The War of the World: History's Age of Hatred (55 page)

resources.’ For once he was articulating the conventional wisdom. Other eminent authorities – notably Sir Frederick Philips of the Treasury and Lord Weir, chairman of the engineering firm G. & J. Weir – said the same. Skill shortages were a potential problem not only in engineering but in construction. Keynes was only one member of the Economic Advisory Council, which reported in December 1938 that the balance of payments was ‘the key to the whole position’.

Yet these concerns were surely exaggerated. With the annual rate of growth in consumer prices peaking at just under 7 per cent in September 1937 and then rapidly declining (see
Figure 9.2
), and with long-term interest rates below 4 per cent until the outbreak of war itself, the Treasury had far more room for manoeuvre than it admitted. With so much slack in the system – contemporaries with good reason feared a recession in 1937 – higher levels of borrowing would not have ‘crowded out’ private sector investment. On the contrary, they would probably have stimulated growth. As for skilled labour, that was only an issue because, for originally economic
reasons, Chamberlain had committed Britain to a sophisticated airborne deterrent that turned out not to work; and because the government was almost superstitiously nervous of antagonizing the bloody-minded leadership
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of the Amalgamated Engineering Union by ‘diluting’ the skilled labour force. In practice, the rearmament programme stimulated staple industries as well as the infant aeronautical engineering sector; even on limited budgets the navy needed ships and the army needed guns, tanks and uniforms, so the iron, coal and textile sectors all benefited from rearmament. Wages for skilled labourers did not jump upwards, as the Treasury pessimists had feared; on the contrary, wage differentials narrowed. A more rational policy, both economically and strategically, would have been to build more ships and more tanks and to conscript the unemployed – who still accounted for 14 per cent of insured workers as late as January 1939 (see
Figure 9.2
) – and prepare a British Expeditionary Force the Germans could not have ignored. Chamberlain was simply wrong to fear that Britain lacked the manpower ‘to man the enlarged Navy, the new Air Force, and a million-man Army’.

Finally, fretting about Britain’s financial ‘fourth arm’ of defence presupposed that foreign powers would lend to Britain in a war only if it were financially attractive to do so, whereas both the United States and the Dominions would have powerful strategic and economic incentives to lend to Britain if the alternative was a victory for the dictators and an interruption to Atlantic export shipments. In any case, the current account deficits of the later 1930s were trivial – equivalent to around

Figure 9.2
UK unemployment and inflation, 1928–1939

1 per cent of GDP a year, compared with net overseas earnings of at least 3.5 per cent on a total stock of overseas assets worth £3.7 billion ($17 billion). Britain was not broke in 1938. The crucial point, as we shall see, was that she might nevertheless be broke by 1939 or 1940 if her hard currency reserves continued to diminish.

Britain, then, might have rearmed with a vengeance. Instead, on the flawed premises of outmoded economics, the British adopted the principle of Dickens’s Mr Micawber. Oppressed by the thought of their own debts, they hoped against hope that something would turn up. The Depression inspired the Japanese, the Italians and the Germans to think of foreign conquest. It convinced the British that they could do little to stop them.

It seemed staringly obvious to those who believed the strategic and economic cases for appeasement that Britain needed all the friends
she could get. In the words of the Chiefs of Staff in December 1937:

We cannot foresee the time when our defence forces will be strong enough to safeguard our trade, territory and vital interests against Germany, Italy and Japan at the same time… We cannot exaggerate the importance from the point of view of Imperial Defence of any political or international action which could be taken to reduce the number of our potential enemies and to gain the support of potential allies.

But who might these potential allies be? Though the French had spent significantly more on armaments than the British since the 1920s, most of their investment had been in defensive fortifications, the psychological effects of which were anything but healthy. The French Foreign Minister, Louis Barthou, sought to create an ‘Eastern Locarno’ to secure the frontiers of Germany’s neighbours to the east and laid the foundation of the Franco-Soviet Mutual Assistance Pact of 1936. However, the British response was lukewarm; the feeling in London was that the French should be willing to make more concessions to the Germans on armament levels. By 1937 France’s Prime Minister Léon Blum had embraced the notion that concessions to Germany in both Eastern Europe and overseas were necessary if peace were to be preserved. But Chamberlain had little confidence in the French and did practically nothing to make joint Anglo-French action effective. The Soviet Union was viewed with revulsion by most Conservatives, Chamberlain among them, on ideological grounds. Even Churchill found it hard to contemplate having Moscow in his grand alliance, though that was clearly a logical inference to be drawn from his own analysis of the situation. Much hope was pinned on Mussolini, who in 1934 had appeared to take a firm line against an abortive Nazi
putsch
in Vienna; this was to exaggerate Italy’s strength and to underestimate Mussolini’s desire to overturn the status quo, which he revealed when he invaded Abyssinia and ignored all inducements to negotiate a settlement. The 1935 ‘Stresa Front’ of Britain, France and Italy proved to be just that: a front. When Italy defected, Britain and France could not agree what to do first: get Mussolini out of Abyssinia or keep Hitler out of the Rhineland. They did neither. This pattern of Anglo-French mal-coordination, not helped by the divergence of
domestic politics in the two countries when France briefly had a Popular Front government, was to continue until the outbreak of war. Even after the
Anschluss
, Chamberlain could not bring himself to utter more than the most ambiguous hint of support for France in the event of a continental war. Unfortunately, there was just as much ambiguity in the French position after Édouard Daladier became Prime Minister in April 1938, not least because of the habitual cowardice of Georges Bonnet, his Foreign Minister. In Asia, meanwhile, Britain simply could not choose between her interests in China and the need to avoid war with Japan. The British nightmare was a German-Italian-Japanese combination. Yet the more they sought to avert it by diplomatic expedients rather than military counter-measures, the more likely it became.
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Among the great powers, that left only the United States. Yet the Americans were as eager to appease Germany as anyone in Britain. Franklin Roosevelt proposed the return of the Polish Corridor to Germany almost as soon as he entered the White House, sending Samuel L. Fuller as an unofficial emissary to Berlin in 1935 to sound out Hitler’s terms for a general peace settlement. His Secretary of State Cordell Hull repudiated the British model of economic appeasement – based on reaching bilateral economic agreements with Germany – in favour of a more ambitious multilateral approach to trade liberalization. But the net result was not so different. Between 1934 and 1938 American exports of motor fuel and lubricating oil to Germany nearly trebled. American firms supplied Germany with between 31 and 55 per cent of its imported phosphate of lime (for fertilizer), between 20 and 28 per cent of its imported copper and copper alloys, and between 67 and 73 per cent of its imported uranium, vanadium and molybdenum. Half of all German imports of iron and scrap metal came from the United States. US corporations including Standard Oil, General Motors, DuPont and even IBM all expanded their German operations.
By 1940 American direct investment in Germany amounted to $206 million, not much less than the $275 million in Britain and far more than the $46 million in France. In Asia, the United States had already established a pattern of calling on others to take stands against aggression, while pursuing its own economic self-interest. When Roosevelt began to do the same in Europe too, Chamberlain concluded that Americans were ‘a nation of cads’. ‘It is always best and safest’, he told his sister Hilda, ‘to count on nothing from the Americans except words’ – hence his dilatory response to Roosevelt’s call for a general great-power conference in 1938. The feeling was mutual. ‘The trouble is,’ opined Roosevelt, ‘when you sit around the table with a Britisher he usually gets 80 per cent of the deal and you get what is left.’ American ambassadors like Joseph Kennedy Sr. in London and Hugh Wilson in Berlin saw no objection to giving Hitler a free hand in Central and Eastern Europe. Moreover, American policy-makers, Roosevelt in particular, harboured a thinly veiled ambition to see the British Empire broken up.

Yet merely hoping, in view of Britain’s excess of commitments and her insufficiency of funds and friends, to preserve peace by diplomatic concessions was not as sensible and pragmatic a strategy as it seemed. For it failed to contemplate the potential consequences of diplomatic failure. Duff Cooper, as First Lord of the Admiralty, was one of the few members of the Cabinet to grasp this:

The first duty of Government is to ensure adequate defences of the country. What these adequate defences are is certainly more easily ascertainable than the country’s financial resources. The danger of underrating the former seems to me greater than the danger of overrating the latter, since one may lead to defeat in war and complete destruction, whereas the other can only lead to severe embarrassment, heavy taxation, lowering of the standard of living and reduction of the social services.

Faster and greater rearmament in the mid-1930s might not look affordable to the Treasury, but how much more expensive would it be in the 1940s if Hitler were to succeed in dominating the continent and if Germany, Italy and Japan chose to make common cause against the British Empire? This hypothetical worst-case scenario was wished away by most decision-makers – an act of negligence, since politicians
have an implicit moral obligation to those whom they represent regularly to contemplate the worst case, to attach to it both a probability and an estimated cost and then to insure against it. It was this that both Baldwin and Chamberlain failed to do – an irony, in view of their personal experience of business. An entire ‘nation of shopkeepers’
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declined to cover itself against a risk that was both large and likely. The supreme irony is that the premium itself might have been quite small. Indeed, the British may even have been paying enough to be covered. But their leaders, captivated by their own wishful thinking, failed to make a claim until it was too late.

How are we to explain this grave and, it might be thought, uncharacteristically imprudent misjudgement? To attribute it to popular pacifism will not do; that is not the correct inference to draw from events like the East Fulham by-election of 1933 or the notorious Oxford Union ‘King and Country’ vote of the same year.
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The proponents of
an unqualified renunciation of armed force – men such as George Lansbury and Sir Stafford Cripps – were only a minority, even within the Labour Party. The popular alternative to rearmament was collective security, not pacifism. Thanks to organizations like the Union of Democratic Control, the National Peace Council, the League of Nations Union and the Peace Pledge Union, there was considerable public support for the League, extending across the political spectrum. As Gilbert Murray, the Chairman of the League of Nations Union, remarked in 1928, ‘All parties are pledged to the League… all Prime Ministers and ex-Prime Ministers support it… no candidate for Parliament dares oppose it openly.’ Moreover, British voters wanted a League with teeth. In 1935 over 11 million voters returned a questionnaire in the so-called ‘Peace Ballot’; over 10 million favoured non-military sanctions against an aggressor, and nearly 7 million accepted the principle of collective military action if these were not effective. The only difficulty was that no one quite knew where the League’s military capability was going to come from; it was far easier to talk about disarmament agreements. Few people wanted to face the fact that over Manchuria Japan had defied the League with impunity. The withdrawal of Japan and then Germany from the League ought to have served notice that as an institution it was defunct; Mussolini’s invasion of Abyssinia was the
coup de grâce.
For a moment it seemed that the British would use naval power and economic sanctions to enforce the writ of the League; then (with the British general election safely won) it was revealed that the Foreign Secretary Sir Samuel Hoare and the French Premier Pierre Laval had proposed a deal to give a large chunk of Abyssinia to the Italians. It was Manchukuo all over again, with the difference that a Western politician paid a price; the hapless Hoare fell on his sword. The dashing Anthony Eden took his place, pledging ‘peace through collective security’; within a few months Abyssinian resistance had collapsed
and the Germans had marched into the Rhineland. Still people clung to the League rather than face the stark realities of the balance of power, which they had been promised was a thing of the past.