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Britain were ˜heavily engaged elsewhere™, Japan would not attack British



34
Clive to FO, tel 231, 3 Sept 1935, FO 371/19244/F5687/6/10, minutes, Orde (4 Sept)
and Vansittart (4 Sept).
35
Chatfield™s remarks, 17th meeting DRC, 10 Oct 1935, Cab 16/112.
36
Hoare™s minute (30 Sept) on Cadogan to FO, tel 60, 27 Sept 1935, FO 371/19244/
F6160/6/10, and Vansittart™s reply (30 Sept); Cadogan™s diary entries, 23, 24, 25 Sept
1935, Cadogan Papers, ACAD 1/3; Cadogan to Orde, 21 Aug 1935, Cadogan Papers,
FO 800/293; Leith-Ross to Runciman, 21 Sept 1935, Runciman Papers, WR 275.
37
Hoare™s minute (29 Oct) on ˜Chinese Financial Situation™, Orde, 28 Oct 1935, FO 371/
19245/F6729/6/10.
Complications and choices 151

interests in the Far East, but rather would assault Soviet Russia.38 This
was a minority view in the defence establishment.39 For most, the focus
was on the Japanese military threat in the Far East and how to contain it.
Here, Soviet Russia was central, for only Moscow had the military
means to deal with Japan. Continued Japanese pressure in Manchuria
both annoyed and frightened the Soviets.40 The likely result of this,
Harcourt-Smith noted, was a ˜steady deterioration in Russo-Japanese
relations™. This line of analysis was supported by Soviet actions. In mid-
October, Litvinov pointed out that Japan was using the cover of the
Abyssinian crisis to increase its violations of the Soviet frontier, and he
attempted to persuade Britain to support the Soviet position.41
The need to do so was underlined by Japanese actions. Anglo-Japanese
relations were steadily deteriorating, and Japan was pursuing a policy
independent of the Powers in the Far East. The Far Eastern Department
emphasized the tangle of considerations. As Gascoigne put it: ˜Japan is at
present very much mistress of the Far East, America is drawing in her
horns, Russia is much occupied at home, and we have been obliged [by
Abyssinia] to weaken our squadron in China waters.™ Orde lamented:
˜The Japanese badly need a beating from somebody; but we at least are
not in a position to administer it.™42 Collier suggested a joint effort to curb
Japan: ˜I cannot help feeling that we might make more effort than we do
now to bring the Russians and the Americans into an anti-Japanese front
with us.™ He contended that the Comintern™s actions should not neces-
sarily prevent Anglo-Soviet co-operation against Japan: ˜The Comintern
is a nuisance but not a serious menace, and need be no ban to Anglo-
Russian collaboration in matters of foreign policy towards third par-
ties.™43 But, however the ˜beating™ was to be administered, there was little
belief that Japan would soon pursue a pacific policy without the threat
of force. It was not surprising that Orde was dismissive of a report from
Tokyo that Japanese officers were becoming less anti-British: ˜they will
probably have to become more frightened of trouble with Russia before
they really try to earn our friendship™.44
38
Randall™s minute (11 Oct 1935) on ˜Strategical Situation in the Far East with Particular
Reference to Hong Kong™, COS 405, 10 Oct 1935, FO 371/19343/F6416/717/61,
Vansittart™s minute (12 Oct).
39
Chatfield™s remarks, 18th meeting DRC, 14 Oct 1935, Cab 116/112.
40
Charles to Collier, 16 Oct 1935, FO 371/19347/F6710/13/23, and minute (5 Nov).
41
Charles to FO, disp 470, 22 Oct 1935, FO 371/19347/F6689/13/23.
42
Based on Clive to FO, disp 553, 5 Nov 1935, FO 371/19357/F7579/376/23, minutes
(all 9 Dec, except for Collier™s 17 Dec).
43
Collier™s minute (14 Dec) on Cadogan to FO, disp 41, 20 Oct 1935, FO 371/19308/
F7572/427/10.
44
Orde™s minute (28 Dec) on Clive to FO, tel 350, 27 Dec 1935, FO 371/19357/F8065/
376/23.
152 Britain, Soviet Russia and the Versailles Order

Soviet Russia was also significant in Europe. In mid-October, there
were rumours of an imminent improvement in Soviet“German relations.
While this speculation was dismissed, Collier noted that it remained ˜a
possibility with which we must reckon™.45 European politics were made
more fluid by Soviet fears that both Britain and France also might
abandon the Stresa front and swing their support towards Germany.46
The War Office was particularly concerned, arguing that a ˜German“
Russian Alliance would ultimately entirely dominate continental
Europe™ and reduce France and Italy to ˜second class powers™.47 This
circumstance would likely lead to Japan™s joining the Russo-German
combination, ˜which would probably mean the end of the British
Empire™. In early December, the Foreign Office warned the Treasury
that efforts were being made in Berlin to improve German“Soviet trade
relations.48 Problems were everywhere. Opinions varied. These vari-
ations must be considered “ although they take us away from Anglo-
Soviet relations narrowly defined “ in order to understand how Soviet
Russia affected British strategic foreign policy.
There was an influential sector at the Foreign Office who saw the
solution to all the problems in an Anglo-French rapprochement with
Germany. On 21 November, Sargent and Wigram contended that Brit-
ain and France should work together towards an ˜Air Pact and Air
Limitation™ and attempt to get Germany back in the League. This could
not be done by bargaining away ˜“other people™s” possessions in Eastern
and Central Europe™, but the duo suggested that ˜a policy of coming to
terms with Germany in Western Europe might enable Britain and
France to moderate the development of German aims in the Centre
and East™. The grip that 1914 had on their thinking was evident. Such
a policy faced ˜formidable obstacles™; however,
the British public will expect it to have been attempted, before we proceed to
intensive rearmament, or to a further multiplication of defensive pacts which, in
the circumstances now emerging in Europe, will soon differ little from what
Germany before the war claimed to be the policy of “encirclement”.
The duo believed that what they termed ˜our traditional policy of
coming to terms with Germany™ must be continued and that a ˜policy

45
Charles to FO, disp 453, 17 Oct 1935, FO 371/19460/N5520/76/38, minute; Collier™s
minute (4 Dec) on Phipps to FO, disp 1237/27 Nov 1935, FO 371/19460/N6175/76/38.
46
Chilston to FO, disp 533, 29 Nov 1935, FO 371/19460/N6304/135/38.
47
˜The possibility of co-operation between Germany and Russia, and Germany and Japan
and the effect of such combinations on British security™, secret, MI3B, 30 Oct 1935, WO
190/368.
48
Collier to S. D. Waley (Treasury), and L. Browett (B of T), 7 Dec 1935, FO 371/19460/
N6340/76/38.
Complications and choices 153

of drift™ must be avoided. Without this, there would be the unpleasant
possibility of a Russo-German rapprochement.49
This policy was unacceptable to Collier. He rejected its assertion that
Germany must be appeased, arguing that ˜rhetorical phrases™ had been
used by the authors to ˜stigmatise the alternatives [that is, other policies]
as a “policy of encirclement” and “a policy of drift”™. He felt that
Germany™s aims in eastern Europe were incompatible with British inter-
ests and could not be moderated. To attempt to mollify the Germans ˜is
not a continuance, but a reversal of our previous policy™. He believed
that German ambitions would be checked by other means: ˜Russian
armaments are becoming strong; the Baltic States are consolidating
themselves and, with Russian help, should be able to put up a good
fight.™ He also rejected the idea that the ˜British public™ wanted such a
policy; the recent election had given the ˜Government a mandate with-
out any qualification™. He also opposed other lines of appeasement.
While Collier did not advocate Britain™s forming any alliances to check
Germany, he believed that Berlin could best be deterred by a collective
threat of the use of force, including that provided by Soviet Russia.50
These arguments were seen by Vansittart on 1 December.51 The PUS
agreed that an effort to come to terms with Germany should be made
and that a ˜policy of drift™ as well as ˜a policy of encirclement™ had to be
avoided. On the other hand, he did not feel that the Anglo-German
Naval Agreement had necessarily ushered in an Anglo-German rap-
prochement. Nor was an improvement in Franco-German relations on
the cards. While the French foreign minister, Pierre Laval, had a ˜strong™
desire for such a development, the French Left did not, and Laval™s
position was weakening. Linking these two possible realignments was
the PUS™s view that any warming of Russo-German relations was un-
likely:
I agree that a Russo-German rapprochement cannot be discounted, but that will
depend largely on the attitude of France. The Franco-Soviet agreement was
designed precisely to prevent this. Unless M. Laval completely destroys the
confidence of Russia (and the Little Entente) a Russo-German agreement is
possible but not probable.

This had implications for British policy towards both Moscow and
Berlin. ˜It [a Russo-German rapprochement] would become far more
49
˜Britain, France and Germany™, Sargent and Wigram, memo, 21 Nov 1935, FO 371/
18851/C7752/55/18.
50
Untitled memo, Collier, 22 Nov 1935, FO 371/18852/C8523/55/18.
51
This and the following paragraph are based on Vansittart™s untitled memo, 1 Dec 1935,
Vansittart Papers, VNST 2/24; original in FO 371/18852/C8524/55/18, and Hoare™s
minute (3 Dec).
154 Britain, Soviet Russia and the Versailles Order

probable if we too took the road to Berlin prematurely. And if we did,
and brought about an anxious Russian bid to Berlin, and then failed
ourselves?™
On this cautious note, he turned to Collier™s arguments. Vansittart
agreed with him that Germany could not be accorded any territories in
Europe and that Britain needed to rearm to negotiate. He did not reject “
in Collier™s root-and-branch fashion “ any accommodation with Ger-
many. While Vansittart accepted the argument that Germany could not
be appeased in eastern Europe, he asserted that Berlin might be given
some of Britain™s African possessions and that the League Covenant
might be revised. Vansittart sent these memoranda to Hoare and Eden,
the former noting that he would read them ˜during my holiday™.
There was an unintended irony in this remark. Hoare™s ˜holiday™
ended in his signing of the eponymous pact with Laval that led to the
foreign secretary™s forced resignation. December was thus full of political
swirl, culminating finally in Eden™s becoming foreign secretary. But,
while this was going on, a major re-evaluation of the nature of
German“Soviet relations came about. On 16 December, Collier met
with Major Hayes from MI2. They agreed that important elements in
both Germany and Soviet Russia favoured closer relations between the
two states. Hayes was ˜gravely concerned™ about the possibility of ˜a
German“Russian rapprochement which might eventually include Japan™,
and accepted Vansittart™s view that ˜this danger must be countered, not
by collaboration with Germany but by collaboration with Russia™. The
major concluded that it was ˜urgently desirable to take some further step
to strengthen our position at Moscow and keep the Soviet Government
in the Franco-British orbit™.52
These issues became wrapped up in a discussion of British trade policy
towards Soviet Russia. Earlier in 1935, various schemes had been floated
in which Britain would extend a guaranteed loan to Moscow at a higher
rate of interest than the prevailing one, the difference in rates being used
to generate money to pay off the Russian debts.53 The Treasury did not
object in principle, but saw political peril. As Neville Chamberlain


52
Maj. Hayes (MI2, WO) to Collier, 3 Dec 1935, FO 371/19450/N6255/7/38, spawned
the discussion; Collier™s minute (19 Dec).
53
Capt. Victor Cazalet, MP, to Oliphant, 9 Apr 1935, T 160/749/F14202/1, Leith-Ross to
Sir Horace Wilson (chief industrial adviser to the government) and Runciman (presi-
dent, B of T), 9 May 1935, T 160/791/F7438/10; Waley to Collier, 2 Jul 1935, Ashton-
Gwatkin™s note, 4 Jul 1935, sent to Leith-Ross, and Waley to Fergusson, 6 Jul 1935, all
T 160/749/F14202/1. Cf. the interpretation in Michael Jabara Carley, ˜“A Fearful
Concatenation of Circumstances”: The Anglo-Soviet Rapprochement, 1934“1936™,
CEH, 5, 1 (1996), 53“5.
Complications and choices 155

noted, while ˜he was a realist & had no prejudices™ against such an
arrangement, ˜he was also a realist in the sense that he wasn™t going to
have any serious Party difficulties over it™.54 And, officials at the Treas-
ury were aware that ˜Lord Beaverbrook would no doubt feel that if we
wanted to develop any country with guaranteed loans we had better
chose our Colonial Empire rather than Communist Russia, and a good
many people would sympathise with his views.™55
On 17 October, the matter came to a head. The Board of Trade
proposed that, instead of offering the Soviets a loan, as the Foreign
Office and Moscow preferred, export credits should be extended.56
Export credits would not require the legislation that a guaranteed loan
would (thus avoiding anti-Soviet parliamentary pressure), it was ˜very
uncertain™ that the Soviets would tie a debt settlement to a loan, and
export credits reduced the period of risk of Soviet default to five years
from a loan™s fifteen to twenty years.57 But export credits would also
mean that there was little likelihood that any of the Russian debts would
ever be settled. This, combined with the fact that the loan had been
˜vigorously espoused in the Foreign Office™, tipped Chamberlain towards
the need for consultation.
A meeting was made more urgent due to a query from a British firm
asking what attitude the government would take towards an Anglo-French
consortium constructing railway improvements in Soviet Russia. Collier
and Ashton-Gwatkin met with the Board of Trade to discuss the matter.
The foreign-policy ramifications were evident, as any delay might lead the
Soviets to ˜turn elsewhere “ to the Americans for example, or even to
the Germans™.58 They also decided that this needed to be discussed by
Chamberlain, Hoare and Runciman.59 However, with a general election
just three weeks away, such talks were delayed.
In the interim, Maisky talked to Ashton-Gwatkin.60 Four days after
the election, on 18 November, Hoare and Chamberlain met again.61 On
that same day, Maisky told Vansittart that a British loan would serve to
lessen Soviet suspicions that the recent Franco-German talks were
54
N. Chamberlain™s views in Leith-Ross to Waley, personal, 8 Jul 1935, T 160/749/
F14202/1.
55
Waley to Phillips and Fergusson, 30 Jul 1935, T 160/749/F14202/1.
56
J. R. C. Helmore (B of T) to Fergusson, secret, 17 Oct 1935, T 160/791/F7438/10.
57
Untitled memo by Waley, 18 Oct 1935, minutes, Hopkins (18 Oct) and N.Chamberlain
(18 Oct), all T 160/791/F7438/10.
58
Stevenson (managing director, Holland and Hannen and Cubbitts Limited) to FO, 23
Oct 1935, FO 371/19452/N5543/17/38, Collier™s minute (25 Oct).
59
The Treasury was sceptical about the railway project: Waley to Rowe Dutton, 8 Nov
1935, memo (19 Nov 1935), H. Wilson Smith, both T 160/791/F7438/10.
60
Memo, Ashton-Gwatkin, 9 Nov 1935, FO 371/19452/N5808/17/38.
61
Memo, Hoare, 18 Nov 1935, FO 371/19452/N5949/17/38.
156 Britain, Soviet Russia and the Versailles Order

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