REVIEW OF RELATIONS BETWEEN THE UNITED KINGDOM AND GERMANY

The Commonwealth has not recently had any direct relations of
particular significance with Germany, nor was Australia, or any of
the Dominions, a signatory of the Locarno Treaty, the renewal of
which was one of the chief European problems of 1936. Yet by
reason of the vital interest of Australia and the other Dominions
in the preservation of European peace and as a corollary World
Peace, German policy and activities are always followed with close
attention.

[There followed a comprehensive summary of the events of 1936.]

The necessity for some action to ease the economic position in
Germany is now being widely discussed. The difficulties of a
purely political agreement to replace the Locarno Treaty seem very
great and it is felt that Great Britain must, as a safety valve to
ensure peace, take some action to relieve that economic trouble in
Germany. The currency agreement which was negotiated between
France, the United Kingdom and the United States, for the
devaluation of the French franc, did not ease this situation but
rather tended to emphasize Germany's sense of isolation.

Failing either a political agreement or an economic settlement,
and excluding the unlikely possibility of the waning of Nazism, it
would appear that the hope of averting an 'adventure' on the part
of Germany lies in the strong position of Great Britain today by
reason of her rearmament.

Generally speaking the peace of Europe today is centred around
Germany's future intentions. Her rearmament programme does not
give any indication whether her intentions are peaceful or
warlike. The various declarations made by the German leaders,
writers and publicists, do not really qualify the position. For
example, Professor Banse [1] says Germany wants a German empire
from the North Sea and the Baltic to the Mediterranean; Rosenburg
[2]-the breakup of Soviet Russia and the creation of vassal states
from the Black Sea through the Ukraine to the Baltic; Dr Schacht
[3]-the return of the former colonies; Spengler [4]the
regeneration of the decadent white races by the spirit of
prussianism; Hitler in 'My Struggle'-the unity of the German race
and sufficient land in Europe to support it. Today there is unity
in the demand for return of colonies and access to raw materials.
This aspect is dealt with in a separate paper.

Probably German ideas of foreign policy are in a state of flux and
they do not quite know what they want, and their actions since
1933 have been opportunist in taking advantage of a difficult
economic and political situation both international and as regards
individual states. Apart from the return of colonies, there are
still some German demands such as the status of Danzig, Memel,
Luxemburg, the union of Austria and Germany, the revision of
frontiers and German minorities, particularly in Czechoslovakia,
which are likely to come to the front at any time and which may
not only increase the prevailing tension, but cause a general
conflagration.

Beyond this there are clear indications that German policy
visualises the establishment of a Germanic bloc in Central and
South-eastern Europe. The aim is probably not a political empire
as the Germans are well aware of the existing strength and ideals
of the young nations created as a result of the Peace Settlement,
and have in mind the difficulties which may be caused by
minorities within their frontiers. They learned this by bitter
experience over Alsace and Lorraine, and for this reason this
particular problem practically ceases to exist.

The reports from Roumania, Yugoslavia, Hungary, Greece and Turkey
show clearly that this Germanic bloc is being created by economic
and financial domination effected through the so-called clearing
and exchange agreements which places a large proportion of foreign
trade at the mercy of Germany. There are also tendencies towards
the formation of a distinct Fascist bloc. In this connection all
the authoritarian or totalitarian states are included as against
the democratic countries with whom for the time being at any rate
Soviet Russia has allied herself for common protection. The idea
of the groupings of Europe into these two blocs is still nebulous
but it is one which will have to be closely watched and guarded
against. [5]

1 Professor Ewald Banse, enthusiast for Pan-Germanism, author of
several books including Raum und Volk im Weltkriege (1933),
published in English (1934) as Germany prepares for War.

2 Alfred Rosenberg, German Nazi ideologist, philosopher and
Minister for Eastern Occupied Territories 1941-44.

3 Dr Hjalmar Schacht, German President of the Reichsbank 1924-30,
1933-39, Minister of Economics 1934-37.

4 Dr Oswald Spengler, German philosopher and mathematician, author
of Der Untergang des Abendlandes (2 vols, 191 8, 1922), published
in English (1926-28) as The Decline of the West.

5 Memorandum prepared in Department of External Affairs.

[AA: A981, IMPERIAL RELATIONS 137]