62 Mr S. M. Bruce, High Commissioner in London, to Mr R. G. Menzies, Prime Minister

Letter LONDON, 6 February 1940

PERSONAL

In my personal cable to you of the 1st February [2], I indicated that I would forward to you a Memorandum dealing with the Economic and Social aspects of the definition of our peace objective. This I now enclose. It was prepared by McDougall [3] as the result of many long conversations we have had on the subject which were followed by drafts which were amended by subsequent conversations.

It embodies a summary of the conclusions we have arrived at.

As the object of all the communications I have sent to you is merely to give you a picture of the way in which my thoughts are tending, I came to the conclusion after reading the Memorandum that it would quite adequately meet that requirement and I am accordingly sending it to you in the form which it has now taken.

There is no need for me to weary you with a further letter on this matter and I would only add one observation. I have repeatedly asked, ever since war broke out, how it was proposed we would achieve the victory to which we so continually refer. Up to the present moment I have received no very dear answer to that question.

It is generally agreed that it is probably impossible a conclusion can be reached by a great land offensive on either side. Similarly there is fairly general agreement that even if we achieve the objective of the Empire Air Training Scheme and establish superiority in the Air that fact alone will not be sufficient to force a conclusion. Equally it is felt that while by the exercise of our Sea Power we can increasingly embarrass the enemy, it is doubtful if we could end the war by this pressure or in any event not for a very long time.

My own view is that victory can only be achieved by bringing home to the enemy that it is not worth fighting on. To create this frame of mind a combination of all forms of pressure will be required, namely, heavy losses in land fighting; increasing destruction in the Air and an ever growing economic strangulation by the blockade. All these factors will tend to sap the morale of the enemy but the power of resistance will endure much longer if the Germans have the impression they are fighting for their very existence and that they have little to hope for should the Allies achieve victory. This resistance would be sapped if they knew that after an Allied victory there would still be left something worth while living for.

It is because I hold this view that I feel so strongly that we should declare our peace aims, in which some hope is held out to a reformed Germany, as by doing so I believe we will help to break down the German power of resistance as and when the increasing pressures I have referred to above begin to be felt.

[S. M. BRUCE]

1 This letter and enclosure were dispatched by air mail (see last sentence of Document 37) and have been placed in this collection on the assumption that they were received in Canberra some ten days after dispatch.

2 Document 37.

3 Economic Adviser to the High Commissioner in London.

Enclosure

Memorandum by Mr F. L. McDougall, Economic Adviser to the High Commissioner in London

n.d.

The leaders of the Allied Governments have on many occasions since the outbreak of the war made it clear that Great Britain, France and the Dominions are not fighting for any territorial aggrandisement, nor for economic advantages but because Germany under her Nazi Government menaced the liberty and independence of European countries and indeed of the world.

There is, however, a strong feeling in many countries that the Allies should state their peace aims with more clarity than has yet been the case.

This feeling finds forcible expression in the United States of America and in other neutral countries, especially among those who are most anxious to see an Allied victory. Our neutral well wishers believe that if the Allies would present to the world a declaration making it clear that they are not fighting to re- establish the status quo but rather to secure a safe and juster world in which all nations could co-operate, the result would be immensely to strengthen the Allied cause.

On the other hand certain of the Allied Governments feel that it would be difficult, if not impossible, to make a declaration as to the political and territorial adjustments that will be necessary once the Nazi regime has been defeated.

If the force of this argument is accepted, does that necessarily mean that it is impossible for the Allies to make any declaration on peace aims? If a distinction is drawn between, on the one hand, purely European political questions and, on the other, the wider issues, it should be possible for immediate progress to be made on the latter while reserving the former for later discussion and clarification.

The advantages of such a course would be very great, not only in relationship to public opinion in neutral countries but also because of the effect upon the mass of middle class and working class opinion in Great Britain and in the Dominions. A declaration along the lines envisaged would dispel once and for all the impression, now so sedulously cultivated by German propaganda, that the ruling classes in Great Britain and France are fighting for the defence of privilege and for the maintenance of a plutocratic capitalism and imperialism.

It is, therefore, suggested that the Allied Governments should at the earliest possible moment formulate a declaration concerning their ultimate aims in regard to factors other than the European political complex.

It may, however, be maintained that for the Allies to make such a declaration before they have secured important results through military action or through the pressure of economic warfare would be regarded as a sign of weakness. It might further be said that Great Britain and France should have made such a contribution to world settlement before the war.

Such contentions would neither be historically accurate nor would they show a proper appreciation of the nature of the struggle in which we are engaged.

It is well known that the United Kingdom Government on many occasions in the years immediately preceding the war made it dear that it was prepared for a general settlement of all outstanding questions with Germany provided the German Government would give evidence of a real desire for political co-operation towards European peace. Progress towards economic collaboration was regarded as impossible so long as the German leader [1] and his lieutenants insisted upon conducting political affairs on the basis of threats.

It could thus be made dear that the responsibility for the failure to secure a movement towards the rectification of economic and social grievances rested upon the shoulders of Nazi Germany.

When Germany took the decision to plunge Europe into war, she compelled Great Britain and France to take up arms to secure the political conditions which Germany had made impossible through her huckstering diplomacy. This being the case, the Allies now find it possible publicly to announce the type of settlement they have long desired to achieve. They find it the more necessary to do so because the German propaganda machine is constantly attempting to suggest that Great Britain and France are fighting to preserve their own economic advantages and have been mainly influenced by their hatred of the growing economic strength of Germany. Such statements are a complete inversion of the truth, as everyone who remembers the constant efforts of Mr. Chamberlain [2] and M.

Daladier [3] for a pacific settlement must realise.

Now that war has come, the Allies must continue the struggle until Germany is prepared to abandon the Nazi doctrines and becomes a country ready for peaceful intercourse with other nations. It can, however, only help towards the successful outcome of the war and toward the realisation of the ultimate hopes of a better world for the Allied Governments now to announce their own conception of the results which would flow from peaceful co-operation and to indicate the contributions they will themselves be prepared to make towards that end.

It would, however, be essential that the suggested declaration should be sufficiently definite as to be regarded as a substantial pledge given to the world by the Allied Governments.

The suggested declaration might be along some such lines as the following:-

I. The Allied Governments regard it as impossible at this stage of the war to attempt to lay down the political conditions they would desire to see incorporated in the peace settlement since so much will depend upon the course of the war, the number of belligerent countries, and the reactions of the German people.

On this aspect of the Allied peace aims all that is possible is to reaffirm declarations already made, to emphasise that the security of all nations is closely involved in the cause for which the Allies are fighting and to indicate that the opinion of important neutral Governments will be sought in connection with this aspect of the peace settlement.

II. The Allied Governments realise that the economic difficulties which affected many nations during the period 1919-1939 were an underlying cause of political discontents and tensions. They also realise that the existence of serious poverty in most countries and of bitter poverty in certain countries is a condition which demands resolute action both on the national and on the international plane.

The effect of the war must be to cause serious economic disequilibrium which will be intensified when a halt is called in the production of armaments and when, as the Allied Governments hope, the world will agree to large scale disarmament.

The Allied Governments therefore believe that immediate steps should be taken to face the problems which must arise at the conclusion of hostilities.

The measures which will then be required will be in part national but unless methods of international action can be evolved in regard to economic, financial and social co-operation, national efforts will be severely handicapped and are unlikely to prove sufficient to meet the requirements of the situation.

Further, the Allied Governments believe that the economic and social objectives which should be sought, at the conclusion of the war, should not be a return to the conditions prevailing in the years preceding the war but rather that all nations should be enabled fully to develop their economic resources and jointly to co-operate in a concerted attack upon the problems of poverty.

III. The Allied Governments do not desire at this stage to put forward any precise proposals in regard to the world problems indicated in the previous section. They suggest that the main purposes to be sought should be, firstly, to secure to all nations the greatest possible opportunities for the development of their economic life and, secondly, to afford to individuals fuller possibilities for a progressive betterment of their standards of living.

They therefore believe that the questions they desire to see jointly discussed and determined can be classified in two main groups.

(i) Questions relating to the relative economic opportunities of countries:-

(a) Colonies (b) Raw materials (c) Demographic problems (d) Commercial policy including trade barriers and international cartels (e) Agricultural policy including increase of consumption and the control of production (f) Financial problems including the question of capital requirements, monetary stability, freedom of exchange (g) Transport questions (h) Anti-depression policies.

(ii) Questions directly affecting the welfare of the individual:-

(a) Methods of improving standards of living (b) Health questions (c) Labour questions (d) Social protection.

In addition the Allied Governments suggest that early consultation is required concerning the special problems consequent upon the war, and the measures taken by many countries to resist aggression. These problems include:-

(i) Demobilization problems (ii) Employment questions resulting from the demobilization of armament industries (iii) Restoration of the ravages of war.

NOTE: It may be regarded questionable [sic] as to whether the Colonial problem should be included at this stage in the list of questions set out above. Its inclusion would go far to convince other nations of the serious intention of the Allies to make real contributions and for this reason it seems desirable that Colonies should be included. If, on the other hand, this inclusion would unduly delay agreement among the Allies themselves, it might be undesirable to press for the maintenance of 'Colonies' in the above lists.

IV. The Allied Governments, recognising that their own major interests will best be served by the prosperity of all nations, will be prepared for the fullest exploration of methods whereby national commercial, financial, agricultural and social policies can best contribute to international progress rather than become obstacles to its development. They will themselves be prepared to make positive contributions towards the solution of all these problems and desire to discuss the form of such contributions with other Governments.

V. The Allied Governments do not desire themselves to determine the methods whereby the joint considerations they are proposing can best be carried out. They suggest, however, for the consideration of other Governments that since the 20th Assembly of the League of Nations has determined upon a separation of the economic and social activities of the League from its political functions the new machinery brought into being by the Assembly might well be utilized for this purpose.

Should other Governments agree to this suggestion the Allied Governments would propose that the new League Central Committee on Economic and Social Questions together with the International Labour Office should be utilized as the means whereby the foregoing questions may be examined and proposals prepared for the consideration of Governments.

The action of the Assembly has already made it possible for States not members of the League to adhere to the new organization for economic and social work without any involvement in political questions.

In addition to this the Allied Governments are convinced that arrangements can be made for enlarging the Central Committee and for the co-option of representatives of Governments which cannot see their way officially to adhere to the new organization.

The adoption of this proposal would secure a trained international secretariat for the study of these problems.

[AA: M103, JANUARY-JUNE 1940]

1 Adolf Hitler.

2 U.K. Prime Minister.

3 French Prime Minister.

[AA: M103, JANUARY-JUNE 1940]