10 Mr M. MacDonald, U.K. Secretary of State for Dominion Affairs, to Mr J.A. Lyons, Prime Minister

Circular Cablegram B20 LONDON, 25 January 1939, 5.24-9.22P.m. [1]

MOST SECRET

Following for Prime Minister:-

Secretary of State for Foreign Affairs [2] has received a large number of reports from various reliable sources which throw a most disquieting light on Hitler's [3] mood and intentions. According to these reports Hitler is bitterly resentful at the Munich Agreement which baulked him of a localised war against Czechoslovakia, and demonstrated the will to peace of the German masses in opposition to the war mongering of the Nazi Party. He feels personally humiliated by this demonstration. He regards Great Britain as primarily responsible for this humiliation and his rage is therefore directed principally against this country which he holds to be the chief obstacle now to the fulfilment of his further ambitions.

(2) As early as November, there were indications which gradually became more definite that Hitler was planning a further foreign adventure for the spring of 1939. At first it appeared-and this was confirmed by persons in Hitler's entourage-that he was thinking of expansion in the East, and in December the prospect of establishing an independent Ukraine under German vassalage was freely spoken of in Germany.

(3) Since then reports indicate that Hitler, encouraged by Ribbentrop [4], Himmler [5] and others, is considering an attack on the Western Powers as a preliminary to subsequent action in the East. Some of these reports emanate from highly placed Germans of undoubted sincerity who are anxious to prevent this crime; others come from foreigners, hitherto Germanophile, who are in close touch with leading German personalities. Reports in question have received some confirmation in the reassurance which Hitler appears to have given Monsieur Beck [6] concerning his plans in the East as well as in the support which Germany has recently given Italy's claims against France. [7]

(4) There is as yet no reason to suppose that Hitler has made up his mind on any particular plan. Our reports show that he may:

(i) push Italy to advance her claims by force and use his obligations to Italy as a pretext for embarking on war. This course would have the advantage of ensuring the participation of Italy from the outset.

(ii) begin by launching an attack on Holland. In this connection the recent deterioration of German-Dutch relations and the critical tone adopted towards Holland by the German Press are noteworthy. Once in command of Holland and the Dutch Coast, Germany would aspire to dictate terms to us and paralyse France. She might at the same time bribe Poland and perhaps other countries with promises of colonial spoils; in that event the Dutch East Indies might be allocated to Japan.

(iii) put forward impossible colonial demands in his speech on 30th January in the form of an ultimatum. This seems the least likely hypothesis.

(iv) make a sudden air attack without pretext on England and follow up this initial surprise by land and sea operations against the Western Powers. We have received definite information from a highly placed German that preparations for such a coup are now being made. This person has however no information to show that Hitler has yet made up his mind to execute this plan.

(5) In the last few days we have received reliable information to the effect that the German Government are pressing for the conversion of the anti-Comintern Pact into a pact pledging signatories to give each other military assistance against unprovoked attack by a third power; that the Italian Government have agreed and that the Japanese Government are considering the matter. Our information is that the German Government wish this pact to be concluded in time for it to be announced by Hitler in the speech he is expected to make on 30th January.

(6) All reports are agreed in forecasting that the dangerous period will begin towards the end of February. This is borne out by independent reports to the effect that orders have been issued for mobilization about the middle of February. We have already received the news of preliminary mobilization measures and the formation of a reserve regiment composed of time expired conscripts which has been recently established in Bavaria. Moreover the economic and financial crisis with which Germany is now faced might well compel Hitler to take some action and the choice before him is either to slow down his re-

armament and to abandon his policy of expansion or else to launch into some foreign adventure in the hope of completing both thus distracting attention from the domestic difficulties and supply [sic] him with material resources which the country urgently requires and can no longer buy abroad. There can be little doubt that a man of Hitler's temperament may be tempted to choose the second alternative. Another motive for his doing so might be that he was not sure of the loyalty of his army and might feel that the surest way for a dictator to deal with a doubtful army was to give it occupation.

(7) It may seem fanciful and even fantastic to attribute such designs to Hitler and it is as yet impossible to speak of them with certainty but today as in July, August and September of last year it is remarkable that there is one general tendency couched in the summary of all reports and it is impossible to ignore them particularly in view of the character and proved reliability of the many informants. Moreover Hitler's mental condition, his insensate rage against Great Britain and his megalomania which are alarming the moderates around him are entirely consistent with the execution of a desperate coup against the Western Powers. The removal of moderates such as Schacht [8] and Wiedemann [9] is symptomatic. It has been suggested in some quarters that the German people would not follow Hitler on such a course and that a revolt would ensue. We have examined this aspect but the authorities on Germany whom we have consulted including anti-Nazi Germans of sound judgment are agreed that Hitler's orders would be carried out and that no revolt can be anticipated at all events during the initial stages of a war.

(8) His Majesty's Government in the United Kingdom have carefully considered the situation in the light of these reports and have decided to accelerate as far as possible the preparation with every defensive and counter offensive measure. In the meantime they are employing such methods as are available to them for bringing home to the German people the wantonness and folly of embarking on aggressive military adventures. They will lay much public emphasis on the point, in the hope of deterring Herr Hitler from committing himself to something irrevocable in the speech which he is expected to make on 30th January.

(9) Finally, in the event of Germany picking a quarrel with Holland, His Majesty's Government in the United Kingdom are considering the desirability of being ready at once with a proposal to both Governments for selection by neutral Governments of a board of three arbitrators. Such a proposal might not prove effective, but if arbitration were rejected or overridden by Germany, the issue would be clear and His Majesty's Government would have locus standi for appropriate action.

(10) In the next few days we shall be considering carefully what further steps we might take to avert or to meet a situation such as we have cause to apprehend, and we shall of course keep you fully informed. In the meantime we have thought it desirable to inform the Dominion Governments frankly of our apprehensions as to the future and to indicate such action as we are taking.

(11) It is impossible as yet for the Prime Minister [10] to decide whether he will himself utter any public warning to Germany before Hitler makes his expected speech on 30th January. The Prime Minister is due to speak at Birmingham on 28th January and if possible we would let Dominion Prime Ministers know beforehand what line the Prime Minister would propose to take.

(12) Similar appreciation is being sent to His Majesty's Charge d'Affaires at Washington [11] for communication to the President of the United States [12] for his personal and secret information. [13]

1 This cablegram was dispatched from London in three parts between 5.24 p.m. and 9.22 p.m. (G.M.T.) on 25 January 1939.

2 Lord Halifax.

3 Adolf Hitler, German Chancellor.

4 Joachim von Ribbentrop, German Foreign Minister.

5 Heinrich Himmler, Leader of the S.S.

6 Colonel Joseph Beck, Polish Foreign Minister.

7 On 17 December 1938 Italy informed France that she considered their agreement of 7 January 1935 to be null and void. This reopened Italy's long-

standing claims against France, including Corsica, Tunisia and Djibouti.

8 Dr Hjalmar H.G. Schacht, German Minister of Economics 1934-37.

9 Captain Fritz Wiedemann, former Confidential Aide to Hitler, became German ConsulGeneral in San Francisco on 20 January 1939.

10 Neville Chamberlain.

11 Probably V.A.L. Mallet.

12 Franklin D. Roosevelt.

13 On 27 January the Prime Minister, J.A. Lyons, sent a copy of this cablegram to all Ministers and to each of the State Premiers and to the Leader of the Opposition (AA: A1608, A41/1/1, i). Lt Col W.R. Hodgson, Secretary of Department of External Affairs, told his Minister, W.M. Hughes, that 'this is the most disquieting communication we have received for a considerable time and indicates that we may be faced with grave developments at any moment, especially after 30th January ... In my opinion it seems that the Commonwealth Government would incur a risk ... to hold a Cabinet meeting in Hobart with an the Ministers and most important officials away from the centre of activities and the main channel of communication with the British Government...' (ANL: Hughes, ms 1538/40). Hodgson's suggestion that the Cabinet meeting be held elsewhere was not, however, taken up. Nor do the Cabinet Minutes for the meeting on 7 February indicate that the feared crisis was discussed (AA: A2694, vol. 16). En a personal and confidential letter on 21 February 1939 to A.T. Stirling, External Affairs Officer in London, J.D.L. Hood, who was at the time in charge of the Political Co-operation Section of the Department of External Affairs, said that cablegram B20 had caused a sudden alarm, but that this was soon discounted in the light of subsequent cablegrams from Stirling and the Acting High Commissioner in London, J.S. Duncan. He added that 'it has remained difficult right up to the present to reconcile the various reports we have had of German and Italian intentions. But no doubt you have had the same trouble in London. Anyway, there is no mistaking the great impetus to defence preparation which the events of the last month or two have given here' (FA: A2937, Mr J.D.L. Hood).

[AA: A1608, A41/1/1,i]