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an extent that ˜it may be impossible for us even to initiate a policy of
rapprochement with Germany in collaboration with France . . . This
road will have been closed before we have even begun to walk down it,
and instead the first step will have been taken in the direction of encircle-
ment, without any guarantee that such encirclement can be made effect-
ive.™ And, in fact, a full-blown Franco-Soviet arrangement might lead ˜to
the conclusion of a German-Japanese Pact as [a] counterweight™.84
Instead, Sargent preferred to hold the threat of ratification ˜in terrorem

Phipps to FO, tel 20, 28 Jan 1936, FO 371/20346/N515/187/18, minutes; memo,
Perowne, 31 Jan 1936, FO 371/20339/N663/20/38.
Andrew Crozier, ˜Prelude to Munich: British Foreign Policy and Germany, 1935“1938™,
ESR, 6 (1976), 359“62.
Edmond (consul, Geneva) to FO, tel 8 LN, 22 Jan 1936, FO 371/18979/C452/92/62,
minutes, Sargent (23 Jan), Collier (29 Jan); Eden to Chilston, disp 56, 30 Jan 1936, FO
371/19884/C692/4/18, Sargent™s minutes (8 Feb).
The remainder of this and the following paragraph, except where indicated, are based on
Eden to Clerk, disp 143, 27 Jan 1936, FO 371/19879/C573/92/62, minutes, Sargent,
Vansittart and Eden (1 Feb, 1 Feb and 3 Feb).
See also Phipps to Berlin, disp 49, 10 Jan 1936, FO 371/20285/F303/303/23, noting the
growing warmth between the German and Japanese fighting services; cf. Phipps to FO,
tel 13 saving, 20 Jan 1936, FO 371/20285/F365/23.
162 Britain, Soviet Russia and the Versailles Order

over Germany™s head™ as a bargaining tool. For his part, Vansittart
contended (in a view likely derived from his bitter experience over
Abyssinia) that Britain should not offer any advice to Flandin, since it
˜would at once leak out™ and ˜produce a storm™. Both the PUS and Eden
preferred that the two countries should instead reconsider the idea of a
˜Mediterranean Locarno™.
Policy was threshed out on 3 February.85 The discussion centred
around a paper produced by Vansittart. The PUS summarized many
of the points he had been making for the past two years. He observed
that the ˜Versailles system has broken down™, and that some alternative
means needed to be found to restabilize Europe. With respect to Ger-
many, he saw three alternatives. First, the British could ˜wait on events™;
second, a policy of ˜encirclement™ might be followed; or, finally, trust
could be put in ˜the propaganda value of the League™. He rejected all
three, and advocated that the British ˜would be well advised to resume
the exploration of their former policy of coming to terms with Germany,
provided always that this course proves possible, honourable and safe™.
Soviet Russia was an important factor in Vansittart™s calculations. A
particular concern was the possibility of a Russo-German rapprochement,
which the Franco-Soviet Treaty had been designed to prevent. Only
Hitler™s ˜personal hatred™ of Bolshevism stood in the way of such an
occurrence, and the PUS argued that this was not necessarily eternal.
What circumstances were most likely to lead Hitler to put his prejudices
aside? ˜He would be most likely to do so™, Vansittart asserted, ˜in the
event of his convincing himself that he was being threatened by encircle-
ment.™ ˜He might equally do so,™ the PUS went on, ˜if a policy of too
prolonged drift on the part of Britain and France led him to conclude
that he could hope for nothing from either of them.™ He concluded
that, if ˜this is correct, an Anglo-French settlement with Germany would
be a more effective guarantee against the dangers of Russo-German
co-operation than the present Franco-Russian Treaty standing by itself™.
Such an argument led directly to the ˜urgent question™ of the possible
loan for Soviet Russia. The advocates of improved Anglo-German rela-
tions favoured giving credits, since a loan would be interpreted as
˜throwing in our lot with France and Russia™. What should be done?

This and the following two paragraphs are based on ˜Note of a Meeting held in the
Secretary of State™s room at the Foreign Office on February 3rd, 1936, to discuss Sir R.
Vansittart™s memo on Britain, France and Germany™, ns, 3 Feb 1936, FO 371/19885/
C979/4/18; Vansittart™s memo forms part of ˜Germany™, CP 42(36), secret, Eden, 11
Feb 1936, Cab 24/260.
Complications and choices 163

Surely, the answer . . . is that we should first ask ourselves whether we intend to
bring Germany back into the comity of nations at a price to which neither Russia
nor anyone else can legitimately object, that is by the restitution of the German
colonies. If the answer is ˜Yes™, the answer should clearly be credits. If the answer
is ˜No™, there is no reason to boggle at a loan, for there will anyhow be no
prospect of settling with Germany, and we may then take whichever course is
more compatible with our interests.

While Vansittart was not insistent on using colonies as a means of finding
common ground with the Germans, he was adamant that there would be
a price to pay for any improvement in Anglo-German relations.
At the meeting, the ˜general feeling™ was that negotiations with Ger-
many were ˜desirable™. Further, such negotiations should be pursued in
tandem with ˜simultaneous™ parallel discussions with the French. This
turned the gathering towards a consideration of the loan versus credits
issue. All Sargent™s fears were again raised. Hitler might ˜interpret this
[the granting of a loan], should it follow on the ratification of the Franco-
Russian Treaty, as a definite move against Germany by Great Britain
and France, and . . . he might reply with the reoccupation of the
Rhineland demilitarised zone or even with the conclusion of an alliance
with Japan™. Eden made two points. First, echoing earlier concerns, the
foreign secretary doubted that ˜the Cabinet would accept the loan™;
second, he felt that the loan ˜was almost certainly valued by Russia partly
because of its political complexion and . . . that for the time being at any
rate it must be decided to go ahead with credits and then see what
happened as regards the negotiations with Germany™. The die was cast.
The Soviet loan died in the Cabinet on 12 February. While Eden put
forward the Foreign Office™s views concerning the advantages of a loan,
he accepted the Board of Trade™s proposal for credits, for the reasons
given above.86 The Cabinet approved the idea of granting credits to
Soviet Russia. The matter was resolved.87 A loan to Soviet Russia was
not going to be permitted to stand in the way of a British effort to reach a
comprehensive settlement in Europe. Why was this decision taken?
There were several contributing reasons. First, there were political and
ideological obstacles. A guaranteed loan required legislation, and there
was a vociferous lobby in the House of Commons that would have
insisted that any loan must be linked to a repayment of Russian debts,

Memo, H. Wilson Smith (Treasury) to Waley, 7 Feb 1936, T 160/683/F14676/1, for the
preliminaries; the FO™s views are in ˜Export Credits for Russian Orders™, CP 32 (36),
secret, Eden, 8 Feb 1936; the B of T™s position is in ˜Export Credits for Russian Orders™,
CP 31(36), Runciman, both Cab 24/259. Minutes, Cabinet 6(36), 12 Feb 1936, Cab
Subsequent action, Nixon (ECGD) to Waley, 13 Feb 1936, T 160/683/F14676/1.
164 Britain, Soviet Russia and the Versailles Order

a nexus that the Soviets refused to acknowledge publicly, although their
attitude towards paying a higher interest rate suggested that they would
turn a blind eye to any British move to use some of the interest to pay the
debts. There was also a related lobby that objected to any treating with
Soviet Russia whatsoever (as the Metro-Vickers crisis had made clear
just two years earlier).88 In the Cabinet, there were some, like Hailsham,
who shared this view. Second, there was no one among the ministers to
champion the Soviet cause. Chamberlain had made it clear that a Soviet
loan was not worth the political aggravation of trying to achieve it. On
the other hand, there were strong advocates, like Runciman, of the
alternative policy of granting credits. This left Eden. The foreign secre-
tary was very much the new boy, and his position was not strong enough
to afford the political difficulties of pushing through a Soviet loan.89
Further, he was suspicious that the Soviets were not particularly inter-
ested in working within the context of the League™s Covenant, and
Eden™s reputation was as a champion of collective security.90
Nor was there any consensus among the officials at the Foreign Office.
Collier and Sargent had opposing views, and they continued to snipe at
each other. Vansittart™s position was more complex. On some occasions
he occupied a middle ground between Collier and Sargent. And, while in
late January he had seemed to be in favour of the loan, at the vital
meeting in February he threw his support behind a more comprehensive
settlement. What prompted this change is speculative, but it seems likely
that it resulted from several things. First, Vansittart had a wide view of
foreign affairs, and the more comprehensive approach offered the possi-
bility to stabilize Europe in the aftermath of the collapse of the Stresa
front.91 Second, after December, Vansittart needed to mend his own
fences, since much of the blame for the Hoare“Laval fiasco had fallen on
his shoulders, and he could not afford to be seen to disagree with Eden™s
views.92 Further, Vansittart™s anti-Germanism was notorious, and he
needed to demonstrate that he could take a broader view in order to
secure his position. This was evident to many. ˜There has been a ten-
dency to “head-hunt” over Sam Hoare™s escapade in Paris™, Hankey
wrote on 2 January, ˜and Van™s name has been mentioned or hinted at
“ even in Parliamentary debate I think.™93 This, combined with the fact

David Carlton, Churchill and the Soviet Union (Manchester, 2000), 46“50.
A. R. Peters, Anthony Eden at the Foreign Office 1931“1938 (New York, 1986), 167.
Eden™s differences with the Soviets can be seen in his conversation with Maisky, 11 Feb
1936, FO 371/19885/C965/4/18, Wigram™s caustic minute (18 Feb).
Roi, ˜From the Stresa Front™, 82“5.
Eden to Runciman, 13 Dec 1935, Runciman Papers, WR 275.
Hankey to Phipps, 2 Jan 1936, Phipps Papers, PHPP 3/3.
Complications and choices 165

that Eden had just invited Alexander Cadogan, who had worked closely
with Eden at Geneva, back from China (where he was ambassador)
to become joint deputy undersecretary at the Foreign Office, must
have made the PUS concerned about maintaining his influence in
Thus, the Soviet loan was no-man™s child. By the middle of February
1936, the makers of British strategic foreign policy had decided that
circumstances were such that Britain™s interests were not best served by
moving towards Soviet Russia. Only events would show whether this
decision was correct or would require further analysis. But one thing was
certain: the conundrums of the ˜deterrence™ period had not yet been

Cadogan™s diary entry, 4 Feb 1936, Cadogan Papers, ACAD 1/4.
5 Soviet Russian assertiveness:
February 1936“July 1937

The decision not to offer Soviet Russia a loan (and, by extension, not to
prepare the way for a possible political arrangement between the two
states) did not end the choices facing those who made British policy.
The next year and a half was full of events that made determining the
direction of British policy even more difficult. British strategic foreign
policy continued in its ˜deterrence™ phase, with no new consensus
about its proper direction emerging. The German remilitarization of
the Rhineland on 7 March 1936 and the ratification of the Franco-
Soviet Treaty on 2 May undermined Eden™s efforts to find a compre-
hensive settlement based on an Anglo-French-German understanding.
Italy annexed Abyssinia, again revealing the League™s impotence. On
18 July 1936, the Spanish Civil War broke out, with all its ideological,
political and strategic complications. In the Far East, a series of inci-
dents kept Anglo-Japanese relations on edge, while, on 25 November,
the signing of the German“Japanese Anti-Comintern Pact linked two
of Britain™s potential foes together. In May and June 1937, the Purges
in the Red Army and the resulting questioning of Soviet Russia™s
strategic value threatened to disrupt the precarious balance of power.
Finally, on 7 July 1937, the Marco Polo Bridge incident initiated fully
fledged hostilities between Japan and China, which threatened British
interests in China. However, until the advent of the Purges, Soviet
Russian military strength increased, and Moscow continued to pursue
a policy of deterrence towards both Germany and Japan. Soviet mili-
tary strength deterred Japan and Germany, but Soviet foreign policy
often had results that were contrary to British interests. The tension
between the two was the essence of the Soviet impact on British
strategic defence policy.
At the beginning of 1936, while the focus was on the Anglo-Soviet
loan discussions and Franco-Soviet relations, the Far East also touched
on British thinking about Soviet Russia. Opinion at the Foreign Office
held that ˜uneasiness between Japan & Russia & a permanent state of

Soviet Russian assertiveness 167

tension is the ideal from our point of view™.1 Such tension was felt likely
to persist.2 However, there were also disquieting reports about possible
closer relations between Germany and Japan.3 Such a rapprochement
would be directed against Soviet Russia, and raised the spectre of a
two-front war for the latter.4 The situations in Europe and the Far East
were tied together by considerations of defence. In November 1935, the
DRC issued its third report, which argued that it was ˜a cardinal require-
ment™ that diplomacy should prevent Britain™s being confronted ˜simul-
taneously™ with Japanese aggression in the East, German aggression in
the West and, referring to the complication caused by Italy™s adventure
in Abyssinia, aggression from ˜any Power on the main line of communi-
cation between the two™.5 This struck a responsive chord at the War
Office, where concerns about the defence of Hong Kong had underlined
the shortages of troops available for the Far East.6
At the beginning of January 1936, Colonel Hastings Ismay, the head
of MI2, initiated a re-examination of British policy in the Far East.
Ismay believed that the Japanese army was bogged down in North China
and that Soviet Russia was Japan™s ˜main enemy™. Japan needed to find
friends. He contended that ˜only Anglo-Japanese friendship seems likely
to deter Japan from entering into closer relations with Germany™. This
would be attractive for London, since ˜our interests in the Far East, at
any rate north of Singapore, are at the mercy of the Japanese™.7 Ismay™s
views found wide acceptance at the War Office, and a paper advocating
such a policy was submitted to the Cabinet.8 Orde demolished the
argument.9 He argued that Japan was determined to be dominant in
Minute (9 Jan), Gascoigne (FED), on Clive to FO, tel 6, 8 Jan 1936, FO 371/20279/
Minutes, FO 371/20279/F89/89/23; Clive to FO, disp 30, 20 Jan 1936, FO 371/20286/
Ibid., Phipps to FO, disp 49, 10 Jan 1936, FO 371/20285/F303/303/23; ˜Note on
German“Japanese Relations™, secret, Lawford, 24 Jan 1936, FO 371/20285/F674/
303/23, minutes.
Phipps to FO, tel 13, 20 Jan 1936, FO 371/20285/F365/303/23, minutes.


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