land armies, a situation might arise when, as in the last war, we have to improvise our army to assist her. Should this happen, the Government of the day would most certainly be criticized for having neglected to provide against so obvious a contingency.

Nevertheless, the decision was taken, as the Minister for War Leslie Hore-Belisha put it, ‘to put the continental commitment last’. General Sir Henry Pownall, the Director of Military Operations and Intelligence, was appalled, but overruled. Incredibly, the army’s budget was actually cut in the wake of the Austrian
Anschluss
. Things were no better by the time of the Munich crisis. It was not until February 1939 that the idea of a European expeditionary force was revived, and even at that late juncture it was to be composed of just six regular and four territorial divisions.

The rationale of relying on air power merits further exploration, for it was pregnant with future difficulties. As we have seen, the role envisaged for Britain’s enlarged air force was not defensive but offensive; it was to be, in the words of the future Prime Minister Neville Chamberlain, ‘an air force of such striking power that no-one will care to run risks with it’. If Britain could credibly threaten to bomb German cities into rubble from the air, so it was argued, the Germans might be deterred from using force against their neighbours. The idea that this might deter Hitler was self-reflexive; because they themselves feared German bombers so much, the British assumed that
Hitler would fear their bombers equally. Though Churchill was right that Germany was out-building Britain as far as numbers of aircraft were concerned, British analysts systematically overestimated the Luftwaffe’s capacity to inflict casualties on the population of the capital. That in itself was a grave error, for it caused the government to exaggerate the threat Hitler could pose to Britain in 1938; fantasizing about a flattened London became a substitute for thinking about realistic worst-case scenarios. Also deplorable was the Air Staff’s slowness to work out how Britain’s own strategic bombing forces would actually be used; when it came to the crunch in September 1939, Bomber Command confined itself to dropping propaganda leaflets, having come to the conclusion that trying to hit German industrial targets would be too costly. Most shocking of all is the comparative neglect, until the eleventh hour, of Britain’s air defences, which were to prove the nation’s salvation in 1940. True, vital work was being done by the Aeronautical Research Department chaired by Henry Tizard, which adopted the radar technology developed by Robert Watson-Watt at the National Physical Laboratory as early as 1935. But the Air Ministry was much slower to appreciate the need to invest in fighters capable of intercepting incoming bombers. Another side effect of the focus on long-range bombing was that it further diminished the strategic importance of Belgium and France, since it was assumed from the outset that the bombers would fly from British bases.

Thus the British knew they could not defend their Asian empire if the Japanese attacked it; knew they could not defend Belgium and France if Germany struck westwards, much less Poland and Czechoslovakia if Germany struck eastwards; and knew, or thought they knew, that they could not defend London if Hitler sent his Luftwaffe across the Channel. By 1935, incredibly, they were so convinced of their own hopeless vulnerability that they did not even dare fight the Italian navy. In 1938 the Chiefs of Staff ruled out even ‘staff conversations’ with the French, since the very term ‘has a sinister purport and gives an impression… of mutually assumed military collaboration’. Perish the thought!

Could not these appalling vulnerabilities have been addressed by increased defence expenditures? No; all that more rapid rearmament would achieve, it was objected by the mandarins of the Treasury, would be to undermine Britain’s precarious economic recovery.

Fighting the First World War had increased the British National Debt by a factor of twelve. By 1927 it was equivalent to a crushing 172 per cent of gross domestic product. The interest on the debt accounted for more than two-fifths of public expenditure in the late 1920s. Budget surpluses and an overvalued exchange rate following Churchill’s decision, as Chancellor of the Exchequer, to return to the gold standard in 1925 were attained at the expense of jobs in manufacturing. The staple British industries of the late Victorian era – coal, iron, ship-building and textiles – had now been replicated all over the world; export markets for such British products inexorably shrank. Yet ‘invisible’ earnings from Britain’s still immense overseas investments, financial services and shipping were also under pressure. Less obvious but in some ways more profound was the damage that the war had done to the labour force. Under the system of volunteering that had been used to recruit the new divisions needed in the first half of the war, a great many skilled workers had been drawn into the armed forces, of which a substantial proportion were either killed or incapacitated. The official solution to post-war problems was essentially Victorian in conception: budgets should be balanced, the pound should return to gold and free trade should be restored. In the name of ‘retrenchment’, defence expenditure was reined in, so that as a share of total public spending it fell from nearly 30 per cent in 1913 to just over 10 per cent twenty years later. Baldwin told the International Peace Society: ‘I give you my word that there will be no great armaments.’ He meant it. The Ten-Year Rule amounted to a spending freeze for the armed services. Even when it was dropped in 1932, the Treasury insisted that ‘financial and economic risks’ militated against significant increases in the defence budget.

As Chancellor of the Exchequer, Neville Chamberlain had been one of the driving forces behind the creation of the Defence Requirements
Committee, in the belief that a clear ordering of military priorities would make his life easier at the Treasury. He welcomed the identification of Germany as the biggest potential danger. Yet it was also Chamberlain who ruled out as impossible the additional £97 million that would be needed to create and maintain an adequate expeditionary force for use on the continent. His preference for a deterrent strategy based on bombers was motivated in large measure by the fact that it looked cheaper than the alternative. When the DRC proposed in November 1935 that its ‘Ideal Scheme’ of rearmament be financed by a Defence Loan, there was consternation in the Treasury; again Chamberlain insisted on cutting the spending bids of the navy and the army. But soon the RAF, too, started to look too expensive. As one Treasury official put it after Munich, ‘We think that we shall probably not be able to afford it [the Air Ministry’s latest proposals] without bringing down the general economy of this country and thus presenting Hitler with precisely that kind of peaceful victory which would be most gratifying to him.’ In fact, the RAF was the best treated of the three services (though Chamberlain was ready at any time to curb spending on it in return for an ‘Air Pact’ with Hitler). The Treasury gave even shorter shrift to the requests of the army and navy for additional funds. As for Churchill’s demands for much larger defence expenditures, which he first advanced in 1936, Chamberlain dismissed these out of hand. Only in 1937 was new borrowing undertaken to finance rearmament, to the tune of £400 million, and even then Chamberlain had initially tried to cover the increased costs by raising taxes. His successor at the Treasury, Sir John Simon, insisted that total defence spending from April 1937 to April 1942 should be capped at £1,500 million.

In any case, it was hoped that a policy of economic engagement with Germany might serve to divert the Nazi regime from aggression. On the one hand, officials at the Bank of England and the Treasury wanted to preserve trade with Germany and avoid a total German default on money owed to Britain. On the other, they deprecated the kind of economic controls that would undoubtedly be required if large-scale rearmament was to be undertaken without domestic inflation and a widening current account deficit. When the Secretary
of State for Air, Viscount Swinton, pressed for skilled workers to be shifted from the civil to the defence sector in order to speed up aircraft construction, Chamberlain responded that this should be done by means of ‘mutual arrangements [between employers and employees], and with a minimum of Government interference’ – an echo of the old, failed maxim of ‘Business as Usual’. Traditional financial strength was supposed to be the ‘fourth arm’ of British defence, in Inskip’s phrase; hence the Treasury’s perennial preoccupation with the balance of payments and the exchange rate. The great fear was that in the event of a prolonged war Britain’s credit abroad would prove far weaker than between 1914 and 1918, for the current account deficits of the later 1930s were eating away at Britain’s net creditor position, her gold reserves and the strength of sterling. For all these reasons it was not until 1938 that defence expenditure exceeded 4 per cent of gross domestic product and not until 1939 that the same could be said of the government’s deficit (see
Figure 9.1
).

The economic arguments for appeasement reflected British economic strength as much as weakness. Compared with what had happened in Germany and the United States, the Depression in the United Kingdom had been mild. Once Britain had gone off gold in September 1931 and interest rates had been cut to 2 per cent by the Bank of England, recovery came quite swiftly – not, certainly, to the old industrial regions of the North, but to the Midlands and the South-East, where new industries and services were springing up. Cheap money also fuelled a construction boom in England south of the Trent. But for precisely these reasons, it was argued, significantly higher expenditure on rearmament would have created problems of overheating in the British economy, in the absence of matching tax increases or cuts in other government programmes. Keynes himself was to argue in
How to Pay for the War
that, in the event of large-scale defence expenditures, inflation and balance of payments problems could be avoided only if the economy were much more strictly controlled than it had been in the First World War, with severe taxation of consumption. Such an illiberal regime was inconceivable in peacetime. In April 1939 Keynes spelt out the constraints on pre-war rearmament: ‘The first is the shortage of labour; the second is the shortage of foreign

Figure 9.1
UK expenditure on rearmament and government deficit as percentage of GDP, 1933–1939