THE NEW GERMAN EMPIRE

CD

101 525

THE NEW
GERMAN EMPIRE

THE
GERMAN

BY

F. BORKENAU

THE VIKING PRESS NEW YORK

1939

PUBLISHED IN AUGUST 1 939

THE NEW GERMAN EMPIRE
COPYRIGHT 1939 BY FRANZ BORKENAU

PRINTED IN U. S. A. BY THE VAIL-BALLOU PRESS
DISTRIBUTED IN CANADA BY THE MACMILLAN COMPANY OF CANADA, LTD.

CONTENTS

I. THE NAZI CRUSADE 1

II. NAZI ECONOMICS AND GERMAN

EXPANSION 16

III. AUSTRIA AND THE SUDETENLAND 28

IV. POLAND AND LITHUANIA 43

V. SLESVIG AND THE DOMINATION OF

THE BALTIC 55

VI. THE NETHERLANDS, BELGIUM, FRANCE,

SWITZERLAND, TIROL 65

VII. THE SOUTH-EAST: GERMAN METHODS

OF EXPANSION 81

VIII. THE SOUTH-EAST: CZECHOSLOVAKIA 102

IX. THE SOUTH-EAST: CONCLUSION 113

X. AFRICA AND THE MEDITERRANEAN 136

XL LATIN AMERICA 150

XII. CONCLUSION 165

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GERMAN EMPIRE

CHAPTER I
THE NAZI CRUSADE

AT what is Germany really aiming?

In the light of recent events, this is a greater puzzle than ever.
Before Hitler marched into Prague, a tendency prevailed to inter-
pret German aims in the light of German official declarations. Most
obviously, the German Government had repeatedly disregarded such
declarations as it had made on previous occasions. Hitler guaran-
teed the independence of Austria, disclaimed any aspirations upon
the Sudetenland, declared himself ready to guarantee Czecho-Slovakia
after Munich, etc. None of these promises had been kept. Yet an im-
pression persisted that Hitler's speeches had something to do with
his intentions.

This impression was particularly strong, though particularly un-
founded, in the case of Hitler's speech to the Reichstag immediately
before Munich. On that occasion Hitler solemnly proclaimed that
after the cession of the Sudetenland Germany had no further terri-
torial claims in Europe. In the light of earlier disappointments, caution
would have been indicated in this case more than in any other. For
after Munich, Czecho-Slovakia lay helplessly exposed to German
aggression, and Nazi Germany is never likely to forgo a chance of
conquest. The impression made was not, however, altogether unrea-
sonable. For Hitler's solemn pledges seemed to agree in this instance
with what appeared to be the natural aim of Nazi Germany.

The national and racial idea appeared to be the crux of the Nazi
faith. The logical aim of the Nazis, therefore, would be to unite all
Germans in one Greater Germany. Non-Germans would not only
be undesirable in a country so strongly intent upon racial purity; they
would actually be driven out. Germany therefore, it appeared, could
have no desire to acquire non-German populations. It is true that
after the acquisition of the Sudetenland there still remained unre-

2 THE NEW GERMAN EMPIRE

deemed German minorities, such as those of Memel and Danzig.
That is why nobody took Hitler's pledge quite literally. But these
remaining problems were insignificant as compared with the prob-
lem of Czecho-Slovakia. It was the basic assumption of the Munich
policy that the era of German territorial expansion in Europe would
in the main be ended with the acquisition of the Sudetenland. This,
of course, was not incompatible with a great deal of German influence
outside the borders of Greater Germany, especially in the east and
south-east of Europe.

It seemed a logical conception; it seemed to square both with Ger-
man interests and with the basic beliefs of Nazism. It was solemnly
pledged by the Nazi Government. Yet Germany has gone beyond
these aims and embarked upon an indeterminate campaign of ex-
pansion.

The first question which now arises is this: Were the conquest of
Czecho-Slovakia and the subsequent moves of German expansion
planned before Munich? In other words, was Hitler deliberately
lying to Mr. Chamberlain and M. Daladier at Munich? It is a prob-
lem difficult to answer, and yet at the same time an essential one.
The question is not whether Germany will now continue her course
of indeterminate aggression or not. There can be no doubt that she
will. The question, and a very important one at that, is whether Ger-
many is simply carrying out well-calculated plans or is driven into
limitless adventures by developments over which she herself is not
the master. In the one case we must still reckon with some rational
plan on the part of Germany which it would be important to discover.
In the second case we are faced with an outburst of incalculable in-
stincts which cannot but end in disaster, both for Germany and for
others.

A few months ago there appeared in German an interesting study
of the Nazi regime by Hermann Rauschning, former Nazi President
of the Danzig Senate. This man, who participated to a degree in the
closer councils of Hitler and quarrelled bitterly with him and his
subordinates about German policy in Danzig, now maintains that

THE NAZI CRUSADE 3

the deepest impulses of the Nazi movement are entirely negative.
"Nihilistic" he calls the spirit of Nazism. In his view, Nazism is a
dissolvent of every existing conception of order, whether political,
moral, or religious. But there is no real constructive aim behind this
drive towards destruction. There is, in particular, no such thing as a
coherent plan in Nazi foreign policy. Nazi aims are unlimited and
undetermined. Recent events give colour to this view.

Rauschning does not deny nobody could that the Nazis have a
programme. They have proclaimed their racial, national, anti-Semitic,
totalitarian, and other beliefs and put them into practice. So they have
done with Greater Germany; so they have tried and are trying with
German domination in the South-East. But in Rauschning's view
none of these aims is final, nor is there a pre-established plan of how
they shall be achieved one after another. Is he right or not? It is the
basic problem for the future of the world.

Perhaps a contribution to the solution of this problem can be made
by analysing the several aspects and stages of Nazi expansion as it
has hitherto developed. What concepts underlie these various aspects
and stages? The answer will fill the greater part of this volume.

One thing, however, must be clear at the outset: it is impossible
even to begin an analysis of German expansion without taking due
account of the Nazi regime and its character. It is not some abstract
general "Germany" which undertakes this expansion. It is Nazi Ger-
many. The boundless character of Germany's present aims, and the
ferocity of her methods, are both due to the Nazi regime. It is not
the German people, not the broad masses, who are responsible for
that policy. On the contrary, they are deeply upset by the prospect of
a catastrophe into which the regime is driving the country and its
inhabitants. Nazi expansion cannot be understood without at least
glancing over the Nazi system itself.

There exists a widespread doctrine among historians and students
of political science to the effect that the basic aims of great powers
never change. By this view Nazism itself is mainly a reaction against
the severe penalties imposed upon Germany at Versailles. Nazism,

4 THE NEW GERMAN EMPIRE

according to the partisans of this theory, would be bound either to
disappear or to soften, once the work of Versailles had been success-
fully undone.

But recent events have not borne out this contention, which, more-
over, is only partly and very conditionally in agreement with histori-
cal experience. The evils of the Versailles Treaty were only one in-
cidental factor in the rise of Nazism and not at all the most important
one. Since their seizure of power, the Nazis have destroyed all rem-
nants of Versailles. It was one of those obvious aims which offered
themselves to their need for expansion. But the repudiation of Ver-
sailles did not mark the boundary line of German expansion; on the
contrary, it was a spring-board for further high-flung schemes. For
republican and democratic Germany, the complete repudiation of
Versailles would have been a glorious achievement almost beyond
the scope of practical politics. For Nazi Germany it was an almost
insignificant incident on the road to unlimited expansion.

Here, a historical parallel obtrudes itself. It is not the first time
that the "natural" aims of a great power have proved to be no more
than a spring-board for a revolutionary movement of world-wide
implications. Nazism and Hitler remind us of the French Revolution
and of Napoleon. In one sense the wars of the French Revolution did
no more than continue the wars of Louis XIV. The old French kings
had striven to make the Rhine and the Alps the borders of France, to
keep Germany and Italy disunited and under their influence, and
to prevent the rise of the power of Britain. The French Revolution
in its wars aimed at the same things. But it coupled these rational and
limited aims with a world-wide crusade for its revolutionary prin-
ciples which launched it upon a campaign of world-wide conquest.
That campaign carried Napoleon to Egypt, to Moscow, and to St.
Helena.

On the face of it, at least, the analogy is obvious. Hitler continues^
the policy of the Kaiser, and if he has his way one of these years will
be a new 1914. But he couples the imperialism of the Second Reich
with a world-wide campaign for a new revolutionary faith which,

THE NAZI CRUSADE 5

by its very character, cannot accept the coexistence of any other faith
in the world. The implication in his case, as in the case of the French
Revolution, is a disappearance of all rational limits to expansion.
Whether the analogy will be borne out in other aspects of the story
remains to be seen.

At any rate, Germany, during the past five years, has gone, and is
going at ever-increasing speed, through a revolution. Revolutions,
however, have laws of their own, overriding all considerations of
normal times. And there is this about revolutions, that abroad they
are invariably misunderstood. It is impossible for people living under
normal, i.e., non-revolutionary, conditions, to realize fully the am-
bience of a true revolution. Europe, in her long history, has seen
many revolutions. But each time the same story has been re-enacted
among those only indirectly affected through it. In non-revolutionary
countries the outlines of the revolutionary process dissolved them-
selves in a tale of meaningless horror; or else, and this is perhaps even
the more frequent attitude, the politicians of countries not directly
affected by the revolutionary process regard it as a thing that really
could be only a mistake, a short deviation of history, a nightmare
which, once over, would lead back to the old "natural" state of things.
Thus, in 1917, people believed the Bolsheviks could not last a month;
in 1921, they were certain the Bolsheviks would become reasonable
and harmless. They did last, but Russia became the country of mass
purges.

Again, is there not a lesson here concerning Nazi Germany ? There
are certainly indications that the advent of Nazism broadened Ger-
many's aims and revolutionized her methods in international policy
just as much as the French Revolution did the aims of France. On
the other hand, there are more than indications that in democratic
countries in reality only two views about Nazi Germany have found
any substantial backing: the one regards the German revolution as
merely an outbreak of meaningless horror, the other as fundamentally
reasonable, though tainted with certain unpleasant excesses. The
partisans of the former view charge their opponents with Fascist lean-

6 THE NEW GERMAN EMPIRE

ings most unjustly, I believe, in many cases. There are many sincere
and even progressive democrats among those against whom such
charges are levelled. The only thing which can be objected to in their
point of view is that they are far too greatly imbued with the soft
and reasonable atmosphere of compromise prevailing in democratic
countries, and instinctively expect the revolutionaries beyond the
Rhine given sufficient time and a willingness to grant concessions
to come over to their own approach to politics. A revolution, however,
is always ruthless, non-compromising, and aggressive, to the point of
its own undoing.

But one must not be satisfied with historical parallels. They serve
only to give a clearer idea of the underlying problem. They have here
been used in order to make clearer the need for a closer examination
of the character of the Nazi regime. It is no use talking about a Ger-
man foreign policy in a void, as if this policy were pursued by some
abstract being called "Germany" and not by a nation living in a very
special and peculiar political system.

What is the German revolution? Even this basic question cannot
easily be understood from the assumptions governing political life
in democratic countries. Political parties in democratic countries today
are usually divided roughly on economic lines. Revolutionary parties
in democratic countries habitually think of themselves in terms of an
economic programme, of a transfer of economic control from one
class to another. The German revolution in no way corresponds to
these ideas. The Nazi Party, before its advent to power, was cer-
tainly not aiming at the expropriation of the upper classes by the
lower classes. In power, it has completely transformed the economic
life of the country, yet one thing it did not do : it did not touch prop-
erty rights except in the case of the Jews. It therefore does not fit in
with current ideas of revolutions; one more reason for many to dis-
regard its essentially revolutionary character.

There are other, less conventional approaches to the understanding
of revolutions. In the case of Germany it is particularly important to
analyse the peculiar stresses which brought about the Nazi revolution.

THE NAZI CRUSADE 7

Even before the War, for reasons not to be discussed in these pages,
political antagonisms in Germany were sharper than in most other
countries. German socialism was much stronger than that of France,
much more militant and seemingly revolutionary than that of Eng-
land. German Catholicism lived at odds with the Protestant mon-
archy. On the other hand the paramount role of the army and the
hold of the landed aristocracy over the administration had never
allowed an ordinary liberal democracy to develop. Both the Right
and the Left were more strongly entrenched than in France, much
more strongly pitched against each other than in England. The germs
of the Nazi revolution lay in the stresses of Germany's pre-War politi-
cal structure.

Such a balance of forces was bound at any rate to create difficulty.
Since 1914 it has been subjected to no less than four fearful shocks
which, besides their political effect, shook the everyday life of every
human being in Germany to the very roots.

First came the War. It was not only, as in all countries., a slaughter.
It meant famine with all its terrible effects. The War ended in defeat,
and famine continued for two or three years after. It broke the phys-
ical strength of the population, and made it more receptive to
subsequent shocks. It heated old political and class antagonisms to
fever pitch. It ended in an inglorious fall of the Hohenzollern mon-
archy, in the proclamation of the Republic, in what was called, in 1918,
the German "Revolution." This title was more freely bestowed on the
events of 1918 than on those of 1933, but corresponded much less to
reality then. The "Revolution" changed very little the economic struc-
ture of the country, left the old civil service intact, restored the power
of the army which defeat had dissolved, and in the main limited itself
to removing princes and making parliaments the formal rulers of the
country." But if the constructive result of the revolution was insignifi-
cant, its moral influence was enormous. In Germany the birthright of
kings and the might of the nation had been the pivotal points of
political and social life. Among the Catholic third of the nation re-
ligion successfully competed with them. But Protestantism's hold on

8 THE NEW GERMAN EMPIRE

its flock had been rapidly waning and had been, as far as it went,
identified with the dynasty and the Reich. Thus revolution following
upon defeat left a dead blank and, at least in the Protestant part of
the country, souls craving for a faith had no other outlet left except be-
lief in a complete change of the social order. But socialism failed them.
In its extreme version it spent its forces in injudicious risings. In its
moderate version it proved to be as "bourgeois" as the staunchest
bourgeois themselves.

Thus, a profound crisis of all beliefs and accepted standards accom-
panied famine and misery. German thought has not been formed by
the sceptical sense of humour of a Hume or a Voltaire. Germany is
still a country with a need for metaphysics. It reacted to the complete
disintegration of all existing values with an outcry for a new faith and
for a saviour.

As early as 1920, after the futility of the labour movement had be-
gun to show, Germany was in a ferment, political, religious, and eco-
nomic, though no well-defined aims appeared on the surface. Upon a
people in such a state of mind came down the third disaster, inflation.
For the very rich it was a splendid affair. For the wage-earning classes
it meant again frightful misery, but of short duration only, and there-
fore did not leave any profound after-effects. For all the middle
classes, that solid block which had maintained the hierarchies and the
values of German civilization, it meant the permanent loss of their
savings which had been the basis of their peculiar kind of life. Since
then, Germany has never had a real middle class. The Germans had
become a nation of proletarians. And among these impoverished mid-
dle classes at the height of the inflation, Hitler in 1923 won his first
sizable mass following.

The mark was stabilized again, and the years between 1924 and
1929 were a period of relative prosperity and considerable industrial
progress. It appeared during these years that democracy could be
worked fairly well, though only moderate Socialists and Catholics
worked it with real belief and enthusiasm. But in fact both the moral
and the economic roots of democracy had been cut in the previous

THE NAZI CRUSADE 9

disasters, and the frail structure could not stand a new shock. That
shock, the fourth within fifteen years, came with the depression. The
depression again hit the middle classes with full force, and struck the
working classes to a degree and in a manner which made the situation
appear hopeless. Eight million unemployed in 1932!

A correct understanding of the final act depends on the realization
that the political system in Germany in 1932 was essentially what it
had been in 1910. Field-Marshal Hindenburg sat in the place of the
Kaiser. But in substance he held command over the same army and
the same civil service, and it was the powers of these bodies which
made the strength of the Reich. The strength of the Left, again as in
1910, resided in the trade unions. And the electoral forces of Right and
Left were as nicely balanced as they had been in 1910. As in 1910, no
parliamentary majority could be found without the support of the
Catholic Party, which alternately backed the Right and the Left and
aptly called itself the Centre Party. Every economic status, every
political and moral value, had been revolutionized in the meantime.
But the party system had remained unchanged and in a state of dead-
lock.

The Nazi revolution of 1933 was directed against this deadlock. It
was not a class movement. It drew its recruits from the discomfited
and despairing of all classes. After so many disasters, no one any
longer believed in the capacity of the old party machinery to bring
help and remedy. Conservatives and Progressives were equally dis-
credited. The young generation laughed at the lingering ideals of
their elders, whether conservative or liberal democratic. The outcry
was for an absolute ruler who would remove all the obstacles blocking
the way to recovery and overcome all those who dared to resist him.
The Nazi Party was fundamentally not a party with a definite pro-
gramme, pledged to definite measures. Its programme consisted es-
sentially of two points: belief in the Fuhrer and claims of unlimited
powers for him.

Thus both the conservative and the advanced forces of the past were
swept away. True, Hitler had to slip into power with the help of the

10 THE NEW GERMAN EMPIRE

conservatives, because he could not hope successfully to fight the
armed forces of the State. But this collaboration with the conservatives
was a passing episode, ending in their discomfiture and destruction.
Here for the first time, as so often later, Hitler succeeded in con-
vincing his natural enemies that he was really their friend and that
they had nothing to fear from him only to ruin them afterwards.
The process of crushing the Right has been slower under Nazi rule
than the one of crushing the Left. But the result has been the same
in both cases. All the political forces of the past have been wiped out.

It is meaningless to ask whether Nazism is a socialist revolution
against the old ruling classes or a reaction of the upper classes against
the threat from the masses below. With the advent of Nazism, a
political body recruited from all classes but independent of them all
has taken power into its hands and established its absolute domina-
tion. It has been left to circumstance in what direction the new regime
would move. Nothing in its structure compelled it to submit or even
to listen to the wishes of any section of the people.

Whoever would understand the trends of present German politics
must start from this clean breakaway from the past as the essential
fact. Hitler and his party came into power not because of any point
in their programme, not even anti-Semitism. They rose as a result
!>f the complete disintegration of the old economic structure and of
the old spiritual values in Germany. In their stead the belief now
stands that Hitler is the chosen saviour of the German people, destined
to lead it to some indefinite glory. Hitler probably thinks of himself
only as an instrument of God for his people, but as far as they believe
in him there remains no room for the worship of any other god but
him.

It is a revolution very different in kind from others. Its tenets bear
no comparison with the limited, well-defined demands raised during
the English Revolution, and even compared with the "liberty, equality,
fraternity" of the French Revolution and its various embodiments in
statutory and constitutional law, the present German Revolution will
inevitably appear half a mystical and half a meaningless event. A

THE NAZI CRUSADE 11

mystical undercurrent, a belief in the coming of the millennium, can
certainly be traced in every revolution and usually provides justifica-
tion for all the horrors which are bound up with it. But in the case of
Germany this quasi-religious fanaticism has swallowed up every con-
crete and well-defined aim. The German Revolution is therefore un-
der the guidance not of a political but of a prophetic movement.

This is not to say that it is lacking in shrewdness, astuteness, and
political calculation. On the contrary, the claim of a supernatural mis-
sion, however vaguely defined, works as an endorsement for the dis-
regard of ordinary morals. But this concerns only means. The aim is
not practical in any definite sense. It is, we repeat, prophetic.

A political movement, if it is to keep its following together, must
be able to point to a reasonable amount of achievement in the direc-
tion of its practical programme. A prophetic movement need not stoop
to insignificant achievements in the practical sphere. It can ask from
its followers and impose upon them a tremendous amount of self-
sacrifice for the sake of achieving its supernatural glory. But the
prophet, while rid of many of the considerations of common sense, is
under one terrible obligation : he must work miracles. If he does not,
he is no longer a prophet. It is the only point where he is dependent
on public opinion. But it is a decisive one. Neither force nor common-
place success will help him if he fails on that score. Besides, Hitler him-
self is an intensely prophetic personality and, like every prophet,
could not exist without experiencing himself his magical powers.
The craving of the Fiihrer and of his following works in the same
direction.

The query whether the Nazi regime could return to normalcy is
therefore quite meaningless. Normalcy has no place in the sphere of
prophetic revelation. Prophecy is the contrary of common sense. If
common sense prevailed, the regime would be useless and meaning-
less and cease to exist.

There is something very peculiar about the particular kind of
prophecy contained in Nazism. Even as a prophecy it is vague and in-
definite. The belief in the Nordic race is something quite artificial,

12 THE NEW GERMAN EMPIRE

a sort of ideological superstructure with little emotional appeal; wit-
ness the personal type of the Fiihrer himself which corresponds so lit-
tle to the official Nordic ideal. And besides the Nordic faith, there is
nothing but the faith in the Fiihrer. Normally, prophets arise in the
name of some god different from themselves whose message they have
to transmit. This is not so with Hitler. His prophetic mission has no
other content than his own person. He must play the role of the
prophet and of the Messiah in one.

It is therefore only natural that the Nazi programme, so vague and
indefinite in its positive tenets, should be extremely precise in its nega-
tive aspects. Everything except absolute subordination to the Fiihrer is *.
satanic. The real Nazi programme consists of "antis." The Nazis are
anti-liberal, anti-democratic, anti-parliamentarian, anti-conservative,
anti-Marxist, anti-Catholic, and anti-Christian in general, and pri-
marily, of course, anti-Semitic. There is nothing like anti-Semitism to
reveal the true character of the Nazi movement. The Jews, a small
and helpless minority, are no real enemies at all. But that is just what
makes anti-Semitism, so essential for the Nazis. A real enemy might
be defeated and disappear, and once this had been achieved the'
prophetic mission would be at an end. The figure of the Jew as the em j
bodiment of all forces of the dark is eternal, precisely because the fig-
ure has nothing in common with reality. It is nothing but a straw I
puppet for prophetic aggression.

Thus anti-Semitism reveals some of the most important features of
the Nazi movement with a direct bearing upon its attitude in the in-
ternational field. It reveals that aggression is an intrinsic feature of 1
Nazism. Without aggression and without the belief of being the ob-^
Ject of aggression Nazism would never survive. It is not the result of
some inferiority complex which might be smoothed out by adequate
treatment. It is intrinsically bound up with the movement itself. But*
there is this peculiarity about Nazi aggression, that it never attacks a * l
stronger or an equal enemy. For in a fight against equals miraculous' 1
success can by no means be taken for granted, and the adventure might
easily end in the prophet's disgrace. Nazism must go on struggling

THE NAZI CRUSADE 13

indefinitely, but it must never be a real fight between real forces capa-
ble of joining combat. Nazism always strikes the helpless and does
not strike them before they have become helpless. It is a crucial point
for the understanding of Nazi foreign policy.

Here Nazi tactics are indissolubly linked with the basis of the
movement itself. A prophet carrying a supernatural message needs
only to prove his prophetic quality by signs and symbols. But a
prophet aiming to be himself the Messiah and to bring immediate
salvation to this world must make his earthly career a constant se-
quence of miraculous successes. And as this world is, this cannot be
achieved by means of a straight fight against straight adversaries.

But there is more. It is not only the peculiar nature of the Fiihrer's
prophetic claims, it is just as much the reality of the German situation
which makes a return to normalcy a hope impossible of achievement.
We have seen how Hitlerism was the outcome of tremendous stresses
in a situation of political stalemate, and of the reaction of the masses
against it. The Nazi regime, by suppressing the right of organization
and of free expression, has prevented these stresses from expressing
themselves in the ordinary forms of political battles. But those stresses,
those economic difficulties and sufferings, those sectional interests and
antagonisms, have not been wiped out by the advent of Nazism. They
have only been bottled up without any normal outlet. The form of
the difficulties and stresses has been changed under the Nazi regime,
as we shall see in the next chapter, which deals with Nazi economic
politics. But the substance of poverty, destitution, malnutrition, over-
work, and insecurity has remained and in some respects even in-
creased. Germany today is a boiling cauldron without a safety valve.
The regime itself in its need of finding miraculous cures for very
serious but commonplace difficulties has augmented the pressure. And
the only question is in which direction the cauldron will explode.
This is the only thing the regime in all its apparent strength can really
attempt to control. For explosion there must be. A prophetic regime
cannot in the long run allow its following to realize that life is just as
drab or even drabber than it has ever been.

14 THE NEW GERMAN EMPIRE

As the Nazis have no definite programme, they can more or less
freely choose the direction of the onslaught they started. They may
attack any section of their own people or any suitable adversary in the
foreign field. But of course no such attack, however ruthless and
however successful, will be able finally to solve the problem. There-
fore the attack is inevitably directed in turn upon every available ob-
ject. There exists a definite connexion between the measure of tension
inside Germany and the aggressiveness of the regime both at home
and abroad. Aggression at home and aggression abroad can work as
substitutes for each other. Yet there can never be an end to aggression
as a whole, because it is not determined by any real grievance but by
the prophetic character of the regime and the tension which this very
character is creating inside the country. The views of the Gestapo
about the feelings of the people are therefore more important for
German foreign policy than any facts of international affairs proper,
however important in themselves.

It must be borne in mind also that the reactions of a prophetic
totalitarian regime to difficulties are exactly the contrary of the reac-
tions of a common sense liberal regime. A liberal country when faced
with serious difficulties at home inevitably becomes weaker in the
international sphere. For a totalitarian regime growing difficulties at
home are only a reason for growing aggression, to the point of des-
perate ventures.

There are no definite aims and no definite limits to Nazi expansion,
for it is not directed fundamentally towards the removal of any real
grievance or the destruction of any real enemy. It moves in an atmos-
phere of unreality and of a chase after the miraculous which cannot
be transformed by any changes in the field of objective reality. All
practical aims are subordinate to this supernatural urge.

But this does not mean that the regime cannot deal with practical
problems. On the contrary, the terrific momentum and the disregard
for ordinary morals which characterize the movement help it tre-
mendously in achieving practical aims. The German Revolution in
its expansion abroad is even bound to solve, incidentally as it were, a

THE NAZI CRUSADE 15

great many practical problems. But no limited solution can still the
insatiable hunger o this Moloch. Every new victim serves merely to
stimulate its appetite.

Besides, the movement is living in an atmosphere of self-created
dangers. The prophet has not really proved himself so long as people
are living happily outside his dispensation. What is the use of defeat-
ing Catholicism and Christianity in general inside Germany when
they remain world powers abroad, proving by their very existence the
limits of the power of the new Messiah? What conviction does the
defeat of liberty and democracy in Germany carry so long as they
regulate the life of other great nations? What importance has the de-
feat of German communism so long as the Soviet Union exists ? The
new faith must embrace the whole world or the validity of its prohetic
claims will be disproved. Liberalism, a system of tolerance, can easily
put up with the existence of anti-liberal creeds abroad as well as at
home. But a Nazi creed must be all-embracing in order to be valid.
We will meet that situation step by step as an essential element in
German foreign policy. A liberal regime would be untrue to itself in
accepting ideological wars. But the Nazi Messiah and his following
can exist only in the form of a permanent crusade.

CHAPTER II
NAZI ECONOMICS AND GERMAN EXPANSION

WE must now get a step nearer the immediate problems facing Nazi
international policy. It is true that all these problems, important as
they are, are overshadowed by the inexhaustible need for expansion.
Yet certain problems of a practical nature, especially economic ones,
oblige the regime to take immediate action, and therefore at times are
more in the foreground than the deeper ideological and religious im-
pulses. In the long run the Nazis must prove the validity of their
prophetic faith and attempt to destroy all other forms of life. But these
are tasks which can be achieved gradually and allow of delay and
procrastination. The economic needs, however, were urgent from the
first day of the regime onwards, and not for a single moment was there
any escaping them. When the Nazis came into their own in February
1933, they were confronted with a statistical unemployment of six
millions and a real one of probably more than eight. The young gen-
eration of the working classes had never seen a factory from the in-
side. And hundreds of thousands of business people were ruined. It
was this disaster which had finally brought the Nazis into power.
They could not have kept it without finding a remedy for unem-
ployment. It was their most urgent task. On the advent of the Nazis
unemployment figures had not yet begun declining from their peak,
but business was already recovering slowly both in Germany and
abroad. The new regime conceivably might have entrusted itself to
the natural business trend, stimulating it by State orders within the
ordinary financial capacity of the country.

But this course was for various reasons unattractive to the regime.
At best it would have led to a recovery, followed in a few years by a
business recession. There would have been nothing staggering and
sensational in that, nothing likely to justify the extraordinary claims
and powers of the regime. The recovery was bound to be limited.
16

NAZI ECONOMICS AND EXPANSION 17

German prosperity before the Nazis depended very largely on ex-
ports and therefore on the world market, and Germany had found it
very difficult to export sufficiently even during the preceding boom.
Then, the effects of natural recovery would have been very gradual,
and big business would have profited from it much earlier and much
more thoroughly than the masses for whose allegiance the movement
had primarily to care. The regime felt the need of doing something
very big immediately. Finally, a policy of letting things go their way
thoroughly disagreed with the temper of the Nazi movement as a
whole, with the belief that a new saviour could completely abolish
suffering by his mere will. So, any idea of a liberal trade policy was
discarded.

Currency inflation might have provided an alternative solution. It
would have made it easier for Germany to force exports, and at the
same time the State, by creating new money, might have given out
big orders to industry despite the scarcity of the sources of taxation at
the moment of a terrific slump. Controlled devaluation of the cur-
rency would not even have been wildly unorthodox, at any rate not
more so than what Britain and the United States had done before. But
horror of inflation lay in the bones of the German masses, and for that
reason it would have been difficult to keep the depreciation of the cur-
rency within limits and to avoid a wholesale flight into foreign cur-
rency. A currency devaluation would have been the most unpopular
of all measures, bound to unite the whole people against the Govern-
ment. The Nazis could not run such risks in the beginning.
' The new regime, therefore, at first limited itself to patchwork : a
limited amount of public works, the introduction of labour camps,
the elimination of women from productive work, etc. But from the
end of 1933 onwards, rearmament suddenly provided a large-scale
solution.

From an economic point of view, rearmament combined several
Advantages. It permitted a rapid increase in the number of workers;
but since armaments represent an unproductive outlay, it did not in-
crease the national income, and did not threaten inflation. The secret

18 THE NEW GERMAN EMPIRE

of Nazi economic policy is that everyone is working much more than
in 1933 but consumes only a very little more than at the worst of the
depression. The number of working hours today is considerably above
that of the best days of the boom in 1929, but the amount of consuma-
ble goods produced lies still far below that figure. The total of wages
paid in Germany is of course higher than at the advent of the Nazis
in 1933, for there are perhaps ten million more at work and the work-
ing day has been expanded from eight to ten or twelve hours. But
amidst rekindled furnaces and an actual scarcity of labour the real
wages of the individual worker are a good deal below even the starva-
tion wages of 1932. While there is no unemployment, the "winter
help" originally created for the sake of the unemployed is lustily con-
tinuing to work, filling the empty stomachs of labourers working at
starvation wages with charity soups. Profits, on the other hand, have
been rigorously limited to six per cent, and the State by taxation and
forced loans is taking the surplus.

This system has been so repeatedly described as not to need further
elaboration. It obviously can work only with the help of the most
rigid control of the whole economic life. Otherwise wages, prices, and
profits could not be kept down and inflation would inevitably ensue.
For the financial starting point of German rearmament was not dif-
ferent from that of any other measure of creating employment by
State help out of sources other than the ordinary revenue. Originally,
rearmament was financed by State-issued short-term discountable
"work creation" notes for which there was no sufficient cover in the
treasury. Normally, the issue of these unfounded loans with the sub-
sequent increase of money in circulation would have made wages,
prices, and imports rise without increasing exports correspondingly,
thus upsetting the balance of trade and finally devaluating the mark
itself. This was prevented by the simple device of not allowing wages
and other classes of income to rise. The all-powerful Nazi State, after
having destroyed the trade unions and the various organizations for
the safeguarding of industrial, agrarian, and banking interests, could
afford to impose its law upon all classes of the population. Wages

NAZI ECONOMICS AND EXPANSION 19

were fixed by decree at the lowest level; prices in a similar way, and
the money which was thrown into circulation through the issue of
"work creation" notes was withdrawn again by taxation, to be issued
again for further rearmament.

With all classes of incomes artificially kept down, imports of goods
for consumption could not possibly have risen very considerably. But
the German balance of trade was an extremely sensitive thing. Ger-
man holdings abroad were small, and the country on the whole had
to pay for her imports out of her exports. There was a considerable
burden of foreign indebtedness, too. Reparations had come to an end
in 1932, but there remained the "frozen credits" of industry and pub-
lic bodies which went into thousands of millions. They derived from
heavy German borrowing abroad during the boom and waited for
repayment until such time as recovery would set in. In these condi-
tions even a small increase of German imports was apt to upset an
uneasy balance of trade and to, threaten the mark. And even the
strictest measures of the Nazi regime had not succeeded in preventing
some increase of demand from taking place in response to the enor-
mous increase of '"employment. Some additional demand for foreign
goods was bound to arise from that score. And an enormous increase
of these demands arose out of rearmament itself.

Rearmament naturally was not only an economic measure. Though
it had really to a considerable extent arisen primarily as a means of
dealing with economic distress, it was from the first moment meant
as a serious political measure as well. At home, rearmament going
together with conscription (which in its turn relieved the labour
market) helped to create that atmosphere of a state of war which
suited the regime. Aimed in the first place at a redress of the grievances
of the peace treaty, it took up one of the most outstanding slogans of
the party and helped to carry it into practice. Finally it created a basis
for that policy of unlimited expansion which was a fundamental ob-
jective of the regime. Thus rearmament satisfied the craving of the
workers for a job and the craving of the young people of the middle
classes for national glory, and so merged in the work for one aim the

20 THE NEW GERMAN EMPIRE

two groups who had previously been most bitterly hostile to each
other a real stroke of genius.

But in order to achieve its aims in the field of foreign policy, re-
armament had to proceed at top speed. First the task was to get ade-
quate armament before the western powers became fully aware of the
danger and took action to stop it in the beginning. Then, rearmament
had to proceed at such a pace as to reach and overreach the arms of
Germany's potential adversaries before they in turn began seriously
rearming. At present, German rearmament must keep pace with the
rearmament of nations financially much stronger than herself. Thus
rearmament in Germany was carried out in furioso, in the hectic at-
mosphere of the Nazi regime and contributing in its turn to it. The
whole nation had to make enormous sacrifices for its sake.

For while the Nazis were perfectly able to fix prices, wages, and
incomes at home, the pace of rearmament was one of the things over
which they did not have complete control. If they had failed to bring
it about at the pace actually achieved, it would have failed in its politi-
cal purpose. All other economic considerations had to be subordinated
to the needs of rearmament.

This made the problem of the German trade balance very acute.
Germany is not a naturally rich country. In years of bad harvests it
has, J despite Nazi efforts to increase the agricultural yield, a heavy
deficiency of cereals. It has a constant deficiency of dairy products. It
is almost totally deficient in all raw materials for the textile industry.
It has no rubber. And except for coal and potash, of which there is a
surplus, it has only insignificant quantities of any mining product in-
cluding iron ore. Germany is reduced to buying the wherewithal of
her nutrition and her industrial process abroad and to procuring the
foreign currency by exports. And this need increases with every ex-
pansion of her industrial apparatus. It increased enormously with the
beginning of rearmament.

Here, incidentally, lies the decisive natural difference between Ger- .
many and Russia, whose regimes present so many parallels in other
respects. The Soviet Union finds almost every raw material she needs

NAZI ECONOMICS AND EXPANSION 21

in sufficient quantities within her own borders. Once her natural
wealth has been opened up, her chief need is for finished products.
And this need diminishes with every progress of industry. Every ex-
tension of production makes Russia more independent of outside
contacts, more self-contained, and in a sense less aggressive. Germany,
on the other hand, with every extension of her plant, becomes more de-
pendent upon foreign raw materials, more closely linked to the chain
of world trade, and therefore more aggressive if she cannot get by
ordinary trading what she heeds.

Now it is precisely difficulties of this kind that have arisen out of
the policy of rearmament. Germany cannot make her exports (by
means of normal trade) meet her additional needs for the import of
armament raw materials. Hence the absolute need for a strict control
of foreign trade. In order to overcome her difficulties, Germany has
cut down to the lowest margin all imports other than those necessary
for rearmament. The saying that Germans today are getting "guns
instead of butter" has become famous. On the other hand, Germany
does whatever she can to force her exports by means of State sub-
sidies and State-enforced dumping. But neither the one nor the other
measure is adequate to the task.

As a result, the outcry for "autarchy," for self-sufficiency, was raised.
Germany ought as much as possible to get rid of her international
trade entanglements and produce what she needs within her own
borders. Much has been done in the line of finding substitutes for for-
eign raw materials. Some of the experiments concerned date back to
the war and sometimes, as in the case of the manufacture of saltpetre
out of nitrogen, have been staggeringly successful. But on the whole
this policy has its fairly narrow limits. Substitutes are mostly inferior*
in quality to the original product and therefore cannot be used in re-
armament, though they can well be used for consumption goods. The
process of production is invariably costly, demanding more labour
than the production of the original raw material. And this at a certain
point becomes prohibitive in a country such as Germany, where, ow-
ing to the pace of rearmament, shortage of labour is acute. Besides,

22 THE NEW GERMAN EMPIRE

no such device could ever help to reach a final balance between ex-
ports and imports. For German rearmament has started a terrific in-
ternational armament race which puts constantly increasing strains
on all countries and primarily on Germany. Rearmament, like the
Nazi movement in general, is a never-satiated Moloch. The demands
not only for raw materials but also for human labour are ever in-
creasing. But the demand for German goods abroad is very inelastic
and subject to trade recessions and political dislike of Germany.

The policy of self-sufficiency is in acute conflict with the basic nat-
ural conditions existing within the borders of the present Reich. If
Germany is to become self-sufficing, she ought first to become a
country like Russia with an almost unlimited natural wealth, a huge
population, and an enormous birth-rate. As she is, she is more de-
pendent upon international trade connexions than many other coun-
tries and can less afford additional strains. She must choose between
two extremes. She can put up with her dependence on international
markets and keep her production within the limits of the opportuni-
ties provided by her exports. But that would imply renouncing the
aim of keeping ahead, in the rearmament race, of powers financially
stronger than herself. If she does not want to do that, she must get
direct control of the raw materials she needs. In other words, she
must expand and conquer.

It should never be forgotten that German needs are indefinitely ex-
panding. In her race for superior strength she needs ever-increasing
amounts of labour, food, raw materials, and foreign exchange. As in
other respects, so in this there can never be a point of satiation. Given
the policy of rearmament, self-sufficiency is Germany's most urgent
need. But precisely because of this policy, self-sufficiency can never be
attained. The solution of this contradiction lies in constant expansion.

Thus rearmament, undertaken partly as a miraculous device against
all evils of unemployment and partly as a means of enhancing Ger-
many's power and prestige, does in its turn create a real need for more
power and for the control of greater economic resources. It is a vicious
circle where the desire for conquest produces the need for conquest.

NAZI ECONOMICS AND EXPANSION 23

The problems and strains existing inside Germany on the advent of
the Nazi regime have been transformed without being removed. Un-
employment has given place to labour shortage, which means over-
work. The unsaleable stocks of the period of depression have not only
disappeared; they have given way to an acute shortage of goods and
to the deterioration of their quality. Instead of unemployment there
is extreme underpayment, and instead of a strangling dependence
upon world markets there is rearmament carrying with it the actual
need for expansion and aggression. The Nazi movement under the
pressure of the sufferings it creates at home and of the tension it
creates abroad can never find a balance, a place to rest, a point of
saturation. ^

At present, in the initial stages of her period of expansion, Ger-
many is torn between her need far foreign goods and her need for
self-sufficiency. The obvious solution is to find a trade policy where
foreign goods can be had without affecting the trade balance. The
barter agreement which Germany aims at making the prototype of
her trade agreements is a device for bringing about that aim. Ger-
many has very little foreign exchange to pay for foreign goods. She
must try to get them without paying in gold or gold value. Barter
eliminates the money element from the transaction.

It is impossible at this point to abstain from some comment on the
far-reaching implications of these methods for the economic system. A
system eliminating gold from its most essential sphere, that of inter-
national trade, can obviously have very little in common with what
is generally called a capitalist regime. In a capitalist regime prices are
fixed by competition in the market, and gold is the ultimate means of
expressing them. It still is so in such countries as Britain, United
States, and France. It no longer is in Germany; just as little as in
Russia. There exists in Germany as in Russia a medium of circula-
tion called "money" on grounds of tradition, but it has no part in fix-
ing values. All prices and all sources of income in Germany are es-
sentially fixed, not by competition but by the State. As there is no free
trade, there is no business cycle, no booms, and no slumps. The State,

24 THE NEW GERMAN EMPIRE

in Germany as in Russia, can always order things to be produced at
its pleasure, and can distribute the products at its will.

It is certainly not a state of things such as socialist labour move-
ments aim at. While there exist economic inequality and economic
privileges, they are brought about not by the laws of the market but
by the will of the State. The difference between the type of inequality
and the type of economic privileges existing in Russia and in Germany
is considerable. We cannot here enlarge upon this subject and must
limit ourselves to the statement that distribution in Germany as in
Russia is regulated by the State, but on different lines.

The essential aim of barter is to extend the sphere of this system of
production beyond the political borders of Germany. Barter as in the
agreements concluded between Germany and other countries is not
barter between individual business men on one side and another. On
the contrary, all barter agreements rigidly exclude private trade and
that by at least two distinct methods. On the one hand it is the Gov-
ernments themselves who are bartering. If Rumania sells a certain
amount of oil to Germany and gets typewriters in exchange, it is the
Rumanian Government which undertakes to procure the oil and the
German Government which undertakes to provide the typewriters.
Payment to the ultimate private producers is in both cases made by
the State banks concerned. Moreover, and this is at least as important,
barter agreements tend not even to be concluded for definite quanti-
ties of goods. Germany aims at buying up in advance entire crops and
entire mineral outputs of certain kinds, and sometimes barters against
them compound services such as road-building and town-planning
which cannot be calculated exactly in advance. In agreements of this
kind the goods and services mutually exchanged have no longer the
character of calculable economic values at all. If Germany buys the
whole of the Bulgarian tobacco harvest, it is exactly the same as if she
requisitioned the whole excess over the producers' own consumption
of the German tobacco harvest and compensated the producers with
other goods or State services.
In a sense the system is ideal. Yet there is a flaw in it. Germany

NAZI ECONOMICS AND EXPANSION 25

needs the raw materials and foodstuffs of many countries who would
be glad to barter them against industrial goods. But those industrial
goods Germany cannot supply, being fully engaged on rearmament.
The exchange of Yugoslav wheat against German aspirin is a carica-
ture so long as Germany, as some wit said, cannot supply a sufficient
number of headaches at the same time. Barter between Germany and
other countries is constantly struggling against difficulties of this kind.

We shall have to say a little more about these problems when dis-
cussing German trade with her various vassal countries. But some-
general facts are better mentioned here. The difficulties that Ger-
many encounters in her own industrial production make it very dif-
ficult for her to keep up her export trade. And this again makes it
very difficult for countries bartering with Germany to get from her
what they really need. The barter agreements, therefore, tend to be
bad bargains for the countries concerned. These countries are obliged
to trade with Germany because she is one of their biggest customers,
and cannot trade with her otherwise than by barter or barter-like
forms of exchange. But they naturally tend to limit the extent of their
bartering with Germany to a level where they remain free to carry
on normal trade with other countries. But if countries bartering with
Germany are able to find other outlets for their goods, this strengthens
their position in negotiating with Germany. And Germany is not so
much unwilling as unable to provide those industrial goods most
urgently needed by many of the countries concerned. If Germany is
to get the sort of trade she needs; she must first substantially control
the economic life of the countries with which she is trading.

Here is the point where economic expansion is inevitably bound up
with political domination. The barter agreements Germany can offer
are in most cases not such as would be accepted by a country free to
determine her own trade policy. In order to get her way, Germany
must control those countries both politically and economically. She
must try to cut them off from their foreign markets. She must try to
become the master of their supplies without offering proportional ad-
vantages in exchange. In other words, she must make these weaker

26 THE NEW GERMAN EMPIRE

countries objects of economic exploitation, and in order to maintain
this state of things must get control of their Governments. Germany's
trade with the countries of South-Eastern Europe and with Latin
America tends to be not so much a form of exchange as a form of
acquiring colonies for economic exploitation. This must be so even
if Germany were not ridden by an inexhaustible urge for domination.
It is a direct result of her incapacity to deliver in sufficient amounts
textiles, engines, and similar staple commodities of the kind and
quality required.

In order to overcome the situation, Germany will have to expand
her industrial production. This she is already doing but only for the
sake of keeping up the armament race. It is a task which exhausts all
her resources. If she wants to supply, say, textiles to all her tributary
nations, she will not be able to produce them in sufficient quantities
within her own borders. She will have to get them elsewhere. In other
words, if Germany seriously intends to control the economic life of
many of the food- and mineral-producing countries, she will have to
draw modern industrial countries into the orbit of her economic sys-
tem in order to provide for the industrial needs of the producers of
raw materials. The annexation of the Sudetenland is a first step in this
direction.

Even in purely economic matters it is a mistake to think of Germany
as following a programme of limited expansion. Owing to the arma-
ment race, her balance of trade is bound to remain under a constant
threat. She could remove that threat only by bringing under her con-
trol all the essential raw materials she needs. But that in itself implies
a policy of world-wide expansion. Moreover, she cannot control all
essential resources of any country without providing all its essential
needs. So every extension of Germany's domination over the pro-
ducers of raw materials carries with it the need for domination over
industrial countries, which in its turn creates an additional need for
foodstuffs and raw materials, and so on. It is not really a vicious circle,
it is only a constantly widening one because no final balance between
the supply of raw materials and of industrial goods can ever be struck.

NAZI ECONOMICS AND EXPANSION 27

The natural facts underlying this situation are not produced by the
German system. Two countries or groups of countries could never
mutually supply all their essential needs. In a free-trade system these
deficiencies are automatically smoothed out. Trade between two coun-
tries under free-trade conditions does not usually balance, and one
of the two always remains with a surplus of free exchange which is
used for covering other needs in other countries. But it is precisely this
free exchange which Germany lacks, and it is owing to this lack that
she attempts to conclude barter agreements.

In order to realize the full implications, one must remember that
some of the essential raw materials come from as far as Mexico, Brazil,
and Malaya, whereas these countries in their turn are supplied with
industrial goods from all over the world. Germany's need of political-
economic expansion is therefore absolutely limitless. She wants to
keep up the highest standard of industrial efficiency. Therefore she
cannot dispense with the products of the farthest corners of the world.
Her economic system prevents her from buying them. The only solu-
tion for her is to conquer them.

CHAPTER III
AUSTRIA AND THE SUDETENLAND

AFTER having given an outline of the driving forces behind Nazi ex-
pansion, we must consider its various objectives. For this we take
Munich as a starting point, however much out of date it may appear
at present. It may now seem artificial to discuss the Sudetenland
under one heading and the remainder of Czecho-Slovakia under an-
other. But the division is not so artificial as it may appear. There ex-
ists a deep difference between Austria and the Sudetenland on the one
hand and the remnant of Czecho-Slovakia on the other. The former
are inhabited by Germans, and can be regarded now as integral parts
of Greater Germany. The latter is inhabited by non-Germans, anti-
Germans, and can never be anything but an area ruthlessly oppressed
and exploited by its conquerors. The type of regime is different in the
two cases.

Moreover, the conquests up to Munich belonged to a general con-
ception different from those which followed. Up to Munich, Ger-
many took a stand on the right of self-determination. This principle
of self-determination not only defined and limited her aims; it pro-
vided in addition certain guiding lines for her dealings with the
smaller nations of Europe. The principle of self-determination ex-
cluded direct conquest. It did not exclude indirect rule. Germany, be-
fore the march into Prague, was obviously aiming at the creation o a
vast empire by methods of indirect rule. She could rule all the smaller
European nations without actually conquering them.

Indirect rule is always based on a nice balance between force and
consent among the subject races. With the march into Prague, Ger-
many has thrown overboard her policy of winning the consent of her
future servants. The policy of indirect rule which will be more
closely defined in later chapters has received a death-blow at Prague.
From the period of diplomatic manoeuvring for supremacy, we are
28

AUSTRIA AND THE SUDETENLAND 29

now rapidly moving towards conquests by main force. But that is not
to say that all traces of the previous method have already been wiped
out. There remain many important countries, such as Scandinavia,
the Netherlands, Switzerland, etc., where the policy of main force has
not yet been adopted and where the old methods of peaceful permea-
tion continue, though they carry much less conviction now than be-
fore.

Finally, the query raised in our introductory chapter remains:
Could Germany build a wide empire on the principle of self-
determination of nationalities and on the methods of indirect rule?

In order to answer this query, and the other problems just men-
tioned, we must still take our stand on the situation created by the
Munich agreement. Looked at from this angle, German expansion
falls easily under two headings: on the one hand there are Austria
and the Sudetenland, already acquired by Germany by right of self-
determination; on the other hand, there are the unredeemed terri-
tories which Germany could still claim by this right. But Germany,
even before the march into Prague, did raise claims not only for ter-
ritory inhabited by Germans but for territory previously belonging to
Germany but inhabited by non-Germans. This was the case with such
territories as the Polish Corridor and North Slesvig. We shall deal
with these territories together with the unredeemed German-speaking
regions.

Austria and the Sudetenland, harbouring together more than ten
million inhabitants, require a separate study. In the case of the other
German claims, the indirect consequences are much more important
than the direct value of their acquisition. We shall therefore deal first
with Austria and the Sudetenland in themselves, then with the re-
maining German claims (as they stood before the march into Prague)
and all their implications, and only then turn to the wider German
aims in Eastern and South-Eastern Europe and outside Europe. For
it is in the sphere of these wider aims that the rapid transition from the
pre-Munich to the post-Munich policy of Germany becomes most ap-
parent. Especially in the east and south-east the transition from the

30 THE NEW GERMAN EMPIRE

policy of self-determination and indirect permeation to the policy of
main force can be studied. But before the new method is studied, the
old one must be well understood.

Turning to Austria and the Sudetenland, we must first repeat that
they are united to Germany by the bond of a common language, and
it is on this ground that Germany claimed them. The principle on
which Germany took her stand in these cases is not quite the same as
the principle of self-determination proclaimed by President Wilson in
1918. Wilson maintained that every population should, in principle,
go to the country to which she wished to belong. Germany maintains
that all Germans must belong to the Reich whether they want it or not.
But after all, a language tie is a very close link in our times. Many anti-
Nazis, when faced with the dilemma of escaping Nazism and re-
maining outside the Reich, or joining the Reich under Nazi domina-
tion, may choose the latter. Even if they resisted the process, they
would be more ready than non-Germans to put up with the fait ac-
compli of German annexation.

Yet these ties of common language are not absolute and all-inclusive.
Other loyalties may cut across them, especially where German-
speaking regions in their previous history belonged to distinct politi-
cal units with a strong individuality of their own. This was em-
phatically the case in the two regions hitherto acquired by Germany
Austria and the Sudetenland. Both of them had been parts of the old
Austrian Empire and as such had belonged to the Holy Roman Em-
pire until 1806, and again to the loose German Confederation between
1815 and 1866. But they had always been more closely connected with
the non-German parts of Austria than with the Germans outside
Austria, and since 1866 had not been part of the Reich at all. Among
the Germans of the Austrian monarchy there existed strong resent-
ment against the Prussians who ruled the new Reich.

How far did Nazi Germany overcome this resentment? She was
certainly better fitted to do it than the old Prussian Reich. It is a mis-
conception to regard Nazism as a new edition of Prussianism. The
Fuhrer himself is an Austrian, and very few of his staff are Prussians.

AUSTRIA AND THE SUDETENLAND 31

The army, the embodiment of Prussia's rule over Germany, has been
deprived of its political influence. The prophetic and propaganda spirit
of the regime is utterly incompatible with the dry sense of duty and
of silent obedience which was the core of Prussianism. The Nazi re-
gime is thoroughly plebeian, whereas in old Prussia the aristocracy
ruled. The Nazi regime is therefore much nearer to the Germans out-
side the borders of the Reich than the old Prussian system ever was/

On the other hand, inside old Austria itself there existed strong
trends hostile to a separation of the Germans of Austria from the
Germans of the Reich. These pro-Reich tendencies within the old Aus-
trian monarchy were embodied in the Pan-German movement led by
Georg von Schdnerer, which had its strongest roots in the Sudeten-
land. Schonerer's ideas deeply influenced Hitler. His movement was
violently nationalist, anti-democratic, anti-liberal, anti-Austrian, anti-
Catholic, anti-Semitic, and played about with the idea of the rebirth
of the old German paganism; in fact, the whole Nazi programme.
The defeat of Germany in the War discredited his ideas for a time,
but on the other hand the nationalist feelings of the Germans in the
Sudetenland were exacerbated since they had, through the peace trea-
ties, come under Czech domination. When the economic slump of
1930 hit the Sudetenland even more severely than the Reich itself,
and when a few years later the Nazis took the helm, the old Pan-
Germanism re-emerged in full strength. No transition to Nazism was
necessary because, in those regions, Pan-Gerrnanism and Nazism were
really one and the same thing.

Neither was there a need for a plebiscite in the Sudetenland. The
municipal elections of May 1938 had shown all too clearly that the
great majority of the population wanted to join Germany, not only
because they were Germans, but because they were confirmed Nazis
as well. The Sudetenland was the cradle of Nazism, and is its most
faithful adherent today. Nazi Germany has acquired a thoroughly
reliable population with the Sudetenland.

The cause of Austria is different. There Pan-Germanism had many
converts before the War, but they had never been more than a minor-

32 THE NEW GERMAN EMPIRE

ity. To the ead the bulk of the population adhered to the Catholic and
Socialist Parties. Since 1918, however, the little Austrian Republic, an
artificial remnant of a larger empire, had lived in poverty and destitu-
tion. The peace treaties refused Austria the right to join the German
republic, but among Socialist workers and Catholic peasants the idea
of the Anschluss, of Austria joining Germany of her own free will,
had taken deep root. In the Austrian Republic, in contrast to the
Sudetenland, the desire to join the Reich extended far beyond the
limits of the Pan-German movement.

It was a fearful ordeal for Austrians when joining Germany be-
came identical with submitting to the Nazi regime. In the Sudeten-
land the advent of Nazism had given the pro-German movement a
tremendous impulse. In Austria the consequences of this event were
much more complex. The Socialists and a pro-German section of the
Catholics departed from the ideals of the Anschluss as a result of the
advent of the Nazis, and thousands who had previously wanted it
now no longer wanted it. But there was Germany's rise to balance
these effects, and then the depression hit Austria fearfully and made
people see their only salvation in joining the Reich. As a result, the
Nazis made deep inroads, especially among the peasant following of
the Catholics. But their conquests were offset to an extent by their
anti-Catholicism, which made at least the older generation of the
peasantry hesitate to join their heretical ranks.

The result of all these trends and counter-trends was roughly this:
in Styria, Carinthia, Vorarlberg, the Nazis had probably won a def-
inite majority; in Salzburg, a narrow majority; in Tirol and in the
Burgenland (the border region ceded to Austria by Hungary in
1921) about half; in Upper Austria a strong minority; in Vienna and
Lower Austria a small minority.

The conquest of Austria in March 1938 has naturally changed the
position. The Nazis had deeply undermined the strength of the
Catholic Church in Austria, and the Episcopate with Cardinal In-
nitzer at its head immediately bowed to the conqueror and Heil-
Hitlered the entering German troops. It can be confidently assumed

AUSTRIA AND THE SUDETENLAND 33

that as a result resistance against the Nazis has broken down all over
the countryside. A section of the Austrian peasants may be far less en-
thusiastic about Nazi rule than the Sudetenlanders but, after all, ac-
quiesce in it. Vienna, with its dominating socialist movement, its old
liberal tradition, and its high proportion of Jews, is different. It is the
second city of the Reich; but it is difficult to see how it could ever be
anything but disaffected.

The Sudetenland, therefore, became almost immediately an in-
tegral part of the Reich, whereas Austria presented difficulties. The
independent Austrian army had to be dissolved; most of the higher
officers and civil servants had to be replaced by men from the old
Reich, and considerable resentment ensued. Few even of the old
partisans of the Nazis in Austria were entrusted with positions of con-
fidence. Austrians were regarded as unreliable. Austria today finds
herself in a semi-colonial position, her natives systematically excluded
from ruling their own country. The economic stresses soon to be men-
tioned added to the uneasiness created by these measures. It will not^
be an easy task for the Nazis to assimilate Austria.

This is the political position. How does the acquisition of these two
regions affect the strength and the international position of the Reich?
This can easily be gleaned from a list of the assets and liabilities ac-
quired by the conquerors.

Strange to say, the biggest assets acquired by Germany 'are un-
doubtedly Austria's and the Sudetenland's unemployed.^Both regions
were distressed areas. The unemployment was larger than figures
showed, because the various means tests reduced the figure of the sta-
tistically unemployed, and the available female labour and the young
who had never seen work must be added to the whole. Austria and
the Sudetenland together count roughly eleven million inhabitants.
Something very near a million must have been immediately available
for work. Now the presence of such a huge number of unemployed
could not be regarded as an asset but rather as a heavy liability in a
country with an unemployment problem. But unemployment is pre-
cisely the one economic evil from which Germany has been relieved

34 THE NEW GERMAN EMPIRE

by the Nazi regime. She is faced with an acute shortage of labour, and
besides Italian, Dutch, Danish, and other workers, she imported con-
siderable numbers of Austrians, even before 1938.

Austrian and Sudetenland workers are on the whole of highly
skilled stock. A certain proportion of them have found and will still
find work at home at their old trades, which are working again for the
Greater German market after having been stopped by the depression. .
But a considerable number have been carried off for unskilled labour
on roads, fortifications, etc., in the old Reich, under the German law
for the compulsory conscription of labour. These workers, like those
of the old Reich employed on these kinds of work, live under a sort
of military discipline, while their families at home get only the scanti-
est allowances. There are flaws in the German achievement of over-,
coming unemployment. But undoubtedly the new supply of labour
has helped the German Government to ease considerably the tension
of the labour market.

Besides workers, the two- newly acquired regions provide military^
recruits. The potential of German man power has been increased by
about one-seventh. In the case of the Sudetenland, Germany will en-
joy the additional advantage that the military reserves she has ac-
quired are fully trained. Czecho-Slovakia, having been on the win-
ning side in the Great War, was never disarmed, and in contrast to
Germany and Austria had a conscripted army since 1918. Both Austria
and the Sudetenland are able to provide troops naturally fitted for
mountain warfare, which is rather a weak point in the German army*
In the case of Austria, these advantages are somewhat offset by the
fact that the officers' corps of the old Austrian army was on the whole
strongly anti-German and had to be replaced by officers from the old
Reich. Thus, while Germany acquires more men, her shortage of of-
ficers, already very serious, is becoming a still greater problem. There-
fore the acquisition of the new territories is liable to delay for some
little time the moment when Germany will be fully ready for war,
the more so because both the Austrian and Sudetenland troops must
be retrained with German methods and German material.

AUSTRIA AND THE SUDETENLAND 35

As to this material, there exists a great difference between Austria
and the Sudetenland. The Austrian armament was regarded as
worthless by the German staff and after the Anschluss was sold to
Hungary down to the last button. The frontier fortifications of
Czecho-Slovakia with their heavy guns and secret devices, however,
are undoubtedly an important asset to Germany. It will be remem-
bered how strongly Hitler, at Munich, insisted that no "installations"
should be removed by the Czechs before the evacuation of the territory.

On the economic side, by far the most certain asset acquired by
Germany was the conquest of the Austrian gold reserve equivalent to"
about $90,000,000. The enormous importance of this windfall is char-
acteristic of the present German situation. Normally, the Austrian
gold reserve would have been reasonably sufficient to cover the addi-
tional circulation of notes in Austria and would therefore not have
brought any specific advantage to Germany. But Germany is living
on an uncovered currency and on barter. She spent the Austrian gold
reserve within less than a year on rearmament.

Here is one more characteristic aspect of the German trade situation
as it has evolved during the last years. In 1935, the first year of Ger-
man rearmament on a grand scale, the German trade balance had
been seriously passive. But from that position Germany had recovered
during 1936 and 1937, partly owing to her barter trade and partly ow-
ing to the boom which allowed her to export heavily to the free mark-
ets of the West. But in 1938 the trade balance was again heavily ad-
verse to Germany. This was mostly due to the general recession in
world trade, but also to such factors as the blacklisting of Germany in
the United States, the boycott of German goods, deterioration in their
quality and delay in their delivery owing to the overstrained state of
German industry. The newly acquired territories, Austria and the
Sudetenland themselves, contributed to the trade deficit, as we shall
see in a moment.

In 1937 Germany had made a surplus of about 400,000,000 marks in
her foreign trade. In 1938 this surplus had been transformed into a
deficit of about the same amount. It is impossible to give these figures

36 THE NEW GERMAN EMPIRE

any meaning in terms of gold or sterling because no one knows what
the mark is really worth. In her many barter and clearing agreements,
Germany has been laying down separate exchange rates for every
country and in most cases even different exchange rates for different
types of transactions. These variations of the rate of exchange are a
strong weapon in the hands of the German negotiators of trade agree-
ments because they can manipulate the exchange rate at will. But it
makes valueless any statistics which take the mark as a definite unit
always of the same value. All we can say is that a German trade sur-
plus has been converted into a heavy deficit. It is not easy to see how
this deficit could again be converted into a surplus. Germany cannot
get all she needs by barter agreements extremely favourable to her-
self. And given the speed of her rearmament, she must find it very
difficult indeed to cover her requirements out of her exports, partly be-
cause there are no unlimited markets for her goods and partly because
it is beyond her own resources to force rearmament at the pace she is
doing and simultaneously force her export trade to the extent needed
to cover her imports. Therefore German imports and exports can bal-
ance only in extraordinary years. In lean years she has simply no
choice but to conquer foreign exchange in order to patch up the
deficit. That Germany should be forced to expand in order to obtain
foreign exchange may seem a fantastic position. It is nevertheless a
reality, and a need for such expansion must inevitably recur within
short intervals. Especially if, as in the case of Austria and Czecho-
slovakia, the new conquests are liable to add to the permanent deficit
of her trade.

Here, as in so many other respects, German expansion only creates
the need for still more expansion. That was very obvious in the case of
the Sudetenland. There Germany hoped to get a new currency wind-
fall, but her expectations did not materialize. She had expected to get
part of the Czecho-Slovak gold reserve as cover for the Czech bank
notes in circulation in the Sudetenland. But as Germany had refused
in her turn to take over her share of the Czech debt, Czechs-Slovakia
refused to give away her share of the gold reserve. Thus, in the case of

AUSTRIA AND THE SUDETENLAND 37

the Sudetenland, Germany had burdened herself with new per-
manent needs to import without the compensation of a currency wind-
fall. It was one of the main reasons for the march into Prague. She has
now got control of the Czech gold reserve. But no windfall can still
her gold-hunger for very long.

Why are Austria and the Sudetenland permanent burdens upon '
the German trade balance? The first answer to this query is simple:
both were distressed areas though for different reasons. The little re-
public of Austria was a remnant of the old Habsburg monarchy,
whose capital Vienna had lived on the resources of the whole empire.
Once these resources were cut off, the two million inhabitants of Vi-
enna were inevitably delivered over to misery. The Sudetenland, on
the other hand, is a highly industrialized region, needing large mark-
ets. Some of these markets before the War had lain inside the Habs-
burg monarchy and had been lost by its disappearance. Others abroad
had been severely hit by the world depression and by Japanese com-
petition. The economic problems of the two areas are therefore rather
different in kind. But they have certain features in common.

The trouble about them both, from the German point of view, is
that they are markedly deficient in foodstuffs, which constitute a
rather inelastic item of imports. Germany can deprive her Austrians
and Sudetenlanders of butter and eggs, but not of bread. The Su-
detenland has an additional serious deficiency of meat.

Both regions might pay for their deficiency of foodstuffs out of
tourist traffic. The famous spas of Northern Bohemia and the Aus-
trian mountain resorts have brought foreign currency to Austria and
Czecho-Slovakia. But there is no doubt that the Nazi conquest has
driven away a very considerable section of the custom of these places.

One additional factor of great importance is that the industry of
both regions, and especially that of the Sudetenland, is now directly
competing with the superior German industry in foreign markets. To
cite one important instance, the Sudetenland cotton industry hitherto
competed successfully with German goods in the U.S.A. market ow-
ing to the most-favoured nation clause which Czecho-Slovakia en-

38 THE NEW GERMAN EMPIRE

joyed while Germany was blacklisted in the American tariff. But since
the Sudetenland has become German, Sudetenland goods are sub-
jected to the same restrictions as German goods and their exports to
the United States must heavily decline.

There are, unfortunately, few lines of production where the old
Reich and the Sudetenland do not compete. Whether it is textiles,
gloves, earthenware, toys, glassware, musical instruments or paper,
Sudetenland goods always meet similar German goods on the market.

The situation could be slightly better in the case of Austria. A con-
siderable section of her industry was turning out half-artistic goods
with an appeal to special tastes. Austrian furniture, leather goods, etc.,
did not compete with German goods. But here the difficulty arises out
of the German trade system. Those goods do not easily lend them-
selves to bartering in large quantities, and again exports are affected.

The industries of Austria and the Sudetenland now form part of a
larger economic unit which should provide a larger market. But as
industrialists in both regions always knew, there is no hope of their
beating the producers of the old Reich with their superior technical
outfit. Thus certain Austrian industries are declining. The Sudeten-
land industries keep their old markets in Czecho-Slovakia.

Moreover, in both Austria and the Sudetenland Germany has ac-
quired certain raw materials she urgently needs. She is now self-
sufficing in timber, controls almost all lignite (the raw material for
artificial oil) available in Europe, and has acquired in Austria the
largest European deposit of magnesite and an important amount of
bauxite (the raw material for aluminum) . With the acquisition of the
Joachimsthal area in the Sudetenland she has come very near Eu-
ropean monopoly in radium. Perhaps the most important gain is the
acquisition of the Austrian iron-ore, though the 1,800,000 tons of an-
nual Austrian production cover less than one-tenth of the German
needs.

A clear distinction must be made between the value of these gains
for the German trade balance and for the German war potential. All
gains are important in relation to the trade balance, though here the

AUSTRIA AND THE SUDETENLAND 39

assets must be offset against the liabilities. No figures are available to
allow of any definite conclusion. But the heavy adversity of the Ger-
man trade balance in 1938 proves that so far the newly acquired terri-
tories cannot really have helped Germany very much, and in the case
of Austria it is almost certain that she is not only no help but a heavy
burden.

Concerning the war potential, the situation is equally involved.
The gains in the Sudetenland, primarily lignite and timber, represent
a net advantage to Germany. The same could not be said of Austrian
iron-ore, magnesite, bauxite, and timber because these were to a large
extent available to Germany before the Anschluss and would in all
probability have remained available in case of war. Here the advan-
tage is limited to the saving of foreign exchange, whereas the direct
effect on German military strength is nil.

It is not easy to sum up this very complex picture. The economic
effects of the conquest of Austria and of the Sudetenland have proba-
bly been on the whole disadvantageous, the windfall of the Austrian
gold reserve being over compensated by a permanent burden upon the
German trade balance. On the other hand Germany has temporarily
relieved her labour shortage, slightly strengthened her supply of
raw materials, considerably increased her strength in military man
power, and slightly increased her supply in armaments. Against this
stands as a serious factor the increased shortage of officers. Altogether
it is not too favourable a balance, especially if one keeps in mind that
with Vienna she has acquired a city second only to Berlin and clearly
disaffected.

But we have not yet mentioned what is perhaps the most serious
burden accruing to Germany by her conquests of 1938, that is, the tre-
mendous expenditure involved in the task of reconstructing the newly
acquired provinces. Railways and roads must be brought up to the
German standard. The new army units must get German outfits.
Those industries which can be made to work for military purposes
must be modernized. All these may be minor charges upon a country
living under normal conditions. To Germany with her overstrained

40 THE NEW GERMAN EMPIRE

industry and her serious shortage of raw materials it is a terrible task
to face. This immediate liability diminishes the value of all the imme-
diate assets gained by the conquest. This leads up to the problem which
in the context of the Nazi regime must be the most important of all:
What has been the effect of the tremendous successes of 1938 upon the
German regime itself? Has it become more popular? Has it won in-
creased prestige among the Germans themselves ? Has it become more
pacific or more aggressive?

The achievement of Greater Germany in itself ought to add enor-
mously to the prestige of the regime. That such an old dream of the
German people should materialize so suddenly and even without
bloodshed ought to balance many sufferings Nazism has imposed
upon the Germans. The regime ought to issue forth with greater
strength from such an unequalled series of successes, and in conse-
quence need not be so aggressive at home and abroad.

As a matter of fact, none of these natural consequences of the
achievement of Greater Germany came about. Therefore the Munich
agreement had almost immediately to be followed by a series of new
German threats and aggressions. And at home, just after Munich, the
Nazis reached the highest degree of horror they have so far achieved
in the persecution of the Jews; also it is notorious that they are prepar-
ing a large-scale attack on the Christian churches. Since Munich, the
frightfulness of the German regime has only increased.

The increased feeling of strength is partly responsible for this. But
this is only one half of the story. The other half is that, strange as this
may seem, mass feeling inside Germany has remained almost unaf-
fected by the grandiose successes of Germany in 1938. Under normal
conditions a regime which had succeeded on such a scale would be
absolutely safe for one or even two generations. In Nazi Germany
these successes have not been sufficient to allay for even a couple of
weeks the deep psychological crisis through which the Nazi regime is
passing at present.

This crisis has complex reasons. Some of them derive directly from
the economic difficulties of the regime. Up to 1937, Nazism drew pres-

AUSTRIA AND THE SUDETENLAND 41

tige from the gradual disappearance of unemployment, which offset
the unchanging misery of starvation wages. But once the reservoir of
the unemployed had disappeared > all subsequent economic changes
were felt as changes for the worse: more work, worse food, worse sup-
plies, worse disorganization of transport, worse labour conscription,
worse taxation, more interference with the economic life of the in-
dividual. In the hectic atmosphere of Nazi Germany all these things
constitute an intense strain and completely overshadow even the great
successes in the international field. The constant rumble of the propa-
ganda machinery makes things worse. It is not that propaganda has
failed to foster certain attitudes in the German people. Most Germans,
for instance, believed the stories about the atrocities allegedly com-
mitted by the Czechs against the Sudeten Germans. Yet the propa-
ganda failed to have the expected psychological effect. People simply
did not care about the supposed sufferings of the Sudeten Germans.
They were sick of it all and especially of the idea that they should go to
war to liberate their brothers across the border.

This fear of war is one of the most outstanding features of the
present situation in Germany. Here the regime is in an impasse. For
it has itself created that fear by its constant talk about the hostility of
the whole world against the new Germany, about Jewish and Catholic
world conspiracies against Nazism, about an alleged British policy of
encirclement, and by its constant threats against its neighbours. Con-
scription, rearmament, the construction of fortifications at breath-
taking speed, requisitions, and mobilizations bear out these fears.
Hatred and fear of war are the predominant feeling among those
German masses which Nazism set out to educate in a new spirit of
heroism.

Here, as on so many other points, the obviously reasonable policy
for a regime would seem a return to normalcy. But for all the rea-
sons outlined above, the regime is unable to do this, though for a time
propaganda may change its tune and talk peace instead of threats and
aggression. In the end* the regime will have to react against the psy-
chological crisis with more and not with less aggression. It has already

42 THE NEW GERMAN EMPIRE

done so at home. Success in the international field is yielding rapidly
decreasing results in terms of prestige at home. This is only one more
reason why the regime will be driven to quite incalculable degrees of
violence and aggression.

The final question, therefore, is : What, for Germany, was the im-
portance of Austria and the Sudetenland in terms of further expan-
sion? In itself, their conquest is of more than doubtful value for Ger-
many. But as a step to further expansion the advantages gained by
Germany are immeasurable. It is sufficient to say, in this respect, that
Czechoslovakia, after Munich, was a broken reed. The Franco-
Soviet alliance was broken. But more important than the break-
ing up of the French system of alliances in Eastern Europe is the
defeat of Italy. Before 1938, Italy could regard Austria and Hungary
as her dependencies. With Poland friendly to Hungary, and Czecho-
slovakia hostile to Germany, Italy had succeeded in creating a barrier
against the German advance towards the South-East. With the con-
quest of Austria, the Germans broke that barrier. The immediate re-
sult was that Germany instead of Italy became the paramount power
in the whole South-East. But this belongs to another chapter.

CHAPTER IV
POLAND AND LITHUANIA

WE now turn to the remaining claims which Germany may raise
either on racial or on historical grounds for territory formerly belong-
ing to the Reich. Let us begin with Germany's eastern border. Here,
one German claim, the one for Memel, has already been achieved,
despite Hitler's assurance before Munich that Germany had no further
territorial demands. No less than four German claims against Poland
are still unsettled. They concern the free city of Danzig, the Corridor,
the province of Poznan (Posen) , and Upper Silesia. Memel, of course,
belonged not to Poland but to Lithuania. In reality, in spite of Lithu-
ania's inveterate hostility towards Poland, the maintenance of Lithu-
anian rule in Memel was as much to Polish as to Lithuanian interest.
In reality there are only two parties in the contest on the eastern bor-
der of Germany: Germany and Poland. The smaller Baltic countries
are merely satellites. But behind the quarrel between Germany and
Poland looms the greater antagonism between Germany and the
Soviet Union.

From the advent of the Nazi regime down to the time of Munich,
German territorial claims in the east were not very much in evidence,
much less so, in fact, than under the Weimar Republic. This was due
to the German-Polish non-aggression pact which Hitler concluded a
few months after his advent to power. It was then his first big diplo-
matic success. The German Republic had never bowed to the deci-
sions of the peace treaties concerning her eastern border, and when
the Nazi regime came in, the Poles were particularly upset. Fearing,
to be the first victim of Nazi aggression, they sounded Paris about the
possibility of a preventive war, but the suggestion was turned down.
Marshal Pilsudski immediately effected a change of front and tried a
policy of direct negotiation with Germany. Those were the months
when the Stresa front, the bloc of Britain, France, and Italy against

43

44 THE NEW GERMAN EMPIRE

Germany, and the Franco-Soviet pact, were in preparation. Hitkr
snatched eagerly at the opportunity of winning at least one friend.

Ever since, Polish policy, under the direction of Colonel Beck, Po-
land's Foreign Minister, has been very strongly pro-German. Disliking
the idea of Russian support, and distrustful of the willingness of the
western powers to help, Poland tried to keep friends with Germany. *
The Polish dictatorship both before and after the death of Marshal
Pilsudski was only too grateful to have achieved a measure of security
from abroad while fighting their many adversaries at home. And
JEiitler wanted to keep Poland quiet while conquering Austria and
Czecho-Slovakia. Not only were German claims upon Polish territory
left dormant, but Germany even avoided making claims on behalf of
the seriously maltreated German minority in Poland. And in order
not to offend Poland, Germany left Lithuania in possession of Memel.

All this suddenly changed after Munich. During the Munich crisis^
Poland had not entirely acted on Germany's whim and in the end had
occupied more Czech territory than the Germans wished. The slice of
Czech territory acquired by Poland is not large but it contains im-
portant coal mines and the supremely important railway junction of
Bohumin. The only railway running from Berlin straight into Slo-
vakia and towards the Black Sea passes through this place. Germany
could never carry out a successful campaign in the Balkans or in the
Ukraine without possessing Bohumin and its railway line.

But the question of Bohumin is of only secondary importance. If
Germany after Munich suddenly changed her policy towards Poland
it was simply due to the fact that she now regarded Poland as an easy
victim. She launched a pincer movement against Poland from both
north and south. In the south, the Carpatho-Ukraine was made a
spring-board for the Ukrainian anti-Polish revolutionary movement.
In the north, Germany threatened Lithuania through the conquest of
Memel. The reaction against the double threat was the conclusion of
the Polish-Soviet non-aggression pact and later on, after the occupa-
tion of Memel, the Polish demand for help from the west.

At that moment, the German-Polish situation in its kaleidoscopic

POLAND AND LITHUANIA 45

transformation had already assumed a slightly different aspect. Ger-
many, while occupying Bohemia, Moravia., and Slovakia, had had to
leave the Carpatho-Ukraine to Hungary. The Hungarians there
stamped out Ukrainian nationalism to the best of their ability, thus
removing from Poland, for the time being, the threat of a Ukrainian
rising. Germany certainly expects to recover control o the Carpatho-
Ukraine later by gaining control of all Hungary. But in the mean-
time she had thrown the Ukrainians in the Carpatho-Ukraine to
their worst enemies, and the effect of this German "betrayal" of the
Ukrainian cause will not be forgotten by the Ukrainians. Even if
Germany gains control of Hungary, now including the Carpatho-
Ukraine, the Ukrainians are no longer very likely to rise at the bid-
ding of Germany.

But at the same time, by acquiring Slovakia, Germany now threat-
ens Poland direcdy from the south while her newly acquired influ-
ence in Lithuania threatens her from the north.

Memel's paramount importance for Lithuania was due to the fact
that it was this country's only harbour. Out of this fact a terrible clash
of interests arose. ForjhreisnJoub^that the, Memellanders^lmost
to ajnian^^ wishes of the popula-

tion of this small territory clashed irreparably with the vital interests
of the country they belonged to. Whether two million Lithuanians
should virtually lose their independence so that a hundred and fifty
thousand Memellanders should be able to exert the right of self-
determination is a problem beyond the power of human justice to
decide.

The political structure of the little Memelland is very similar to that
of the Sudetenland except that Memel before the War belonged to the
Reich. The town and the surrounding country district have always
been extremely conservative and this conservatism, with some help
from inside the Reich, gradually transformed itself into Nazism. In
the end all German representatives in the Diet of the Memelland were
virtually Nazis.

46 THE NEW GERMAN EMPIRE

The special situation o the Memelland was realized at the peace
conference. As a compromise between German and Lithuanian claims,
the area was taken from Germany but not given to Lithuania. Al-
though Lithuania got free access to the sea, the territory remained
under the administration of an inter-Allied commission. This lasted
until, in January 1923, the Lithuanians took advantage of the growing
tension between France and Germany preceding the French occupa-
tion of the Ruhr and occupied Memel by a coup de main. Following
that, the Lithuanians made every effort to make the town and the
territory Lithuanian, but without any appreciable success. The pro-
portion of German to Lithuanian votes in the Diet remained steady at
about five to one. Attempts to abolish the regional autonomy of the
area failed. And resistance against Lithuania grew rather than de-
clined.

This is the more surprising, because the greater part of the popula-
tion of the countryside speaks not German but Lithuanian as its
mother tongue. Only the town of Memel is completely German. The
fact is that tens of thousands of Lithuanian-speaking peasants con-
stantly voted German. For in these parts of the world religion is still
more important than language. The Lithuanians of Lithuania proper
are staunch Catholics, like the Poles. The Lithuanians of the Memel-
land are Protestants, like their German neighbours, and therefore feel
German.

Economically, no German interests were affected by the Lithuanian
possession of Memel. But as already stated, Lithuania was bound to
become largely dependent on Germany by losing Memel. For about
half her export of eggs and dairy products goes through Memel to
England and could now be cut off by Germany any time she wished
to do so. Domination of Lithuania, moreover, might lead to German
domination of the other Baltic countries, Latvia, Estonia, and Fin-
land, which are of great economic and strategic importance.

The acquisition of a hundred and fifty thousand more Germans is
quite an insignificant gain for Germany. To acquire complete con-
trol of Lithuanian eggs and butter, products which Germany finds it

POLAND AND LITHUANIA 47

very difficult to import, is certainly more valuable to her. But the
decisive importance of Memel lies in the indirect results its acquisi-
tion by Germany may have upon the whole situation in the Baltic.

The whole position, therefore, is similar in many respects to that of
the Sudetenland, though the problems are on a smaller scale. The
German claims were justified by the undoubted and incontestable
desires of the population. But the real importance of the claims lay
not in their immediate effects but in their indirect consequences:
in the case of the Sudetenland, the opening of the gates to the south-
east; in the case of Memel, the opening of the gates to the Baltic.
Here lies a significant difference between the growing German em-
pire and older empires such as those of Britain and France. For Britain
and for France the acquisition of valuable countries was at least one
decisive aim of imperial expansion. But for Germany the regions
she wants actually to make part of herself sometimes matter little.
What she really desires is often not the increase of her territory but
the expansion of her influence over territories which will formally
remain independent. We shall meet that feature over and over again,
and its full importance will only gradually emerge.

The antagonisms between Germany and Poland are of a different
nature because in the Polish regions coveted by Germany the Ger-
mans are mostly a minority. The free city of Danzig (which is not
Polish, but where Poland enjoys special privileges) is the only excep-
tion. She is thoroughly German, and for that reason was not given
to Poland by the peace treaties but granted a sort of independence
with special rights for Poland in the harbour. This compromise was
devised for reasons similar to those applying in the case of Memel.
For Danzig, the seaport at the mouth of the Vistula, was at the time
Poland's only access to the sea.

Danzig never became Polish. But like the Lithuanians in Memel,
so the Poles in Danzig attempted to make use of their special rights
for Polonizing the city. As in the case of Memel, it was a complete
failure.

The Nazis, however, found their job in Danzig much more difficult

48 THE NEW GERMAN EMPIRE

than in Memel. Danzig is a much bigger place, with a strong labour
movement, and strongly Catholic. The presence of a League of Na-
tions High Commissioner did not make the task easier. It needed a
great deal of ruthless terrorism to destroy the opposition parties. But
after years of struggle, the goal was reached,, the Nazis became the
only recognized party. The Gestapo took control of the Danzig
police; the man power of the little country was quietly organized
to make part of the German army in case of war; Danzig workers
were exported to Germany; and Danzig wharfs got German arma-
ment orders. While all this happened, Germany carefully safe-
guarded Polish rights and interests so that no Polish interference dis-
turbed the process of Nazification.

Today, Danzig for all practical purposes is part of the Reich save
that Poland has certain rights in the harbour. In itself Danzig would
have no positive value for Germany except its capacity to yield several
thousands of workers and of army recruits. But its nuisance value in
connexion with German-Polish politics is considerable. In possession
of Danzig, Germany can always cut off Poland's water-borne export
down the Vistula and the Baltic. Again, the indirect consequences
of the Nazi conquest of Danzig are much more important than its
immediate advantages to Germany.

But Poland has seen to it that this danger be reduced as much as
possible. All through the history of the German Republic, the Ger-
man Government tried to the best of its ability to create trouble be-
tween Danzig and Poland and so make it difficult for Poland to make
full use of the Danzig harbour. As an answer to this policy, the Poles
have constructed a harbour of their own in Gdynia (Gdingen),
formerly a little fishing village on the small stretch of coast line on the
Baltic owned directly by Poland. Gdynia is situated in the Polish Cor-
ridor, the Polish stretch of country cutting German East Prussia
from the rest of the Reich since the peace treaties. Though the Corri-
dor was granted to Poland expressly for the sake of giving Poland
direct access to the Baltic, the Germans never believed that the Poles
would be able to construct a harbour on that shallow and sandy beach.

POLAND AND LITHUANIA 49

They did, however, and connected it with the mining centres of
Upper Silesia by direct railway built with French capital. Today,
Gdynia takes about half of Poland's sea-borne export trade in weight
and much more than half of it in value. Danzig could any day be
ruined, as a harbour. And if it were closed to Polish transport, Poland
could easily divert her whole trade from Danzig to Gdynia. Danzig
has become relatively unimportant to both sides.

Gdynia arid the Corridor, on the other hand, have only become
all the more important. The Corridor constitutes the really tragic,
insoluble problem between Germany and Poland. It is one of the
many cases where one man's right is the other man's wrong. The"*"
Corridor is Poland's only access to the sea. And as it is equally im-
possible for her to export northward through Russia or Estonia or
southward through Rumania and the Black Sea (because both routes
would be much too costly) all her other practicable export routes at
some point lead through Germany. Without the Corridor, Germany
could subject Poland to virtual blockade.

On the other hand, as already said, the Corridor cuts right across
German territory, dividing East Prussia from the rest of the Reich.
Yet economically the Corridor is immeasurably more important to
Poland than to Germany. Polish traffic through the Corridor to the
coast is seven times the value of German traffic across the Corridor
between East Prussia and the rest of the Reich. Germany enjoys special
rights on the Corridor railways and the Polish transit tariffs are very
reasonable. It is only since 1938 that Germany, owing to her extreme
shortage of foreign exchange, found it difficult to pay for her transit.

Under the Weimar Republic, Germany complained that East
Prussia, which was at any rate severely hit by the agrarian crisis, had
lost markets in the Corridor and the province of Poznan. But what-
ever truth there was in these allegations, there is today no longer an
agrarian crisis in Germany, which suffers not from a surplus but
from a shortage of agricultural products. Today the agricultural sur-
plus of the Corridor and of the province of Poznan would be valuable
to Germany.

50 THE NEW GERMAN EMPIRE

But from the German viewpoint the decisive objection to the Cor-
ridor is not economic but strategical. The Corridor is no serious obsta-
cle to her trade. But it would be a serious obstacle to her military move-
ments in case of war. If ever Germany attacked Russia, East Prussia
would be one of her decisive bastions, and a hostile or even a neutral
Poland could easily prevent her from moving a sufficient number of
troops into that province. Germany therefore needs the Corridor if
she wants to have a free hand for aggression in the East. And it is
precisely the fact that Germany's possession of the Corridor would
strangle Polish trade which makes the Corridor even more valuable
for Germany. For only such a stranglehold could force Poland to give
up her policy of balancing the Soviet Union against Germany and
make her join on the German side. Again it is the indirect not the
direct consequences of a possible German conquest that matter most.
Whatever territory Germany may acquire from Poland is not so
valuable in itself other than as a means of bringing Poland under
control and gaining a starting point for an attack upon Russia.

On historical and linguistic grounds both sides can make valid
claims to the contested territories. The Corridor (Western Prussia)
belonged until 1466 to the Teutonic Knights, the precursors of modern
Prussia; to Poland until the first partition of Poland in 1772, and again
to Prussia until 1918. The province of Poznan was Polish until the
second partition of Poland in 1793, changed hands repeatedly during
the Napoleonic Wars, and finally became Prussian in 1815 and re-
mained so until 1918. The Polish part of Upper Silesia was part o
the Holy Roman Empire from the twelfth century and always re-
mained under German rulers until 1918. It is the only section of
Polish territory where historic rights speak clearly in favour of Ger-
many. As to Poznan and the Corridor, only God Himself could de-
cide whose historic right is to have precedence.

Unfortunately, the linguistic position does not in all cases agree
with the historical one and is complicated by the occurrence of im-
portant changes since 1918. When the Republic of Poland was created
in 1918, it contained about two million Germans (of a population

POLAND AND LITHUANIA 51

which numbered about thirty millions and which has since grown
to thirty-four). Of these, something less than half a million lived in
parts of Poland which had formerly been Austrian and Russian. Of
the remainder, no less than nine hundred thousand were squeezed
out by the Poles after the formation of the Polish State. German
officials, schoolteachers, etc., were summarily dismissed; German
workers could not find work; business men and farmers were ruined
by taxes and other methods of economic discrimination; and terror
was spread among the German minority by a campaign of unmoti-
vated arrests. The Germans, who are not very good at resisting pres-
sure unless backed by official authority, put up hardly any fight and
left in a hurry. The exodus was much more considerable in the Cor-
ridor and in Poznan than in Upper Silesia. For the latter became
Polish only in 1922, after the first wave of Polish nationalism had
spent itself. When the League of Nations established the new border
as a result of the plebiscite, special safeguards were introduced in
favour of the German minority.

Before the disaster, the German minority in Poznan, and especially
in the Corridor, had been considerable. Today, in the two provinces
together, it has sunk to the insignificant figure of a little more than
three hundred thousand. But Germany need not recognize the present
state of affairs and may make a special grievance precisely of this
forced exodus and ask the return of the regions concerned.

As explained above, the area Germany really wants is the Corridor,
on strategical grounds. There would be good reasons for leaving Poz-
nan alone, for this province has always been much more thoroughly
Polish in feeling than West Prussia and would be difficult for Ger-
many to digest. Yet once Germany had acquired the Corridor, the
province of Poznan would stretch as a deep salient into German ter-
ritory and (unless Germany had acquired firm control of the Polish
Government) might constitute a serious threat to Prussia proper.

The situation in Polish Upper Silesia is rather more favourable for
Germany than language statistics suggest. It is true that the majority
of the population speak Polish as their mother tongue, but a knowl-

52 THE NEW GERMAN EMPIRE

edge of German is widespread and the population of the region has
always been curiously indifferent to national issues. Before the War
they felt Prussian and did not very much care which idiom they used.
The coal basin of Upper Silesia is one of the most important indus-
trial regions of Central Europe, and would be well worth having
from the German point of view. Its importance has grown since Po-
land, after Munich, occupied the adjacent part of Czecho-Slovakia,
belonging to the same coal basin and again with a considerable Ger-
man minority. Moreover, one of the most important strategical rail-
ways of Europe runs through Bohumin, the railway junction recently
acquired by Poland. It is the shortest route from Berlin to Budapest
and to the Black Sea.

It remains to discuss the chances of Germany's carrying out her
intentions concerning Poland. Germany finds herself confronted with
a task which is anything but easy. The unpleasant peculiarity, from
the German point of view, is that precisely those political forces
which in other countries are apt to give in to German pressure are
most ferociously hostile to Germany in Poland. There exists in Po-
land a party which calls itself National Democrats which may be
everything Germany could wish for: wildly anti-Semitic, furiously
anti-Bolshevik, anti-Russian, anti-socialist, anti-liberal, and full of
what one generally calls Fascist tendencies. Compared with the
National Democrats, the existing dictatorship, with its backbone in
the army, is a relatively mild affair, however oppressive it may be.
The ruling group in Poland is bitterly at odds with the National
Democrats on their Right, while at the same time the regime is con-
stantly threatened from the Left, the labour movement and the poor
peasants, and in addition cannot fully master the resistance of the
national minorities, Ukrainian, White Russian, and Lithuanian. In
its weakness and instability, the Polish dictatorship, as represented by
Colonel Beck, was until recently the group most inclined to come to
an understanding with Germany.

But the masses are with the opposition of the Left and the Right,
and the regime is much too weak to disregard their feelings. The Left

POLAND AND LITHUANIA 53

is obviously strongly anti-German. But the peculiarity of the Polish
situation is that the National Democrats, the party of the extreme
Right, are the most anti-German of all. Their extreme nationalism
originated in the fight against Prussian oppression before the War.
Their leader Roman Dmowski is himself a native of Poznan, who all
through his life has been ready to cooperate with anybody, whether
the Tsar or the French Republic, in order to defeat Prussia. The Na-
tional Democrats, ever since the beginning of the twentieth century,
have held firm control of what are today the western provinces of
Poland, just those provinces coveted by Germany. And their in-
fluence in these provinces is so great that the Government almost in-
variably chooses the governors of the western provinces from among
their friends; these governors have fought the German minority even
at times when this was not in agreement with the pro-German policy
of the Polish Government. It is an irony of history that the German
minority in Czech Silesia had good reason for bitter complaints when
as a result of Munich they were transferred from Czecho-Slovakia to
Poland. The first act of the Polish Governor was to dissolve all the
German political organizations which had happily thriven in demo-
cratic Czecho-Slovakia.

Germany, therefore, should have little hope of breaking up Polish
resistance from within. Poland is not Czecho-Slovakia. The Right in
Czecho-Slovakia was constantly conspiring with Henlein against
Benes and his group. The Right in Poland could never play a similar
role. For that reason Poland, in spite of all her weaknesses, would be
a hard nut to crack. Yet cracked it must be, because without holding
the Corridor and controlling Poland Germany can never really have
a very strong position against the Soviet Union. And unless Germany
achieves that, she cannot be sure of gaining and maintaining complete
supremacy in the south-east. Here lies one of the most formidable
problems of the future.

Here, too, lies the explanation of the German game with the Ukrain-
ians. Germany can hardly hope to make much use of the rifts among
the Poles. But she can hope to wear down Polish resistance through

54 THE NEW GERMAN EMPIRE

the minorities. There are about seven million Ukrainians in the
south-east of Poland, two million White Russians in the east, about
one million Lithuanians in the north-east, and something like a mil-
lion Germans, mostly in the west; altogether about a third o the pop-
ulation of the whole republic. The hatred of the Ukrainians for the
Poles is intense, and their strategic position most threatening. A revolt
in the Polish Ukraine, backed from the Carpatho-Ukraine (the
Ukrainian part of Czecho-Slovakia) , would have taken Poland in
the rear of its southern flank, whereas through East Prussia and a
German-controlled Lithuania Germany might attack her in the north.
Lithuania might be promised the return of Vilna, her old capital
(snatched away by the Poles in 1920), in exchange for Memel. But
the whole pincer movement is less of a threat to Poland just now,
when Germany has allowed Hungary to occupy the Carpatho-
Ukraine and to stamp out the local Ukrainian movement with fire
and sword. It would not be a very threatening plan, at any rate, if
either the Soviet Union or the western powers backed Poland. But
there might be moments when help from either side would be equally
unavailable. For such a moment Germany is obviously waiting. Until
then she is playing at cat and mouse, alternately threatening and
promising, alternately pushing the Ukrainians and the German mi-
nority forward and keeping them back. Whether she will succeed is
another question. It is not very likely in view of the pledge recently
extended to Poland by the British Government.

CHAPTER V
SLESVIG AND THE DOMINATION OF THE BALTIC

SMALL territorial gains can have tremendous indirect consequences.
This applies emphatically to the German claims for North Slesvig.

Like the Corridor, Poznan, and Upper Silesia, so North Slesvig
was lost to Germany by the peace treaties. Like these provinces, Ger-
many claims her back from her new owner, in this case the helpless
little kingdom of Denmark. As in the case of the territories ceded
to Poland, the Germans form a small minority. But this minority has
never been persecuted by the Danes as the German minorities in the
east have been persecuted by the Poles.

Slesvig was under the Danish crown until the war between Den-
mark on the one side and Prussia and Austria on the other in 1864.
After this war, the province remained under joint Austro-Prussian
administration and was one of the bones of contention between the
two countries which led to the war of 1866. Austria, after her defeat,
left it to Prussia but stipulated that a plebiscite should be taken at a later
date in the northern part of the province, where the majority spoke
Danish. The pledge was never carried out, and first Austria, and much
later Denmark, formally renounced the idea. But it was taken up by
the Allies after the Great War, and a plebiscite took place after the
peace treaty in two separate zones, the one with its centre in Flens-
burg, the other with its centre in Haderslev (Hadersleben) . The Flens-
burg zone voted overwhelmingly German, the Haderslev zone over-
whelmingly Danish. There were, however, several towns on the
southern fringe of the Haderslev zone with a German majority. The
result was not surprising, for it corresponded exactly to the results of
ordinary pre-War elections. The Haderslev zone had invariably sent
a Danish nationalist to the German Parliament.

After the transfer of the territory, German influence and German
votes naturally declined still further owing to the withdrawal of

55

56 THE NEW GERMAN EMPIRE

German officials. In the elections of 1935, the Germans in the area
polled twelve thousand votes out o a total vote of eighty-one thousand;
in those of 1939, fourteen thousand votes out of a total of ninety-six
thousand. Germany's claims to North Slesvig are weak indeed, for
nobody can seriously doubt the unobjectionable character of Danish
elections.

The little area has no importance in itself whatsoever. It is mainly
agricultural, and it is the peasant population which is mostly Danish,
while German influence is stronger in the few small country towns.
The acquisition of an area with an agricultural surplus might be
welcome to Germany, but as the whole area has only a hundred and
eighty-four thousand inhabitants, the advantage would be insignifi-
cant. The district has no particular strategic importance.

Yet there is no doubt that Germany covets it. Or more exactly here,
as in so many other places, Germany is playing at cat and mouse.
Time and again the German foreign office has disclaimed any designs
upon North Slesvig. But the local rulers on the border, in Kiel and in
Flensburg, act in a different manner. Quite officially they organize a
Nazi Party, Storm Troops and all, in North Slesvig, that keeps close
watch over the German minority and puts forward thinly veiled de-
mands for a return of the area to Germany. A big Nazi meeting in
April 1938, after the fall of Austria, launched the slogan, "The swas-
tika must wave as far as the Kongeaa" (the pre-War boundary river
between Germany and Denmark).

As North Slesvig is neither German-speaking nor valuable in itself,
these claims can only aim at some other goal. And it is not difficult
to discern that again the territorial demands are merely a cover for
the real aim that of establishing a firm control over a formerly in-
dependent country. Germany keeps the claim for North Slesvig up
her sleeve in order to break Denmark.

If North Slesvig is unimportant, Denmark is not. Though only a
small country with three and a half million inhabitants, she is, next to
New Zealand, the best world producer of dairy products. And dairies
are one of the weakest spots in the German system of supplies. Yet

SLESVIG AND THE BALTIC 57

Danish dairies in themselves would not be a sufficient reason for
political action on a grand scale. But as Slesvig is only a means o
access to Denmark, so Denmark herself is only an access to larger
spheres. She dominates the entry to the Baltic. She is a natural bridge
between Germany and the Scandinavian mainland. The control of
Denmark is one of two keys to the control of the whole Baltic area
in case of war. The other key is the Aland Islands in the northern
part of the Baltic, which are Finnish and about which we shall say
something in a moment.

Firm control of the Baltic is one of the most vital of German in-
terests. Swedish iron-ore is the most vital of all raw materials for Ger-
man armament, and Germany, in case of war, would have to accept
any risks whatsoever in order to secure continuous supplies. Den-
mark, Lithuania, and Latvia are important as a means of supplying
Germany with food and that under conditions where Germany will
have no money available to pay for it. Latvia, Estonia, Finland, and
Sweden have rich supplies of timber.

Yet the strategic and political importance of the Baltic is even
greater than its economic one. The Baltic (and the land route across
Finland, Sweden, and Norway) is the nearest out of three possible
communications between the Soviet Union and the West; the other
two being through the Polar Sea and through the Dardanelles. The
value of the Arctic route is very limited. The other two routes Ger-
many threatens to cut. The Danish Sund and the Dardanelles have
always been crossroads of world history.

All sorts of economic and political drives are inseparably inter-
mingled in the German advance in the Baltic. Political action is made
subservient to Germany's economic ends, and German economic
influence in its turn helps to strengthen her political penetration.
Yet the difficulties Germany meets in the Baltic are great indeed.
They are of different kinds in two different groups of countries.

Denmark, Sweden, and Norway are democracies, all three for
many years under Socialist Governments which enjoy tremendous
popularity. Lithuania, Latvia, and Estonia are dictatorships and

58 THE NEW GERMAN EMPIRE

could therefore be more amenable to German political views. And in
Latvia and Estonia, before the War, the Baltic lords of German stock
and language had been the hated rulers over an exploited native
peasantry. The liberation of these regions was marked by the ex-
propriation of the German landlords, and deep distrust of Germany is
engrained in the soul of every Latvian and Estonian.

Finland is a case of transition between the two groups. It has seen
serious attempts to create a dictatorship and is not quite so democratic
as the Scandinavian countries. Then, too, Finland never knew the
Germans as enemies. On the contrary, in 1918 the Germans helped
in the liberation of Finland from Russian domination and from Bol-
shevism. The best chances for Germany seem therefore to lie in Fin-
land, and this is important owing to the strategic role of the Aland
Islands. But of late the strength of the extreme Right in Finland has
much declined, and Finland has drawn closer to the Scandinavian
countries. Its Government, too, is now under preponderant Socialist
influence.

A common feature of all Baltic countries is their dislike of Russia
and their strong sympathy for Britain. Britain and Germany between
them take by far the greatest share of Baltic trade and strongly com-
pete for Baltic markets. The seven Scandinavian and Baltic countries
receive no less than twelve per cent of all British exports. And in every
single one of these countries British political ideals are competing with
German ones. The Baltic is an important zone of conflict between
German and British interests.

Commercial and political trends have been somewhat contradictory.
Britain in this region has just held her own commercially, while the
importance of German trade has been steadily growing. But with the
growth of German aggressiveness, the political feelings and sympa-
thies of all the Baltic countries, both democracies and dictatorships,
turn more and more towards Britain.

German pressure is the most severe in Denmark. One of its levers
is the Nazi movement in North Slesvig and among the Danes
themselves. German trade policy is another, and its effects are the

SLESVIG AND THE BALTIC 59

stronger because Denmark and especially Danish agriculture have
been severely hit by the depression and by the Ottawa agreements.
The heavily indebted Danish farmers need markets desperately, and
Germany offers markets, i not for Danish bacon, butter, and eggs,
at least for Danish cattle. But in exchange, Germany., which has a
free hand to buy cattle elsewhere, has forced extremely unfavourable
conditions upon Denmark. The commercial agreement of 1936 be-
tween Germany and Denmark obliges Denmark to accept, in clear-
ing against exports to Germany, textiles, machinery, and other goods
which are being increasingly produced by the growing Danish in-
dustry itself, and this is only one of the many unpleasant features o
this trade agreement. So unfavourable indeed is it that it has been
constantly rumoured that in part this trade agreement is the price
paid by the Socialist Danish Government for the temporary main-
tenance of North Slesvig under Danish rule.

One of the results is that ;the unemployment figures in Denmark
remain at a very high level. It is the only Scandinavian country which
has not really recovered from the depression. Thus unemployment is
gradually sapping the strength of the labour movement while the
peasants look eagerly towards Germany for increased exports and
would be prepared to remove any grievances Germany might raise.
The political effects of this situation are not negligible, though there
are a number of obstacles which make it difficult for Germany to
remove rapidly the existing Left Government. The Danish upper
classes, and especially the Conservatives, the party of the Copenhagen
bourgeoisie, are traditionally anti-German since the War of 1866,
as indeed are the Danish people as a whole. Attempts to form a Danish
Fascist party on Nazi lines have so far met with limited success only;
the election of April 1939 for the first time gave the Danish Nazis
three seats in the chamber. The peasant party so far still holds out
the best hopes for a peaceful German penetration and Danish peasant
organizations have been the only Scandinavian organizations of any
real importance which have so far responded to invitations to Nazi
rallies in Germany.

60 THE NEW GERMAN EMPIRE

Yet Denmark is a country so weak that Germany could control her
by means of direct threats without much help from within. Already
during the Great War it was stated that hardly anything could be
done against a German attack upon Denmark, and today this holds
good all the more, since in her desperately exposed situation Denmark
has preferred to emphasize rather than to cure her weakness. She is
the only country in Europe which has not rearmed to any great ex-
tent and lies open to an aggressor.

Germany makes use of this position to exert pressure of a special
kind which she attempts to exert in many countries, but nowhere so
successfully as in the case of Denmark. She threatens vague evils if
anything anti-German is printed in the Danish press. In the case of
Denmark this goes to incredible lengths. Berlin gs^e Tidende, the
largest Danish newspaper, reprinted, not news about Germany, but
the debate in the British House of Commons after Munich with
the unfavourable comments made by certain members upon German
terrorism against anti-Nazis in the Sudetenland. This quotation was
made the object of a diplomatic action on the part of Germany and
the foreign editor of Berlin gs\e Tidende had in fact to go an event
probably unique in the history of diplomatic relations. Similar pres-
sure with similar success has been exerted upon the Government
paper, Social-Derno^raten.

Thus, in effect, nothing very anti-German can be printed in Den-
mark. It may be contended that the Danish press remains free to dis-
cuss Denmark's home affairs. But in a quiet little country such as
Denmark home news is not very exciting and the real alinement of
forces takes place with regard to international affiliations. The Danish
press may print anything anti-Russian or anti-British but nothing
anti-German. Already, though in a covert form, a German press
censorship is at work in Denmark. It is a decisive step in the establish-
ment of Nazi totalitarianism.

In spite of economic difficulties and of threats from the south, demo-
cratic, anti-German, and pro-British tendencies are too strongly
rooted in Denmark to be easily upset. Yet this is how the diplomatic

SLESVIG AND THE BALTIC 61

correspondent of the Sunday Times [London] summed up the situa-
tion :

"The small German minority is highly organized from within
the Reich, and the German legation in Copenhagen has active con-
tacts with every section of the Danish people. This is gradually lead-
ing to a general weakening of belief in the vigour of democracy,
particularly as it is felt that Great Britain does not show herself
interested in Denmark and makes no effort to counteract the German
anti-democratic propaganda. Keen observers are thus beginning to
wonder whether under these conditions democracy will survive in
Scandinavia, and in Denmark there are already the beginnings of a
Danish Nazi Party."

Sweden is different, for many reasons. She has no German minority
within her borders. She has no common land boundary with Ger-
many, and as long as Denmark remains independent could only be
attacked by sea. She has seriously rearmed and is prepared to fight.
Her Socialist Government is in close co-operation with the peasants,
and there exists no great chance of a rift between workers and peasants
concerning the attitude to take as against Germany. Furthermore,
Sweden is at present exceedingly prosperous and has succeeded in
swallowing up almost entirely the army of unemployed which was
her nightmare during the fifteen years after the War.

The decisive fact is that Germany needs Sweden much more than
Sweden needs Germany. Swedish iron-ore, covering about two-fifths
of Germany's present needs, is absolutely indispensable for German
rearmament. It is German rearmament which to a large extent has
produced the boom in Sweden and incidentally strengthened the posi-
tion of the Socialist Government there. Of this the Swedish Socialists
are not unaware. All Swedish iron mines are either State-owned or
State-controlled, and the Government might refuse Germany the iron
she needs. But nothing of the sort has ever been tried. Seventy-five
per cent of the Swedish exports of iron go to Germany.

Normally, big German imports from a country make it more
dependent on Germany, But in this case Germany cannot use her

62 THE NEW GERMAN EMPIRE

imports as a weapon. For In this era of rearmament Sweden could
easily place most of her exports elsewhere, whereas Germany has no
free choice. Under these conditions the Germans are treading their
way very carefully. The German press systematically refrains from
attacks upon the Socialist Government in Sweden, emphasizes the
racial affinity between Germans and Swedes (but these pure Nordics
are not particularly interested), and altogether avoids giving offence.
Yet the Swedes are well aware that this situation cannot last. In the
event of a serious international conflict, the land route through Swe-
den from Russia to the Atlantic, and Swedish iron-ore, would become
all-important. Besides, Sweden is just one of those smaller industrial
countries which Germany might be glad to fit into her economic
system to provide her agricultural vassals in the south-east with in-
dustrial goods. Swedish policy is cautious but preparing for the worst.
The crucial point in these preparations is the fortification of the
Aland Islands, which concerns Finland even more than Sweden.

Finland is economically much less important to Germany than
Sweden is, but strategically even more. Through Finland, Russia can
be attacked directly. The Finnish Right, as already mentioned, has
always been strongly pro-German since the German intervention on
their behalf in the War against the Reds in 1918. And Nazi Germany
ought easily to be able to get control of Finland by bringing to the
helm a party entirely subservient to its aims.

But if there is any country where Germany has overplayed her
game, it is Finland. She put too much hope upon the anti-Russian,
anti-Communist, and anti-democratic Lapua movement of reaction-
ary peasants, Lutheran clergymen, and retired officers of the "White"
army of 1918. This movement came to the brink of complete success
in 1932, at the pit of the depression, but declined with recovery, after
having realized its chief official aim, the dissolution of the Communist
Party. Since then, the extreme wing of the movement has become
much more truculent and must today be regarded as completely Nazi.
But precisely owing to this development, the movement, which at one
time had been almost representative of the whole Finnish Right,

SLESVIG AND THE BALTIC 63

split; the greater part of the Right went back to constitutionalism,
and at present Finnish Fascism is insignificant. Whether it would
remain so in a new depression is a different question.

At any rate, the movement had identified itself too much with
Nazism for Germany not to feel the after-effects. When in 1935 the
last attempt at a coup d'etat collapsed miserably without bloodshed,
a strong reaction in favour of Britain and democracy was the result.
It brought to the head the present coalition Government under Social-
ist leadership. And this political development has so far not been seri-
ously upset by the undoubted headway German trade has made in
Finland as against the established position of Britain.

The effects of all this upon Finnish foreign policy have been con-
siderable. In 1935, when Germany believed herself very near to getting
control over Finland, she peremptorily asked her to fortify the Aland
Islands so that in case of war Russia's Baltic fleet should be blocked
in Kronstadt. The demand was incompatible with a treaty of 1920
between Sweden and Finland which had given the islands to Finland
(more or less against the will of their inhabitants) , but on condition
that they should never be fortified; for the Aland Islands lie not only
across the gateway from Leningrad into the Baltic, they lie directly
opposite Stockholm as well. Finland kept this treaty faithfully and
rejected the German demands.

But two years later she changed her mind under growing German
pressure and decided to seek the consent of Sweden for the fortifica-
tion of the islands, which was readily granted. The island group has
since been strongly fortified, not against a possible attack from Russia
but from Germany. The strategic position of the islands is exceed-
ingly strong, and Sweden and Finland have seen to it that no German
landing corps should be able to strike unexpectedly at the iron mines
of central and northern Sweden or at Russia across Finnish territory.

No wonder that Germany was angry and tried a counter-coup.
Mr. Holsti, the Finnish Foreign Minister who had concluded that
agreement, was known to be a staunch democrat and an anglophile.
His personal position in the cabinet was not a strong one, for reasons

64 THE NEW GERMAN EMPIRE

which had little to do with his attitude to international affairs. The
Germans snatched at the opportunity o some rather strong anti-
German utterances of his in the days of the Munich crisis, and a Ger-
man protest brought him down. But again, Germany had miscalcu-
lated. His successor is certainly not any more pro-German than he
was himself.

To round off the picture, a word must be said about German rela-
tions with Latvia. (Relations with Estonia are friendly but not very
important.) In Latvia the Germans are constantly raising the griev-
ances of the strong German minority which, like all minorities in
Latvia, is treated with scant consideration. But in Latvia this is a
dangerous game. There are other countries, such as Rumania and
Brazil, where the German minority is popular and can easily be used
as a spearhead for German penetration. In Latvia, where national lib-
eration and the breaking of the influence of the Baltic barons were
almost one and the same thing, the situation is different. German
papers complain bitterly about the lack of understanding of Germany
in Riga. But now, since the capture of Memel and the capitulation of
Lithuania, Latvia may at any time be threatened with the use of main
force.

Thus, in the whole Baltic area, Denmark is, so far, the only coun-
try where Germany has had definite success, though of a limited kind.
Yet Denmark is the gateway to the rest, and Germany is making
every conceivable effort to get control of the whole region, as she
must. A German Empire without complete control of the Baltic is
as unimaginable as a German Empire without complete control of
the Balkans. If the latter has got so much more attention than the
former, it is only due to the fact that the Nazis have been more success-
ful so far in the south-east than in the north.

CHAPTER VI

THE NETHERLANDS, BELGIUM, FRANCE,
SWITZERLAND, TIROL

CONTINUING our list o German territorial claims, and their direct
and indirect implications, we are brought to her western borders.
It is the zone where at present German intentions are least conspicu-
ous. In the east and in the north, Germany is surrounded by small
countries, some of them of recent origin and little stability, which are
an easy prey to aggression. But across her western border Germany
finds in France a first-rate military power which it is not so easy to
deal with. The Netherlands and Belgium, which in themselves are
helpless enough, cannot be touched without rousing against Germany
all traditional feelings of Britain about the independence of these
countries. Switzerland, whose strategic position between Germany
and Italy is particularly unfavourable, can yet, to a considerably de-
gree, rely on French support. Any German aggression in the west or
south-west is bound to produce an international crisis much more
serious than that of Munich and which in the present state of things
would almost certainly be bound to lead to war. As long as the Anglo-
French alliance holds firm, Germany therefore will operate with
great caution in this region.

Yet Germany's ultimate territorial claims in this area are perhaps
bigger than in any other one. Two-thirds of the population of Switzer-
land speak German. They are divided from Germany by a history
of their own and a profoundly different mentality, yet Germany is
almost openly working for the acquisition of the German-speaking
part of Switzerland in the future. In the north the Dutch, and the
Flemish in Belgium, speak languages of their own, but these lan-
guages are linguistically much nearer to German than the Scandina-
vian languages and are really only Low German dialects which have
evolved into literary languages. German nationalists have never recog-

65

66 THE NEW GERMAN EMPIRE

nized the Dutch and Flemish as individual nationalities and always
regarded them as lost tribes o the original stock which ought to be
brought home to the motherland. During the Great War, a serious
attempt in that direction was made in the Flemish-speaking part of
Belgium. Today, when Dutch neutrality, in case of war, is less assured
than ever, the Dutch are rightly afraid of the same fate. Finally, there
is German-speaking Alsace, of which more later.

If Germany has so far kept up a certain reserve in voicing her aims
in these parts of the world, it does not mean that she has not made
progress. On the contrary, and perhaps precisely owing to her reserve,
she has brought about, in the west, one of the most brilliant strokes
of her international policy. She has succeeded in loosening the close
ties which linked Belgium with France and Britain.

The territory lost by Germany to Belgium as a consequence of the
war is insignificant. It is the little zone of Eupen-Malmedy, with about
seventy thousand inhabitants. The economic value of this district is
negligible. Part of the region is very poor. There are, however, a few
zinc mines. Malmedy always spoke French and is loyal to Belgium.
Eupen always spoke German, and before the advent of the Nazis
was not very pro-Belgian. But since 1933 the Catholic element in the
district prefers Belgium to Germany, and in the elections of October
1938 nearly half of the vote in the city of Eupen went against the
Nazis, The countryside is politically more or less indifferent.

In the peace treaty the region was handed over to Belgium without
asking the opinion of the population. Afterwards, a strange procedure,
quite inappropriately called a plebiscite, was carried out. Lists were
opened after the territory had become Belgian, and people were
allowed to sign them as a protest against the annexation. This ex-
tremely unfair procedure of an open vote, after the fait accompli of
annexation, was made worse by a great deal of administrative chi-
canery. Germany's case really rests on the inadequacy of this so-called
plebiscite. Belgium has repeatedly considered returning the district
of Eupen to Germany, and even today there certainly exists a case

THE NETHERLANDS, BELGIUM 67

for a local plebiscite under fair conditions. It might long ago have
been taken were it not certain that such a plebiscite would create a
dangerous precedent for other German claims, much less justified in
themselves.

The characteristic thing about Eupen-Malmedy, however, is that
here, in contrast to North Slesvig, the Nazis have not pressed their
claims to any extent. A quarrel about this unimportant region would
only rouse suspicions in Belgium, and Belgium, in contrast to Den-
mark, is willing to defend herself. Germany has much more efficient
means of winning a footing in Belgium, and her tactics would only
be upset by raising untimely territorial demands.

Two factors of the greatest importance work for Germany inside
Belgium. The one is the undoubted crisis of Belgian democracy. The
other is the fight between the Flemish and the Walloons, whose lite-
rary language is French.

The crisis of Belgian democracy is due to the inadequacy of the
Belgian political machinery to the difficult economic tasks now facing
a country living primarily on exports. There are three traditional
parties in Belgium Socialist, Catholic, and Liberal and none of
them is ever strong enough to form a government of its own. More-
over, all three parties are divided within themselves on national lines;
the Liberals less than the other two, but then they are the weakest
party. The Catholics are divided in addition between a very reaction-
ary Right Wing controlled by the landed aristocracy and a strongly
progressive Left Wing controlled by the Catholic trade unions. The
Catholic Party, which is traditionally the strongest party in the coun-
try, can hardly be regarded as a political unit at all. Every attempt
on the part of the Catholics to form a one-sided coalition either with
the Socialists or with the Liberals threatens a split within the party.
But without Catholic participation no majority is normally to be
had. For many years, therefore, the country has been ruled by coali-
tions of all three traditional parties. The binding together of such
contradictory forces naturally tends to create recurrent political stale-

68 THE NEW GERMAN EMPIRE

mates, frequent Government crises, and a general feeling of uneasi-
ness, made worse by the absence of any regular parliamentary oppo-
sition.

It was not surprising, therefore, that as an aftermath of the depres-
sion, and during the very slow recovery following it, a real Fascist
movement grew in Belgium under the leadership of one Leon De-
grelle. This movement, called the "Rexists," was at one time very
dangerous, but during the last few years, with full recovery, it has
disintegrated and finally relapsed into insignificance at the municipal
elections of April 1939. This disintegration of Fascist movements
(outside Germany and Italy) which sprang up during the depression
is not limited to Belgium. We have already met a parallel case in
Finland, and we shall soon meet a few more. Yet it must not be for-
gotten that the Nazis themselves, in Germany, collapsed after the
recovery of 1924, only to re-emerge victoriously with the next de-
pression*

The Rexists have most of their following in the French-speaking
part of the country, which ought to make them anti-German. But it
does not. The common ideology is stronger than the national antago-
nism, and the Rexists must on the whole be accounted a pro-German
force.

The same applies, surprising though it is, to the extreme conserva-
tive wing of the Catholic Party. The Belgian Catholic artistocracy does
not feel itself either French or Flemish. It was horrified by the Popu-
lar Front Government in France and by the Spanish Civil War, which
it interpreted as threats of international revolution. Thus, even among
the French-speaking section of the Belgian population, Germany has
friends.

But the Flemish movement is a much stronger asset for the German
game in Belgium. For centuries the Flemish have been treated as a
sort of inferior race by the French. They gradually emerged to na-
tional consciousness in the eighties and ever since the Flemish national
movement has made steady progress.

The Flemish actually are a slight majority of the Belgian popula-

THE NETHERLANDS, BELGIUM 69

tion, and this majority is bound to grow for a long time because the
Flemish birth-rate is higher than that of the French. The political
significance of this situation came to the surface gradually as the
Flemish became increasingly conscious of their nationality and the
Flemish national movement permeated all political parties. For a long
time the Flemish strove for equality. Today they strive for domina-
tion, and it is the Walloons who are creating defence organizations
against the rising Flemish flood. During recent years every cabinet
crisis has ended in an increase of Flemish influence until the Flemish
had a clear majority in the cabinet.

Every political view is represented in the Flemish nationalist move-
ment. The Flemish are a strong and influential minority in the Social-
ist Party. They actually control the Catholic Party. And they have a
number of smaller nationalist parties proper, of whom some at least
are openly Fascist, anti-Belgian, and pro-German. But in reality pro-
Germanism is general in all sections of the Flemish national move-
ment. The strength of this feeling can be gleaned from the fact that
the Socialist Burgomaster of Antwerp, Camille Huysmans, former
general secretary of the Socialist and Labour International, in 1937
went to the Cologne International Fair and there made an exceedingly
pro-German speech, emphasizing the deep sympathy of his city for
Germany and her achievements and the need of close co-operation
between the two countries. It was an action which could not have any
parallel among, say, Scandinavian Socialists.

But even the most extreme sections of the Flemish are only pro-
German. They do not share the Nazi view that the Flemish are really
Germans. Yet this view is diplomatically suppressed in Germany,
and in the meantime Germany, in Belgium, is in the agreeable posi-
tion of enjoying the full support of a non-German nationalist move-
ment. At the present juncture this movement is not revolutionary in
any proper sense. But it is full of revolutionary implications. It would
be easy for Germany, with its help, to split Belgium in two in a serious
crisis. It would be easy for her to strengthen the separatist wing in
the Flemish movement, and to support the ideas of those of the Flem-

70 THE NEW GERMAN EMPIRE

ish who want to create a Greater Netherlands out o Flanders, the
Netherlands, and South Africa. In a big international crisis, the Flem-
ish nationalist movement might easily be used for permeating the
Netherlands with Fascist ideas.

But just as easily Germany can use the Flemish for bringing Bel-
gium as a whole under their control. At the present juncture the pro-
German elements already dominate the Catholic Party, where both
the Flemish and the Conservatives are pro-German. With the support
of the Flemish Fascists, the Flemish wing of the Socialists, and the
Rexists, they could easily overcome the resistance of the French sec-
tion of the Socialists, the Liberals, and the small anti-German section
of the Catholic Party.

These are only trends; they are not inevitable developments. The
various groups just mentioned have only their pro-Germanism in
common. Otherwise they are bitterly hostile to one another. Sections
of the Flemish movement may turn round when they realize the ex-
tent of German ambitions, and a very great deal depends on both the
economic and the international situation. Yet this much is certain,
that at least half of the Belgian population today would be very re-
luctant to fight against Germany and would probably be ready to
fight for it. As a result of this, the Belgian alliance with France was
denounced in 1936, and there is no telling how far things will go
once the crisis of Belgian democracy deepens. That Belgium of all
countries should prove so very permeable to Nazi influence must be
regarded as an extraordinary achievement and a serious threat to the
vital interests both of Britain and of France. Besides, it would be a
natural aim for German economic policy to draw Belgium with her
big industrial plant into the orbit of the German economic system.

Farther north, in the Netherlands, Germany has been much less
successful, because conditions there are much less propitious. There
does not exist in the Netherlands a national grievance such as the
Flemish question in Belgium. Dutch democracy is working smoothly.
The very strong Calvinist and sectarian tradition of the country is
incompatible with Nazism. Dislike of Germany is traditional and

THE NETHERLANDS, BELGIUM 71

fairly general. So far the Nazis could obtain nothing in the Nether-
lands except the formation of a Dutch Nazi Party, which at one time
seemed to have good prospects but which collapsed at the last parlia-
mentary elections. Here again an unfavourable development of the
economic situation might threaten a change. But at present the situa-
tion in the Netherlands is much more similar to that of Denmark
than to that of Belgium. Nazi permeation is insignificant, but the
country lives in constant fear of direct German conquest, which it
would be very difficult to ward off. In the meantime every German
handbook of geography insists upon the decisive importance for Ger-
many to control the mouth of the Rhine.

On the southern end of the Franco-German border, in Switzer-
land, the situation is again very different. There the Germans hide
their ultimate aims much less than in Belgium and the Netherlands.
They do not limit themselves to supporting a local Swiss Fascism,
fighting for the creation of a totalitarian regime in Switzerland. They
go further and organize and finance a German Nazi movement in
Switzerland which stands for a sort of Anschluss of German Switzer-
land to Germany. A constant series of conflicts between Germany and
the Swiss Government has arisen out of this situation. One day it is
the question of a certain newspaper such as the Schtveizer-Degen,
openly proclaiming the whole Nazi programme and slinging mud
at all Swiss political institutions and political men, until the Govern-
ment finds itself obliged to suppress the publication. Next it is a refer-
endum in the canton of Basel for the suppression of the Nazi Party
which calls forth a German diplomatic protest. Then Swiss public
opinion is roused by the fact that a German attache, who in Prague
controlled the Henlein movement, is transferred to Bern, where he
is suspected of being entrusted with a similar task. Then again, an
incident is created by the discovery that the German "Government is
systematically sending German students to Swiss universities under
the pretence of study but in reality for purposes of political propa-
ganda.

72 THE NEW GERMAN EMPIRE

The most serious conflicts, so far, have arisen over the liberty of
the Swiss press. Germany is following her policy of suppressing all
anti-German comment abroad with particular insistence in Switzer-
land, maintaining that every word of anti-German criticism is
incompatible with Swiss neutrality. They have insisted on the sup-
pression by the Federal Council of an international paper under Com-
munist influence at Geneva, Le Journal des Nations. It was a sort of
compensation for the suppression of Nazi papers. But on the whole,
German pressure in that direction has been less successful in Switzer-
land than in Denmark. Altogether, Germany cannot boast much suc-
cess in her dealings with Switzerland. The Swiss are a conservative
people and in the beginning certain features of the German regime
were attractive to a not inconsiderable section of the population. But
then there are three things the Swiss care for above everything : their
independence, their free institutions, and the unity of their three (or,
more precisely, four) nationalities within one country. German
propaganda for an Anschluss of German Switzerland has aroused
apprehensions about all three points and in consequence has driven
the unexcitable and slow-moving Swiss to a pitch of anger, fear, and
indignation. Today extensive military preparations are being carried
out in Switzerland, and no secret is made of their object: they are
directed against a possible German attack upon Switzerland.

Switzerland has this in common with Sweden, the Netherlands,
and Belgium, that it is one of the smaller industrial countries neigh-
bouring on Germany which could be fitted with relative ease into the
German economic structure. Moreover, like the other three countries
just mentioned it is a capital-exporting country. And as in the political
so in the economic sphere Germany has been more outspoken in her
aims in Switzerland than in Belgium, the Netherlands, and Sweden.
After Munich, an article in the Deutsche Vol\swirt, semi-official
organ of the German Ministry of Economics, tersely suggested that
since Germany was now master of the South-East, Switzerland would
be well advised to fit her economic system closely into that of Ger-
many, unless she wanted to lose her financial and export assets in

THE NETHERLANDS, BELGIUM 73

that part of the world. Such outspokenness was characteristic of the
first few weeks after Munich. On the Swiss side it was easy to point
out that Germany might be interested in diverting Swiss export trade
from France to the Balkans, but that no paramount Swiss interests
were involved in that area. Also, during the following month it be-
came obvious that the German hold on the Balkans was less secure
than was at first believed. Germany thus lacked all means of economic
pressure upon Switzerland, and the only result of this feeler was to
arouse indignation in Switzerland. The importance of the incident
lies in the fact that here for the first time the German need for the
control of further industrial regions was openly proclaimed.

In 1935 Germany acquired the Saar and in 1938 the Sudetenland.
She hopes to acquire Polish Upper Silesia and German Switzerland.
If Sweden, Belgium, and the Netherlands were added to them as
economic zones of influence, it would mean an enormous strengthen-
ing of the German industrial potential. But it's a long way to that goal.

Switzerland is very important, too, in connexion with the Rome-
Berlin Axis. During the abortive crisis of January-February 1939
it became apparent that Germany, in case of war, would try to support
Italy with troops in Africa. At present the Axis has at its disposal
only two railway lines, the one across the Brenner and the other (run-
ning very near the Yugoslav border) from Salzburg through Ca-
rinthia. In case of war, these two railway lines might easily become
congested and form, as it were, a bottleneck. For full-fledged German-
Italian co-operation in war the Gotthard railway, running across
Switzerland, is probably indispensable. This need squares well with
the Italian desire (dating back long before the Great War) of acquir-
ing the Italian-speaking Swiss canton of Ticino, through which the
southern branch of the Gotthard railway runs.

Let us finally emphasize that politically the case of Switzerland is
entirely different from that of, say, Denmark. In Scandinavia, Ger-
many cannot wish to acquire anything but indirect control and politi-
cal domination. German Switzerland Germany wants to annex, as
she annexed Austria and the Sudetenland. It is this desire for annexa-

74 THE NEW GERMAN EMPIRE

tion which stirs such indignation among the Swiss. Here German
politics has fallen victim to German national superstitions. It is on
the grounds of common language that the Germans imagine that
Switzerland must become German. (They are musing on similar
intentions for similar reasons in the case of Flanders and the Nether-
lands.) But in fact language, strong tie though it is today, is not
everything. And the Swiss, with their factual independence dating
back to the fourteenth century, and their deeply engrained liberal
traditions, feel that in the political sense of the word they are emphati-
cally not Germans. Germany might conquer Switzerland by force,
but she would only acquire a territory much more thoroughly dis-
affected than even Vienna.

Important as the Netherlands, Belgium, and Switzerland are in
themselves, the indirect results of a possible German control of these
countries are again more important than the direct ones. In the case
of the Netherlands and Belgium, their chief importance lies in the
threat against Britain which could be exerted from their coast. Ger-
man politics both in Belgium and in Switzerland aims at the en-
circling of France. The latter obviously is a major goal of German
policy. The destruction of French power has been proclaimed in Mein
Kampf as one chief aim of Germany policy. The superficial rap-
prochement between Germany and France after Munich ought not
to foster the idea that Germany has renounced that aim. On the con-
trary, every move of German policy has been in that direction. At
Munich, Germany wrecked France's best ally in Europe. At the same
time she wrecked the Little Entente, the alliance between Czechs,
Rumanians, and Yugoslavs which had been the basis of French policy
in the south-east. And Munich destroyed the Franco-Soviet pact.

On the other hand, the formation of the Axis created for France a
new potential threat in the south. German-Italian intervention in the
Spanish Civil War was aimed at adding yet another threat to those
already existing. The end of the Franco-Belgian alliance had exposed
her northern border. And German and Italian colonial claims imply

THE NETHERLANDS, BELGIUM 75

a grave threat to her colonial resources both of man power and of raw
materials.

The recent rapprochement between Germany and France does
not stand in contrast with these manifold threats, but is their logical
sequel. The dangers France would run in case of an attack from the
Axis have inclined her to come to terms with Germany, especially as
at present the threat from Italy is more in the foreground. More
exactly, these threats make one part of French public opinion amena-
ble to German views and offers the part, namely, represented by
M. Bonnet, the Foreign Minister, and by M. Flandin, who, after
having been a liberal, has today become an almost open advocate of
the Fascist conception. In other words, the episode of Franco-German
rapprochement is in itself a means of disintegrating French resist-
ance. It must be added that these tendencies, which seemed extremely
threatening in the months immediately after Munich, have since lost
much of their strength, with the progress of British rearmament, with
the stronger anti-German attitude in the United States, and with the
German march into Prague.

The question important in our context is this : What are Germany's
ultimate aims concerning France? Does she want to wreck France
to the point of making her a German vassal State? The answer to this
question is perhaps more simple than it seems. There is not the slight-
est reason to believe that the anti-French aims proclaimed in Mem
Kampf have been discarded. Germany can never have a free hand in
Eastern Europe, in Russia, or in Africa so long as France remains a
great power. The French threat to German interests is not so dan-
gerous today as it was ten or fifteen years ago, because France has
become weaker since then. Yet France remains the chief obstacle to
German colonial aims, and Germany will never put up with the
threat of an attack in the west while she is pursuing her aims in the
east.

But France can be driven from her position as a great power by
means o what, in relation to Germany's insatiable thirst for expan-

76 THE NEW GERMAN EMPIRE

sion, appears almost as a limited programme. Undoubtedly Germany
has designs upon a large slice o the French colonial possessions.
Undoubtedly, too, Germany cannot feel herself secure in the west
until the boundaries of France lie open to a military attack as do
today the frontiers of Czecho-Slovakia. The fall of the French Magi-
not line is the logical counterpart to the fall of the Maginot line of
Czecho-Slovakia. The iron-ore of Briey-Longwy (in Lorraine), which
lies not far from the German border, was one of the most important
German objectives even during the last war and has since become no
less valuable. But all this does not imply a real dismemberment of
France.

We leave the discussion of the colonial problem until a later chap-
ter and here limit ourselves to the Maginot line. It is at this point that
the anti-French movement in Alsace comes in. Undeniably Germany
has guaranteed (or very nearly) the German-French border in the
peace declaration drawn up between M. Bonnet and Herr von Rib-
bentrop in December 1938. But just during that period the French
made very disagreeable discoveries in Alsace.

Before 1918, the Alsatians, though undoubtedly German in lan-
guage, hated German rule. After 1918, they did not find themselves
very happy under French rule either. The reasons for Alsatian un-
easiness under France are not very easy to discover. Economically,
the liberated territories had not much to complain about. And as to
administration they had hated nothing so much as the truculent and
contemptuous attitude of the officials from the German North. But
once the change had come into effect, they began complaining about
the irregularities which tend to go with French administrative meth-
ods. That this administration was largely in the hands of French civil
servants, who could not even understand the local dialect, was a
serious grievance. But the most serious aspect of the Alsatian prob-
lem was religious.

The greater part of Alsace is fervently Catholic, and the Catholic
Church in Alsace enjoyed special rights incompatible with the sepa-
ration of State and Church, which is such an essential element in

THE NETHERLANDS, BELGIUM 77

French democracy. Whereas in France religious teaching is rigorously
excluded from all State-maintained educational institutions, all the
schools in Alsace are run on a denominational basis. Twice since 1918
Left Wing Governments in France have made half-hearted attempts
to bring Alsace into line with French religious legislation, but each
time the attempt had to be given up in the face of fierce resistance
on the part of the Alsatians. The attempts themselves had never been
very serious, and once warded off need not constitute a lasting ele-
ment of disturbance. Yet the fact remains that the Alsatians, at least
the majority, distrust "atheist" France as much as Protestant Prussia.
They feel really neither French nor German. They want to be as in-
dependent as possible.

Fairly soon after the War, a strong autonomous movement, repre-
senting all shades from mild home-rulers to unavowed separatists,
grew up in Alsace. The autonomous movement proper was strongly
Catholic, but the situation was made more complex through the
emergence of a considerable Communist movement (dissident from
Moscow) which took care not to offend too greatly the Catholics
while flirting with Alsatian separatism. Strasbourg at one time had a
Communist Mayor, who at the same time was an Alsatian separatist.

About 1930, things had somewhat quieted down, but the situation
was again exacerbated in recent years. The depression, and the ad-
vent of the Nazis with the growing strength of Germany subse-
quent upon it, roused feelings to fever pitch. The depression in Alsace
provided fuel for anti-Semitism. Alsace is the only region in France
where the Jews matter, and unhappily they are for the most part
money-lenders to the peasants. Anti-Semitism provided an easy means
of access for the Nazis.

For a long time the Nazis carefully refrained from launching an
organization of their own in Alsace. But since 1937 there has emerged
the Elsass-Lothringische Partei, an exact counterpart to the Henlein
party in Czecho-Slovakia. This party, just as the Henlein party, has
a full-blown Nazi programme, with the one exception that so far it
claims only full autonomy for Alsace and not its return to Germany.

78 THE NEW GERMAN EMPIRE

No claim for separation could be raised without resultant trials for
high treason.

What is much more important and much more unpleasant from
the French point of view is the discovery made by the French authori-
ties that there was grave suspicion that at least one outstanding leader
of the Catholic autonomist movement was sympathetic with the
German plot. He has recently been arrested on a charge of high
treason, allegedly committed in the form of espionage on the behalf
of Germany. The case in itself is not isolated. Vast German espionage
organizations have been discovered in many countries, and German
espionage normally goes hand in hand with attempts to create dis-
turbances in the countries concerned and to foster Nazi movements
on the German pattern. But the case is remarkable in so far as the
accused man is neither a German nor an insignificant person but
perhaps the most outstanding man in the autonomist movement in
Alsace. It is not material for the political conclusions to be drawn
from his arrest whether the charges brought against him are techni-
cally valid under French law. There can be little doubt about his
political views, which were no secret and, just because they were
not, involved not only himself personally but his party as well. It
must be recognized that Nazi activities in Alsace have been much
more successful than in Switzerland, and that Alsace is threatening
to become a French Sudetenland.

Thus, amidst the Franco-German rapprochement, Germany is
about to penetrate to the back of the Maginot line by political means.
The outlines of the German aims in France become apparent. The
goal is to destroy the power of France by annexing her border regions.
Once this were done, Germany need not bother much about the rest.
A Government of the extreme right, and very friendly to Germany,
would be bound to come to the top, just as in Czecho-Slovakia, and
Germany might then easily leave France to her own fate.

This undoubtedly is the German conception. Whether it will ma-
terialize is quite a different question. France wants to maintain her
position as a great power and can hope to do so, so long as the co-

THE NETHERLANDS, BELGIUM 79

operation of the three great democracies holds firm. She would cer-
tainly not be prepared to give up any part of her European territory.
Before Germany could think of carrying out her plans, she would
have to isolate France, put her under tremendous pressure, and break
her resistance from within with the help of pro-German elements In-
side France. Such a situation may never come about. Yet if Germany
wants to become the ruling power on the Continent, she can never
cease aiming at just such a solution.

In this context, one more German minority must be mentioned;
the Germans in South Tirol. Where the German element in Switzer-
land and the Flemish are intended to help in the encirclement of
France, while Alsatian separatism Is intended to break the backbone
of her resistance, the Germans in South Tirol may be used as one
among several means of keeping Italy loyal to the Axis policy.

The German minority in South Tirol is probably the worst-treated
German minority in the world, with the possible exception of the
Germans in Poland. The Italian policy of denationalization has been
ruthless: the German language has been completely driven out of
the schools (with the exception of religious instruction given in the
native language as a concession to the Vatican), the leaders of Ger-
man resistance against Italianization have long ago been punished by
the usual Fascist means of cudgels and castor-oil, and the frontier
has been lined with one long fence of barbed wire In order to cut off
all contacts between South Tirol and the Germans across the border.
Here, if anywhere, is a genuine grievance.

Numerically, the Germans in South Tirol are not important. They
number only about a quarter of a million. Economically the little area
is insignificant. Strategically it is very important because its southern
border comes so close to the Italian Plain. The present border, run-
ning along the highest crest of the Alps, makes Italy reasonably safe
from German attack. With German rule in Bozen (the chief town
of the region) she would no longer be safe.

The feelings of the population are not so much nationalist as re-
gionalist. They feel themselves not so much German as Tirolese.

80 THE NEW GERMAN EMPIRE

But now that North Tirol belongs to Germany, regionalism has be-
come identified for all practical purposes with German nationalism,
and at the same time the Anschluss of Austria has sent a wave of
hope through the oppressed region as through North Tirol itself.
All the democratic parties in Germany and every Austrian Govern-
ment before the advent of the pro-Italian dictatorship of Dollfuss in
1934 have more or less supported the claims of the Germans in South
Tirol. The Nazis, on the other hand, from their very beginning as a
mass party in 1921, acted on a sort of diplomatic agreement with
Mussolini (who at that time was not yet in power himself) never to
touch on the South Tirol problem. Hitler has carefully kept to this
policy^ even after the Anschluss. But it is obvious that this policy holds
good only so long as the Axis holds firm, and the possibility of raising
the question of South Tirol at any time is one of the means of keeping
Italy to the Axis policy. It is almost as if Hitler told Mussolini: If
you don't ask for Nice from France, I shall ask Bozen (and other
things) from you.

CHAPTER VII

THE SOUTH-EAST:
GERMAN METHODS OF EXPANSION

WE have finished our tour of the whole German border, listing all
Germany's immediate claims. It may have seemed a strange approach
to a study of the new German Empire. Germany's main interests at
present seem to lie in the south-east, and it may therefore appear logi-
cal to begin with a description of German policy in the south-east and
follow with a survey of Germany's more distant aims in the north,
west, and south. But there is no saying in what direction Germany
will turn next. One of the results of our survey, and one essential point
about the new German Empire, is this, that its advance is equally im-
portant and threatening in every direction. Today it is Prague. To-
morrow it may just as well be Copenhagen, Amsterdam, Brussels, or
Bern. Germany is not out for the domination of a limited zone of in-
fluence. She is striving after unlimited expansion.

Besides, in this study we are more concerned with the political
methods of Germany than with any details of her most immediate
aims. The aims and actions are in constant change, and what is said
about them today will be out of date tomorrow. The methods of Ger-
man expansion, however, are persistent, and as far as they undergo
any material change, it is of great importance to understand the im-
plications. Our survey has brought to light many aspects of these Ger-
man methods of expansion which a study of conditions in the Balkans
could not bring out very clearly. There are special conditions in the
Balkans. The variety of conditions Germany meets in her expansion
in all directions is alone able to bring out the features which are com-
mon to German methods in the midst of largely differing conditions.

The first thing which our survey has so far brought to light is that
Germany takes her own borders as the starting point of her expansion.
This is a fact of great importance. It applies equally to Japanese ex-

81

82 THE NEW GERMAN EMPIRE

pansion and to the conquests made by Tsarist Russia. But it clearly
distinguishes the German method of empire-building from that of
Spain, Portugal, the Netherlands, Britain, France, the United States,
and Italy. These latter empires conquered the weakest adversaries and
the most valuable countries. Germany aims first of all at conquering
her nearest neighbours.

We said that this aspect of German policy was similar to the policy
of Japan and Tsarist Russia. But the similarity is superficial. Japan, in
conquering Korea, Manchuria, Formosa, etc., really subjugated very
weak countries, and the same applies to the Russian conquest of the
Caucasus and of Turkestan. German expansion is directed against
white nations, many of which must themselves be counted among the
imperialist powers. The German problem is therefore different from
any problem previously faced by the great powers of the west. It was
one thing for Britain to conquer India. It is a task different in kind
for Germany to conquer the Netherlands and Belgium. All methods
must be entirely different in the two cases.

We shall see in later chapters that Germany's aims are by no means
limited to Europe. On the contrary, German political theory today in-
sists upon the dangers of a narrowly continental outlook and spurs
Germany on towards becoming a "world power," creating an empire
on the ruins of the supposedly decadent empires of Britain and France.
That Germany and Japan are the natural heirs to Britain and France
is the gist of every line written by Germany's most subtle and most
influential political theorist. General Karl Haushofer.

But these wider aims (described as "oceanic" by Haushofer) Ger-
many can tackle only after having solved her continental problems.
This is a result of her geographical position. Germany cannot fight
for colonies as Britain and France did. Britain could win supremacy
in India and America with very little fighting on the Continent be-
cause she was mistress of the seas and had direct access to the overseas
countries she wanted to conquer. England, owing to her unique geo-
graphic position, could afford to be one of the weakest powers on land,
while at the same time the greatest world power. Germany, being an

THE SOUTH-EAST: EXPANSION 83

essentially continental country, cannot hope to rule the seas before
ruling the Continent. She tried the opposite course before 1914, with
disastrous results to herself.

Germany, therefore, cannot attempt to rule in the Near East, in
Africa, and in South America so long as her domination of the Con-
tinent is threatened. But ruling the Continent is a task never before
seriously faced by any great power. Louis XIV and Napoleon tried
and failed. Will Hitler succeed any better?

Our survey has provided material showing how Germany is going
about this task. The most outstanding feature is the subordination of
her territorial conquests to the wider aims of indirect control. Terri-
torial conquest was, on the whole, the final aim of Spain, France,
Britain, etc. These older empires certainly knew that the possession of
certain key positions guaranteed indirect control of wider areas. The
English knew why they conquered the barren sites of Gibraltar and
Aden, just as much as the Germans know why they put up a fight for
such key positions as Memel and Bohumin. But finally, the key posi-
tions of the British served and serve the safe maintenance of British
domination over the wide territories of India. It would be difficult to
find a similar goal of territorial conquest for present German policy,
though of course some such goal may emerge later. At present, how-
ever, territorial conquest for Germany is not so much an end in itself
as a means of acquiring indirect control over wide areas. The acquisi-
tion of Memel and North Slesvig is intended to give her control over
the Baltic and Scandinavia, the conquest of Alsace to give her control
over all Western Europe, etc.

This predominance of the idea of indirect control in the German
mind is obviously due to the fact that her victims so far are white peo-
ple equal or superior to the Germans in civilization, on a level with
herself in technique, and with a highly developed national conscious-
ness.

Even to a Nazi mind, the idea of Germany's directly subjugating
and suppressing all Europe, with a population many times her own,
must seem fantastic. Indirect rule is therefore the only reasonable con-

84 THE NEW GERMAN EMPIRE

ception from the German point of view. Again, the term "indirect
rule" must be used with caution, in order to avoid mistaken associa-
tions. It is one thing to control Hyderabad through its Sultan, and
quite a different matter to control Belgium through the Flemish na-
tionalist movement. The feature common to both is that domination
is exerted through a power which has arisen within the dominated
area itself and is in keeping with its local traditions.

It is quite a different question, however, whether indirect rule can
be handled as easily in, say, Lithuania as it is in the Indian States. Or
rather, even in the Indian States, indirect rule presents an increasingly
difficult problem with the growth of Indian nationalism. It is an ideal
system where the rule of the local potentate is unquestioningly ac-
cepted by his subjects, and a paramount power need do little more
than secure his, loyalty to herself. It is quite a different matter where
local rule is in the hands of violent demagogic mass movements of the
Nazi type which may easily change their mind, shift their allegiance,
and escape control. In such cases, nothing remains to the paramount
power but to step in by main force and establish her direct rule, which
was just the thing to be avoided. Here, in a nutshell, is the problem of
the German Empire. Can a system of indirect rule, however shrewdly
and ruthlessly managed, hold good under the conditions of the Eu-
ropean continent? And if not, what will be the fate of a Germany
trying to oppress directly hundreds of millions of non-German Eu-
ropeans? The conquest of Prague has pointed the question. The an-
swer belongs to the future.

The problem for Germany is made more difficult by the very char-
acter of the Nazi regime itself. This regime explicitly denies equality
to all non-Germans, subjecting them to the most ruthless oppression.
Nazi Germany could never grant the Czechs equality for their lan-
guage and national traditions. But she could not attempt to assimilate
them either, because Germany rejects every policy of race mixture and
attempts to keep her stock as racially pure as possible. It is true that the
Czechs, though not Nordics, are at least "Aryans." Being neither Jews
nor Negroes, their blood will not pollute the easily defiled purity of

THE SOUTH-EAST: EXPANSION 85

the Nazis. But in reality the nice points of racial theory do not matter.
In practical politics the term "German" and "Nordic" merge, and to
every good Nazi the Slavs are an inferior "race," though in the light
of physical anthropology they are not a race at all but a linguistic
group. Less than any other regime could a Nazi regime attempt to as-
similate aliens^ for by so doing she would bastardize the pure, proud
Nordic stock.

Equality and assimilation being both out of the question, direct op-
pression remains the only alternative. It is an old trick of ruling groups
to select a goodly number of talented people among their subjects and
admit them to the ruling circle, thus nipping in the bud the move-
ments of their adversaries. The Nazis could attempt such a policy less
than any other regime. The result of their racialism is bound to be
that they should keep their victims united in deadly hatred against
themselves.

There is only one place, so far as I can see, where a white country
has been systematically oppressed and assimilation systematically re-
fused at the same time: Ireland. The results are known, but then Ire-
land had never more than eight million inhabitants, and did not occupy
a strategically dangerous spot. Then too, despite all discriminatory
legislation, the English system was never totalitarian, and for a hun-
dred years the Irish Catholics sent their representatives to Westminster.
Every alien nation directly conquered by Germany is bound to be
several Irelands at once, with nothing but a Gestapo to offset the con-
sequences.

But if direct rule over white people is made much more difficult by
the Nazi system, indirect rule is made easier. Under the older political
systems, an indirect rule over white people would have been incon-
ceivable. It would have been impossible, in the long run, to rule a
subject nation through a parliamentary regime, because democratic
nationalism in the subject race would have immediately turned
against the dominant power. But the case of the Nazi regime is dif-
ferent. Its peculiarities are such that it can hope to rule white people
through indirect methods.

86 THE NEW GERMAN EMPIRE

In Germany itself, the Nazis do not exclude the masses from politics.
They force them into politics, canalizing their feelings by propaganda
and cutting out unwanted influences through terrorism. The German
regime could not subsist without either terrorism or propaganda. The
Nazis may attempt to help similar regimes into the saddle in their
vassal States.

It is a mistake to believe that propaganda can achieve everything.
Its excessive use carries heavy penalties. No propaganda can succeed
unless it appeals to certain fundamental impulses of its public. No
propaganda can succeed when it runs counter to basic instinctive im-
pulses. No German propaganda, for instance, will ever succeed with
the Czechs, because it has no substantial arguments by which to appeal
to them and because every Czech child carries in its blood the belief
that the Germans are the natural enemies of the Czechs. Even where
the chances of propaganda are better, success in the long run depends
upon cutting out all criticism by means of terrorism.

Terrorism will certainly not be lacking in the countries Germany
rules directly, but the appeal of propaganda in those countries will be
nil. The case is entirely different, however, for local governments
emerging from popular movements on the spot, adopting Nazi meth-
ods and dependent upon German support. Those governments can ap-
peal to their nationals. Their rule may be just as much loved or hated
as the case may be as the Nazi regime in Germany itself. In other
words, Germany may hope to establish a system of indirect rule over
large areas by spreading the Nazi revolution abroad.

Here world conquest and world revolution merge. For all the other
approaches to power used by Germany whether political, military,
or economic are subordinate to this one chief aim : to bring govern-
ments of the Nazi type to the top in other countries. It is an aim which
cannot be fully achieved everywhere. But the possibility of bringing
to the top a regime more or less similar to their own is nowhere ex-
cluded. Therefore Nazi expansion, almost by definition, cannot be
limited to any definite area. Its scope is as wide as is the geographical
extent of revolutionary potentialities. And there is no country in the

THE SOUTH-EAST: EXPANSION 87

world today whose political regime can be regarded as entirely safe.
The crisis of democracy in Europe, the military dictatorships of South
America., the collapse of old hierarchies in the East, all equally favour
Nazi expansion.

The Nazi revolution today is the true world revolution. The days
are past when the seat of world revolution was Moscow. The Com-
munist International today is nothing but a bugbear, one more ex-
cuse for Nazi expansion. The Nazis have addpted the Communist
concept of conquering the world through revolution. But they have
made this concept more subtle, they have adapted it to nationalism,
this dominating religion of our times, and thus made it acceptable
where Communism had only been felt as an offence.

At this point the most immediate practical needs of the Nazi re-
gime merge with its most profound impulses and its most distant
aims into one single coherent whole. Nazi revolutions abroad are an
immediate need of the regime, because Germany, to become a world
power, must be master of the Continent and can rule it only through
the spread of the Nazi revolution. But at the same time world revolu-
tion is the basic content of the Nazis' crusading faith. And Nazi
world revolution in its turn must lead to Nazi world power, to the
materializing of the distant dream of every German nationalist.

But it must again be emphasized: all this is dependent on Germany's
ability to keep to the methods of indirect rule. As long as Germany is
able to kindle the revolutionary fire, it will keep her soup warm. But
direct German conquest is as sure to quench the revolutionary flame
among her neighbours as her indirect influence is sure to fan it. Ruling
Prague through Czech Fascists would have been one thing; ruling
Prague through German violence is something quite different. Rul-
ing Prague in the latter way will be costly enough ; ruling the world
by similar methods would be impossible.

Perhaps an analogy will help. The last successful attempt at uniting
the whole known world in one empire was ancient Rome. And Rome
saw to it that no civilized community should ever be ruled except by
indirect methods, however harsh Roman rule may in fact have been.

88 THE NEW GERMAN EMPIRE

The very few cases when the Romans departed from this method cost
them a tremendous amount of blood and money. And when, after
centuries of domination, Rome gradually abandoned the system of
indirect rule for administrative centralization, she established apace
equality between the Romans and their subject races. The belief in
brute force alone which is always so near to the German political men-
tality is nothing but an evil superstition; as dangerous as the opposing
anarchist superstition that man can be ruled by good- will alone.

Whether or not Germany can keep to her conception of indirect
rule does not entirely or even primarily depend on the wishes of her
leaders. It depends essentially on two points: can she give her subject
races enough to keep their allegiance, can she balance the elements of
consent and compulsion so as to produce the desired effect of keeping
the willing allegiance of her vassals while keeping them in safe -sub-
jection ?

It is a task which needs an enormous amount of strength but even
more tact and judgment, two things which are not very conspicuous
in the German political tradition. Empire-building is not a task for
people with a deep-seated inferiority complex overcompensated by
ferocity. The Germans during the last centuries have alternately been
trampled upon or have trampled upon others. If they can be re-
proached with one thing it is their lack of balance. It is a natural result
of their history. But even apart from psychological abilities and dis-
abilities, the task is difficult enough.

Germany expands not for the sake of expansion only, however im-
portant expansion for its own sake may be in the Nazi conception of
the world. She urgently needs economic advantages, in order to over-
come the great economic difficulties to which her rearmament has ex-
posed her. She wants to grasp gold and foreign exchange in kind. She
needs foodstuffs and raw materials, and is unable to pay adequately
for them. Here is the point where the famous German economic per-
meation of her neighbours comes in. It has found ample treatment in
recent literature and has generally been regarded as the chief means
of German expansion. This is a very doubtful contention.

THE SOUTH-EAST: EXPANSION 89

It is obviously true that Germany by taking more than sixty per cent
of Bulgaria's exports makes Bulgaria dependent upon her. If Ger-
many at the same time contrives by artful devices to spoil the market
for Bulgarian goods in other countries, Bulgaria's dependence upon
Germany becomes more complete In peace time. But the scheme
loses its value in times of war. There would be no lack of markets for
food and raw materials in war, and whether the economic ties prove
an asset for Germany will then largely depend on whether German
trade Is a good bargain for her partners.

A look into any of the current text-books of German economic
policy will convince every reader that they consist of a description of
German methods in sharp dealing. And methods of sharp dealing so
far have never proved good for making friends. It is true that eco-
nomic expansion is bound to be one of the most important alms of
German Imperialism, but whether it is a means of cementing her in-
cipient empire is quite a different question.

In practice the answer to this question cannot be a simple yes or no.
The effect of German trade policy upon various classes of the popula-
tion Is very different. And Germany's special trade methods tend to
develop these differences among her customers to sharp antagonism
which, in its turn, is a political advantage for her.

Wherever she can, Germany buys whole crops or the entire output
of a certain raw material in a certain country in bulk. She claims to
pay higher prices for these purchases than could be obtained on the
world market. It Is in the matter of these prices that the discriminatory
effect of German trade policy has its roots. The prices Germany pays
are fixed In the local currency, and in this local currency they are high.
It is in local currency that the producers receive pay. The growers of
Hungarian and Rumanian and Yugoslav wheat, of Bulgarian and
Greek tobacco, of Greek and Turkish cotton, of Turkish raisins, of
Rumanian oil seeds, etc., can only be pleased at getting higher prices
from Germany than they would get from any other customers. And
the producers of Rumanian oil, Yugoslav iron-ore, copper, lead, zinc,
etc., together with their workers, can only share these feelings.

90 THE NEW GERMAN EMPIRE

Unfortunately, the prices axe paid at the expense, not o Germany
but of other sections of the population of the countries concerned.
First of all., Germany fixes an exchange rate, varying from country to
country, and sometimes even from transaction to transaction, but al-
ways extremely favourable to herself. The goods are paid for not in
money but in German goods. And owing to the exchange rate, which
overvalues the mark, these goods in their turn are delivered at high
prices. This, at least, is so where Germany has no competitors to fear.
In the other case she is able to follow a policy of ruthless undercutting
both directly by unlimited State subsidies for exports and by clever
adaptation of her exchange rates to the necessities of the situation.

The exporters to Germany do not get their money from Germany
at all. For one of the interminable complaints about Germany is that,
as soon as she is in a strong position, her deliveries fall far into ar-
rears as against her purchases. In the meantime the Balkan peasants
are paid in high sums by their respective State banks. And the man
who in reality pays for the margin between German prices and world
market prices is certainly not the German importer but the man who
buys German goods and the national banks of the countries con-
cerned; in other words, the taxpayer. This, of course, is only the gen-
eral position. As long as there are serious competitors in the field, the
situation is very different, and the bargains are really favourable to
those dealing with Germany.

In these circumstances it is obvious that the importers and the
financiers of the countries concerned are the groups severely hit by
German trade policy. The situation of the importers is often dis-
astrous. Here again the picture varies. Germany, after all, must offer
something for her purchases, and she makes her best offers precisely
to those groups which provide her with products important to herself.
Germany has always been prepared to deliver machinery for the im-
provement of the output of raw material and agriculture in the coun-
tries concerned. Big German offers for the development of Yugoslav
mining, Greek and Turkish cotton-growing, and Rumanian oil pro-
duction are within recent memory. Here Germany is developing her

THE SOUTH-EAST: EXPANSION 91

own resources. But the picture is different where this is not the case.
First of all, Germany increasingly attempts to offer what she de-
scribes as "credits." It is a nice sort o credit indeed. A country devoid
of money, as Germany is, cannot give credits. Her so-called "credits"
consist in undertakings to deliver installations for the construction of
new plant, within long terms up to ten years' time, while at the same
time regularly receiving the crops and mineral outputs of the coun-
tries concerned. It is easy to see that these "credits" are not given by
Germany to her partners but the other way round. Germany promises
future completion of certain works against immediate deliveries from
her partners. And the latter are then tied for many years and cannot
change their commercial policy, because otherwise the German con-
structions would remain unfinished.

But this is not the worst aspect of German trade policy. Her part-
ners need goods for consumption. And Germany is unable to deliver
these goods, especially textiles. Thus the countries concerned must
put up with receiving in exchange for their valuable deliveries, goods
such as aspirin, harmonicas, radio sets, etc., for which they do not pro-
vide a real market. They must accept goods of extremely low and
constantly declining quality, many of them, such as engines and
armaments, actually scrapped in Germany. And finally they must ac-
cept increasing delays in delivery.

The governments, the banks, and the importers in these countries
therefore have a natural tendency to break away from the German
market. And Germany must evolve complex and clever, if somewhat
objectionable, devices for keeping them to the German market. The
simple method originally applied rested on the golden rule that there
is no stronger position in the world than that of a man who threatens
his creditors with complete default. Germany imported heavily from
her neighbours without paying either in money or in kind, thus run-
ning up a heavy balance against herself. Then she suddenly made the
covering of this balance dependent upon further deliveries of food-
stuffs and raw materials and upon the purchase of useless or inferior
German goods. It was a method applied against almost every one of

92 THE NEW GERMAN EMPIRE

her neighbours, and followed to the point where her partners, in
despair and disregarding all possible consequences, refused to deliver
further goods to Germany until the balance was covered, Yugoslavia
was the worst case, and it is there that political resentment against
Germany on account of her somewhat unusual trade methods has
been strongest.

On the whole, Germany now tends to abandon these methods in
favour of others. One new method is the one already mentioned, that
of giving "credits." Another springs from the German method of buy-
ing certain products in bulk and supplying her partners with certain
goods to the exclusion of all competitors. Germany then has a free
hand to re-export what surplus remains in her hands and makes am-
ple use of it. Having paid on an exchange rate extremely favourable
to herself, she can dump these surpluses on the world market and still
make a profit. Her partners may in turn arrange to dispose of the
surplus goods they received. They may dump them on the world
market, too, and there is a beautiful story of how Greek tobacco sold
by Germany suddenly appeared on the world market at ridiculous
prices while German guns, sold by the Greek Government at the
same time, appeared in Barcelona to defend the Spanish Republican
Government.

But one thing is certain: Germany's partners may dump German
surplus goods of inferior quality on the international markets while
they can no longer sell there their own staple products because Ger-
man dumping of their own goods has irremediably spoiled the market
for them. Now an iron chain binds them to Germany.

There is one more tie of a similar kind. Once Germany has by
artful devices laid her hands on the greater part of a country's ex-
ports, this country is linked to barter methods, owing to the lack of
free exchange, which is the result of bartering her staple products to
Germany. All countries trading on a large scale with Germany are
now starved of free exchange. And the scarcity of free exchange in
turn makes them more dependent upon German imports which are

THE SOUTH-EAST: EXPANSION 93

granted through barter, however objectionable these German Imports
may be in kind and quality.

There could be only one remedy for this situation. It would change
from one day to the next if countries disposing of free exchange
would buy a substantial proportion of the exports of the countries
concerned. But for this there does not seem to be much hope at
present. The basic situation thus created can be expressed in exceed-
ingly simple terms. Germany is constantly growing in importance as
an importer. But she cannot really pay for what she imports. And
with her rearmament continuing at an ever more fantastic speed, she
becomes increasingly unable to pay decently for what she consumes.
That is why all Germany's trade devices directly or indirectly lead to
a ruthless exploitation of her partners.

No country would agree to such a transaction could it find ade-
quate markets elsewhere. But even as things are, Germany must use
special devices for keeping her partners to their side of the agreement.
Some of these devices, as described above, are of an economic charac-
ter. But the basic device, that of buying certain products in bulk and
enforcing high payment to the producers in local currency, at the
expense of other groups and of the taxpayer, is essentially a political
device. It links the landed and mining interests of the countries con-
cerned to Germany. And if finance and trade may often have the ear
of the Government, it is the peasants who give the big battalions to
every mass movement in the Balkans.

Thus, after an excursion into economics, we are back again at
politics. Economic penetration in itself is a double-edged sword. In
the long run it is as likely to impoverish as to develop the countries
concerned. It may artificially develop certain of their resources, but is
bound to curtail heavily their state of supplies. In itself German eco-
nomic expansion is as much a political danger to Germany as English
vested interests in Ireland or India were apt to rouse the hostility of
the natives.

But the German reaction to this danger is on the whole exactly the

94 THE NEW GERMAN EMPIRE

contrary o what the English reaction was before the introduction o
self-government and even after. The older empires invariably tried
to take the small ruling stratum into their interest. It was an excellent
policy in the beginning, and still is in backward areas. But where
modern mass movements arise, its value decreases. Germany, true to
the Nazi tradition, aims at tying to her interest the peasant as against
the upper classes.

Yet this alone would certainly not be sufficient to keep her neigh-
bours under her control. She must bring direct pressure to bear upon
the governments concerned and the business groups which closely
co-operate with these governments. For this aim Germany has mariy
levers. Paramount among them is the direct military threat which
Germany can now exert against every small country in Europe, but
especially in the east and south-east. This point needs no further
elaboration. More than once, as in the case of the barter agreement
for Hungarian wheat and for Rumanian oil, such military threats have
been brought directly to bear upon Germany's trade partners.

Another means, more gentle but no less efficient, is German sup-
plies of armaments. In view of the need for uniform training, no army
can easily work with armaments of different origin. Once Germany
has offered or forced upon some country vast supplies of arms, she
can be pretty sure that the country concerned will have to follow her
international policy. Since the conquest of the Skoda works in Czecho-
slovakia, there is no south-eastern country to which this situation does
not apply, though Rumania and Yugoslavia tried to extricate them-
selves from the clutches of Germany.

This leads up to the use of these armaments. The countries con-
cerned mostly need arms against one another. The entire east and
south-east of Europe is filled with terrific hatreds, beginning with the
blood-feud between Poles and Lithuanians and ending with the Bul-
garian claims upon Greek territory. Hungary's and Bulgaria's claims
for revision spread an element of unrest over the whole area. In the
present state of things, no frontier in these parts of the world is likely
to remain untouched, but none can be revised without German

THE SOUTH-EAST: EXPANSION 95

toleration at least. Thus every government must try to remain in
Germany's good graces, and the Nazis can apply the golden maxim
of "divide and rule."

In this contest German policy, in accordance with the Nazi faith,
has been to make linguistic boundaries coincide with the borders of
the various countries. But the uneven boundaries of the linguistic
units bear no relation to the economic and strategic needs of the vari-
ous Balkan countries, and are therefore most irrational. Even the
winning side in the fight for boundary revision Is apt to be more
helpless and dependent on foreign help afterwards than before. Be-
sides, no borderline can be drawn so that no minorities remain on
either side. The antagonisms between these small countries are there-
fore doomed to be perpetual, and to throw their governments into the
arms of Germany.

It must be finally noted, and this is a very important point, that at
home all the governments concerned are very weak. In almost every
one of the eastern and south-eastern countries the existing military
and police dictatorships are threatened either by a Fascist movement
on the Right or by a revolutionary peasant movement on the Left, or
by both simultaneously. Sometimes, as in the case of Hungary, the
Fascist movement itself is to a large extent a revolutionary peasant
movement. All this provides splendid opportunities for Germany.
While the creation of Nazi regimes in these countries remains her ulti-
mate goal, she is not loath in the meantime to reap what advantage
she can from the pressure wrought by various mass movements upon
military and bureaucratic governments which cannot hope to subsist
without German support.

In this context, the fight of various linguistic groups within one
country has special significance. Sometimes linguistic groups have a
country of their own across the border and then their claims coincide
with the case for border revision. But in several cases these groups have
no country of their own abroad, and the effect of their mutual strife is
all the more disruptive. This was the case of the Slovaks in Czecho-
slovakia and is still the case of the Croats in Yugoslavia and, in a

96 THE NEW GERMAN EMPIRE

slightly different sense, of the Ukrainians in Poland. Here we touch
again the problem o the mass movements, for movements such as
those of the Croats and Ukrainians are not the affair of the Govern-
ment but of masses hating it. It is one of those cases where the Ger-
mans, by means of threats and inducements, try to win over govern-
ments while at the same time launching mass movements against
them. The Slovak and Ukrainian mass movements were backed by
Germany for a long time. Now Germany has begun backing the
Croats.

But this is certainly not the only case where Germany stirs up in-
tense nationalism. One of two chief means used for launching Nazi
movements is precisely the spreading of the hectic sort of nationalism
which dominates her own country. The other is the stirring up of so-
cial revolution to varying degrees.

As to social revolution, it is easy to stir it up where no agrarian re-
form has been introduced. But in most parts of Eastern and South-
Eastern Europe ample agrarian reforms have been carried out since
1918. The fight of the underdog against the rich is, however, invaria-
bly present in all agitation stimulated by the Nazis, and finds a strong
expression in her commercial policy as described above. It is sheer
nonsense to think of the Nazis as fundamentally opposed to social
revolution. Here again there exists a fundamental difference between
the Nazi empire and all former empires. All the old empires, believing
in a hierarchy, allied themselves to the upper classes in their colonies.
Germany seeks support indiscriminately where she can get it.

As to nationalism, the difference between Germany and the older
empires is again remarkable. All older empires were invariably hos-
tile to the emergence of nationalism among their subject races. They
are therefore threatened by its rise in their colonies. The Nazis stir
up nationalism to fever heat, invariably backing the most extreme and
unreasonable version of it. It is nationalism of this sort which guar-
antees that the revolutionary movements they try to launch will re-
main under their control and not fall under the control of the Comin-
tern. Conversely, the strength of nationalist feeling prevents the

THE SOUTH-EAST: EXPANSION 97

Comintern from having any real successes In Europe and drives revo-
lutionary movements into the arms o the Fascists.

Nationalism and social revolution. In the east and south-east, merge
and culminate in anti-Semitism. Anti-Semitism is an aspect o Na-
zism, the importance of which for the German penetration of the east
of Europe can never be overrated. For the Jewish problem is much
more real In these parts than in Germany. In Germany, the Jews
never had the influence the Nazis pretended to believe they had. But
east of Germany the position is different. Whereas the Jews in Ger-
many numbered less than one per cent, there are very considerable
Jewish minorities in Lithuania, Poland, the Ukraine, Slovakia, Hun-
gary, Rumania, Vienna, and Istanbul. In Vienna the Jews numbered
ten per cent of the population; In Budapest they number twenty per
cent; in Lodz, the second principal city in Poland, they numbered un-
til recently forty-eight per cent, and in the smaller country towns
farther to the east the proportions sometimes rise to seventy or eighty
per cent of the total. The nations of the east and south-east until re-
cently consisted of a landed aristocracy and their peasantry. The
towns were Jewish to an extraordinary degree. With the rise "of the
modern industrial system, one section of the Jews almost automati-
cally acquired predominance in business and in the professions. And
the rising middle class of the peoples of the east and south-east there-
fore meets the Jew as its most obvious competitor.

That the Poles, Hungarians, Rumanians, etc., should develop a mid-
dle class of their own is a natural and desirable process. Its effects upon
eastern Jewry are inevitably unpleasant. The situation has been made
much more difficult by the restrictions imposed upon immigration in
the United States. And now the situation in Palestine is liable to close
the last large-scale outlet. Thus, no less than seven million Jews are
bottled up In an area where most of them are no longer wanted. It is
a problem fraught with terrible implications. These Jewish masses had
somehow managed to live under relatively prosperous conditions in
the old Austrian and Russian Empires. In the cramped conditions of
their successor States they are the most obvious objects of discrimina-

98 THE NEW GERMAN EMPIRE

tion in any economic difficulty. Moreover, the excited nationalism of
the young peoples of the south-east can never be fully satisfied, pre-
cisely because in actual fact they are all more or less vassals to Germany
and cannot obtain full satisfaction for their high-flown aspirations.
So the hatreds they cannot fully express in their actions against their
neighbours quite naturally turn against the Jew as a helpless scapegoat.
With good-will on all sides, and international co-operation, the
problem of eastern Jewry would not be insoluble. But these are factors
almost completely absent from the present situation, and the Nazis
are busy stirring up the worst instincts of human nature against the
Jew. There is little doubt that within a few years the fate of the Jews
in Eastern Europe will resemble that of the Armenians in Turkey.

Anti-Semitism is an excellent means for the Nazification of the na-
tionalist movements east of Germany. The Jews being so large a sec-
tion of the business and professional classes of the countries concerned,
their extermination is in itself a measure of social revolution. The
anti-Semitic movement in Slovakia or Hungary or. any other of these
countries is essentially a movement of peasants and their university-
trained sons against the urban bourgeoisie. In the east, the racial and
religious aspect of anti-Semitism thinly veils the battle cry of social
upheaval. Besides and this is perhaps the most important aspect of
the whole problem the Jewish section of the upper classes in the east
is inextricably intertwined with the non-Jewish sections. The Hun-
garians, for instance, find it difficult to provide an anti-Semitic leader
without a Jewish grandmother, and at least one of the most outstand-
ing anti-Semitic leaders in Hungary is himself a half- Jew. The bonds
between the Jewish bourgeoisie and the non-Jewish gentry are very
close. Anti-Semitism in its extreme Nazi version, therefore, threatens
the upper classes as a whole.

Nationalism, being practically identical with anti-Semitism in these
parts of the world, is extremely liable to fall under the Nazi sway.
But there are other aspects of nationalism. It is naturally opposed to
the international ideologies of Marxism, communism, socialism. It is
opposed to all sorts of pacifism, including the liberal and democratic

THE SOUTH-EAST: EXPANSION 99

belief In compromise. And in the European east and south-east, ideas
to a very large extent have always been imported from Germany. It
is a small step indeed from the native brands of anti-Semitic national-
ism to full-fledged Nazism.

One important element in the picture is the German minorities. In
no single country in Europe except France do they number more than
several hundred thousand. But wherever Germany is able to do so,
and especially in the east and south-east, they are organized as a State
within the State on strict Nazi lines. Germany claims a sort of extra-
territoriality for them so that they need not care for the laws of their
respective countries in carrying out their political agitation. They are
a spearhead of the Fascist movement and provide a constant possi-
bility of raising quarrels about alleged disregard for their special
rights.

We have now drawn the picture of the German conception of In-
direct rule as applied all over Europe, but with particular concentra-
tion in the east and south-east. It is a conception profoundly different
from that of older empires. It may be defined as a conception of
empire-building in an era of democratic mass movements. This con-
cise formula certainly needs elaboration. The older empires, as we
saWj were thoroughly authoritarian and anti-democratic. When they
were formed, the mother countries themselves were just emerging
from the rule of strong hierarchies into the beginnings of liberalism
and democracy. They ruled their empires as they had themselves been
ruled a hundred years before. It is this that now constitutes their weak-
est spot. Here lies the chief advantage of the Nazis. They can start
with methods which others can achieve by a difficult process of adapta-
tion.

But Is it not a paradox to contrast the Nazi type of empire-building
as "democratic" with that of the older empires as "authoritarian"?
Is not the Nazi regime more authoritarian than any other ? In a sense
it is. But it would be as one-sided to describe it as purely authoritarian
as to describe it as democratic. The Nazi regime is a ruthless and fero-

100 THE NEW GERMAN EMPIRE

clous autocracy, built on an equally ferocious mass movement of the
underdogs. The Nazi regime is certainly not a regime of democratic
liberalism. It is a regime of "democratic" Caesarism, of Caesarism based
on demagogy.

What does this mean in terms of empire-building? Britain has
succeeded to an extent in building up a liberal democratic empire.
Her success was complete in the case of those dominions which are
Anglo-Saxon in race and language. But the farther away her subjects
are from Anglo-Saxon race and tradition, the more difficult become
the problems of imperial democracy. The democratic mass move-
ments in India and in the Arabic countries have a tendency not to
cement but to threaten the empire. At any rate, the introduction of
liberal democracy into the colonies means the loosening of the ties of
empire, and this all the more, the more distant a colony is in tradition
and outlook from the motherland.

A totalitarian regime holds out greater hopes of making mass move-
ments subservient to the keeping down of these very masses who sup-
port them. Should the Nazi Governments in Germany's various vas-
sal countries be sufficiently strong, she need, as we said, only secure
the allegiance of the Governments themselves. Mass movements will
not threaten her in totalitarian countries dependent upon her support.
Yet the question remains : Will this ideal type of German imperialism
a commonwealth of Fascist nations under German domination
ever materialize?

The scheme may miscarry where nations refuse to submit to Ger-
many and become Fascist. For such a refusal there can be many rea-
sons. The old rulers of a country may successfully resist the onslaught
of Fascist revolution. The strength of a Fascist movement in a coun-
try may be broken, either because Germany tends to exploit the coun-
try too ruthlessly economically or because she refuses to give full satis-
faction to her national aims, or because Germany, impatient with the
intricacies of indirect rule, steps in too openly as the real master. If it
is a country helplessly exposed to German aggression, resistance will
force the Germans to abandon their concept of indirect rule and make

THE SOUTH-EAST: EXPANSION 101

them turn to direct conquest. If It is a country with a certain power of
resistance and a chance of finding support among the other great
powers, a potential ally will turn into a potential enemy. These pos-
sibilities are crucial. We shall study them a little more closely in the
subsequent sections.

Germany's first experiment with Indirect rule, the one In Czecho-
slovakia,, has at any rate been thrown out of gear*

CHAPTER VIII
THE SOUTH-EAST: CZECHOSLOVAKIA

IT was the wrecking o Czechoslovakia at Munich which finally
opened the doors of the south-east to Germany. German penetration
of the Balkans had started long before Hitler, acquired greater mo-
mentum after the advent of the Nazis, but did not come to a head
before 1938. Up to 1938 the Balkans were still primarily an Italian zone
of influence, with Austria and Hungary as Italian bastions protecting
the countries further removed from Germany against German aggres-
sion. The fall first of Austria and then of Czecho-Slovakia broke
these barriers. The German strongholds in Vienna and Prague pro-
vide just that element of physical threat to all the Balkan countries
without which no German control of this wide area would be con-
ceivable.

But the tragedy of Czecho-Slovakia, besides its international im-
plications, is well worth studying for its own sake. Czecho-Slovakia
is the country which, of all the minor powers around Germany, first
fell under complete German vassalage. In one sense, in Czecho-
slovakia, Germany scored the greatest success she has so far achieved.
But in another, it is very doubtful whether Germany has reached, in
Czecho-Slovakia, just the goal at which she was aiming. Czecho-
slovakia shows in full all the methods of German expansion with
their strong and their weak points.

Throughout the period leading up to the Munich crisis there was
an element of disproportion in the presentation of the Czech situa-
tion abroad. All the time it appeared as if it were a triangular contest
among the Sudetenlanders, the Czechs, and the Germans, with the
other great powers ready to interfere. Relatively little was said about
the dissensions within the Czech camp, about the difficulties against
which Benes had to struggle. In fact Czech resistance was broken up
at least as much from within as from without. The conservative sec-
102

SOUTH-EAST: CZECHOSLOVAKIA 103

tion of Czech political opinion sympathized strongly with Henlein
and Hitler. These groups had a strong representation in the Agrarian
Party. The leader of this Right Wing was Beran, the chairman of the
party itself. The Prime Minister., Hodza, inclined more towards
Benes. But it was Beran and not Hodza who was the real master of
the Agrarians.

The Agrarian Party had originally been a secondary political force,
representing the wealthy peasants. Gradually, thanks to a series of ex-
tremely able leaders, it managed to become the point of concentration
of all the conservative forces: landowners, bankers, industrialists.
The army always remained a stronghold of the Left, but the civil
service became practically an instrument of the Agrarian Party.

The Czecho-Slovak Republic was founded in 1918 on the principles
of a progressive, democratic nationalism. President Masaryk was al-
most a moderate Socialist. Benes had always been his right-hand man.
The army had believed in both. The working-class organizations
were strong. The rise of the Agrarian Party to power had pushed these
Leftist tendencies somewhat into the background, but its rule could
not be secure so long as the presidential office and the army were in
the hands of its adversaries.

The Left in Czecho-Slovakia comprised those groups which had
been most strongly anti-Austrian and most strongly nationalist. The
Agrarians had never been very anti-Austrian even before 1918 and
were not very nationalist afterwards. Subsequent developments drew
them nearer to the Sudetenlanders. The large landowners were
mostly aristocrats who could be regarded neither as Czech nor as Ger-
man. They were international. At the same time they were among
the strongest supporters of the Agrarian Party. The great Czech
banks were sometimes inextricably involved with the affairs of the
German Industrialists in the Sudetenland. Politically the Right Wing
of the Agrarians felt themselves to be nearer to Henlein than to
Benes. Nationally they were readier to put up with German claims
than was the Benes group. Not very democratic themselves, they took
a sober view of the international situation and did not believe In the

104 THE NEW GERMAN EMPIRE

willingness o the western democracies to help. The only reasonable
policy, in their opinion, was to come to an understanding with Hen-
lein. They would rule Czecho-Slovakia together with him on an auto-
cratic system, as a dependency of Germany.

They were far from being Fascists. They were only very mildly
anti-democratic, not unconscious of the honour of their Czech na-
tion, scarcely in any way anti-Semitic. They thought that by giving
in to Henlein they could keep things within limits. This belief they
shared with Lord Runciman, with Mr. Chamberlain, and with
M. Bonnet.

At the decisive hour, the Czechs had forty divisions, their Maginot
line, and the expectation of Russian help in the air. If they could hold
out for a few weeks as they would probably be able to do they had
some hope of forcing Russia, France, and Britain to join in. It would
have been a desperate gamble. But the opposite course was certain
perdition. The Agrarians prevented the Left from taking this chance.

But their hopes were not fulfilled. Hitler had only dangled the hope
of a Beran-Henlein coalition Government before their eyes. Instead of
maintaining Czecho-Slovakia intact under Nazi-Agrarian rule, he
annexed the Sudetenland. Beran found himself Prime Minister of a
hopelessly truncated country.

He accepted the task on a political calculation which at the outset
did not seem to be entirely mistaken. Czecho-Slovakia was still a
country of about ten million inhabitants with many economic and
strategic assets. Of these ten millions, about seven millions were
Czechs who would not willingly put up with German domination.
There is no other people in Eastern Europe like the Czechs. They
are of a stubbornness, a tenacity, of a firmness and continuity of pur-
pose, of a rudeness of manner which are truly Prussian. At the same
time their Slavonic feelings are stronger than those of any other Slav
people. They hate the Germans by instinct and tradition, and their
level of political and general education is higher than that of any other
eastern nation; they cannot easily be browbeaten into submission.

Under such conditions Germany must wish to rule Czecho-

SOUTH-EAST: CZECHOSLOVAKIA 105

Slovakia through an autonomous Government which would have a
substantial backing among the Czechs themselves. The Beran Gov-
ernment seemed to be what the Germans needed. And Beran could
hope that in compensation for his pro-German attitude in interna-
tional politics he would be able to prevent Germany from squeezing
the last drop of blood out of Czecho-Slovakia. No more strongly pro-
German Government with any mass backing was to be had in Czecho-
slovakia. Thus the Germans would be obliged to take into account
the wishes of Beran.

The new regime had an astonishingly easy start. Munich was ac-
companied by a violent reversal of feelings in Czecho-Slovakia. The
Czechs had always been sincere democrats but much more nationalist
than democratic. When their nationalism came into conflict with
their democratic views, they sacrificed the latter without much hesita-
tion. National survival after Munich was dependent upon getting
along somehow with Germany. They settled down to the task. The
democracies had let them down. They turned to hating and despising
the democracies. In the days which followed Munich, Englishmen
and Frenchmen found it uncomfortable to speak their own languages
in the streets of Prague. Strangely enough, there was no real feeling of
resentment against Germany. The Germans had done what it was
natural they should try to do. The Czechs would now try to get on
with the Germans.

Within five months, Germany managed to waste this moral capital
until she was reduced to the use of main force. It is not in the character
of the Nazi regime (as little as of any previous German regime, ex-
cept the Weimar Republic) to be generous to the defeated and gentle
to the weak. The Nazi regime, in particular, cannot envisage the weak
and defeated in any other role than that of an outlet for their sadistic
instincts. It is here that the Nazi mentality differs most profoundly
from that of all the great empire-builders.

Parcere subjectis et debellare superbos. (Curb the proud, but when
you have subjected them treat them with humanity.) This was the
principle on which the Roman Empire was built, on which every

106 THE NEW GERMAN EMPIRE

empire has to be built. Constant neglect of either part of this rule in-
vites disaster. Empires crash if they are unwilling to fight their ene-
mies. They crash, too, if they cannot transform a military conquest
into peaceful administration. It is the second score on which Germany
is likely to fail in the execution of her plans.

In the case of Czecho-Slovakia, the methods of bullying culminated
in the cheap triumph of marching German troops into defenceless
Prague, but these methods led to the miscarriage of clever and far-
reaching plans of much greater importance, as we shall see in a mo-
ment. But it was not entirely due to the juror tcutonicus. The Ger-
mans are themselves in such desperate straits economically that they
simply had to squeeze Czecho-Slovakia to the last drop of blood; and
in order to do this they had to get full control of the Czech resources.
It is here that the final conflict originated.

All the other reasons given for the German march into Prague are
partly excuses and only of secondary importance. The chief reason for
the final German conquest was the insatiable hunger of Germany for
gold and foreign exchange. The Austrian gold reserve had been
spent. The trade deficit was increasing catastrophically. A reduction
of rearmament was out of the question. Britain's offer to negotiate a
trade agreement which would have given German exports a wider
market was dependent upon Germany's keeping to what the British
Government described as the "spirit of Munich." This the Nazis did
not want. The only alternative was to lay their hands on a new gold-
reserve by main force. Like the Spanish conquistadores, the Nazis
conquer helpless enemies in an interminable hunt after gold. Their
economic system can exist only by dint of constant levies upon their
supposed^ enemies.

Gold indeed there is in Czecho-Slovakia. The spoils in Czecho-
slovakia will be greater than in poor Austria. The gold reserve of
the Czech National Bank alone amounts to about thirty million
pounds. There must be private reserves, too, and there is every reason
to believe that the Germans will despoil the Czechs almost as thor-
oughly as they have despoiled the Jews.

SOUTH-EAST: CZECHOSLOVAKIA 107

No statistics are available for the region now occupied by Germany
as distinct from the other parts of former Czechoslovakia. But this
much is certain: Czech Bohemia and Moravia have an agricultural
surplus, especially in wheat, which will help Germany considerably.
Germany acquired a few mines, and very important steelworks which
will help her rearmament. With the Skoda works she acquired the
largest arms-exporting concern in Europe. And the Bata works in
Zlin dominate the world shoe market There is reason to believe that
the conquest of the Czechs will help to reduce, to a certain extent,
Germany's permanent trade deficit. And the acquisition of the gold-
reserve will be sufficient to tide Germany over many difficulties for a
year or even more. Germany can continue unhampered to build her
bombers.

But it is another question whether Germany has not paid dearly for
these advantages. A brief survey of the road that led Hitler to Prague
will show the implications.

The original German conception was, as explained above, that
Beran, with the support of all the conservative forces, should rule
Czecho-Slovakia for them. And in order to avoid any tricks on his
part, the Germans had the Slovaks and Ruthenians ready. One of the
first consequences of Munich was the introduction of home rule for
Slovakia and for Ruthenia, renamed the Carpatho-Ukraine.

The problems concerning these two little countries with two million
and less than one million inhabitants, respectively, are too complex
for detailed description. But this much must be said, that a mistaken
impression is created by the current representation of the Slovaks* and
the Ruthenians' opposing the Czechs as united peoples with a na-
tionalism of their own. A decisive fact about both Slovakia and Ru-
thenia is that political consciousness there, in contrast to the Czechs,
has not yet penetrated down to the masses. In Ruthenia to this day
this statement applies in an almost absolute sense. The unhappy little
country has seen no less than three waves of refugees drift in since
1914: Jews, Russians, and Ukrainians. And what political agitation
there is, is mainly due to these refugees, among the utter indifference

108 THE NEW GERMAN EMPIRE

o the still largely illiterate and extremely wretched peasantry. The
Ruthenian peasant feels no real allegiance to any social group except
the community of his particular valley. He does not care whether he
is under the rule of Czechs, Hungarians, Poles, Ukrainians, Russians,
or Germans.

Political indifference is not so absolute among the Slovaks. But
their most active section always was the Protestant minority, who
happened to be mosdy pro-Czech. The Catholic majority before the
War put up with Hungarian rule without much resentment, how-
ever oppressive it was. In fact they minded the ruthless Hungarian
landlord and the corrupt Hungarian administration less than the
Czech civil servant who came in after the War and brought with him
agrarian reform. For the Slovaks, the Czechs were too thorough and
uncomfortable. The young generation after the War gradually grew
into a Slovak nationalism strongly hostile to the Czechs. It is not a
very broad movement, however. Its importance was derived not so
much from its own strength as from the absence of any very active
counterforce.

It was this absence of the real participation of the masses in politics
which made it easy for the Germans to get control of Slovakia and
Ruthenia after Munich. In the case of Ruthenia, they had only to
choose whether to back the Ukrainian or the Russian refugees. They
decided on the former in view of the pressure a Ukrainian national
movement backed by Germany could exert upon Poland, and in view
of a future disruption of the Soviet Union by the Ukrainian national
movement. German advisers organized the young Ukrainians into
the SIC, a sort of Ukrainian Storm Troops. There was no resistance
within the country against their rule.

What resistance there was came from without and not on the part
of the Czechs. The Czechs were only too happy to help the Germans
and Ukrainians to keep the country in a very loose federation with
Czecho-Slovakia. The threat to the Ukrainian movement came from
Hungary and Poland, with the indirect support of Russia, Rumania,
and Italy. Hungary and Poland wanted a common boundary, and

SOUTH-EAST: CZECHO-SLOVAKIA 109

Italy backed the claim because It would lead to the reconstitution of
a barrier o smaller powers against the German advance in the south-
east. Poland and Russia had an obvious interest in crushing the SIC,
which contemplated the disruption of both countries. For Hungary,
the claim to Ruthenia was part of her general claim for treaty revision,
for the return to Hungary of all territories lost after the War. This
Hungarian claim extended to both Slovakia and Ruthenia, but was
easier to achieve in the case of Ruthenia, owing to the indifference of
the local population. German, Czech, and Ukrainian interests in
Ruthenia confronted the interests of all the other powers from Italy
to Soviet Russia.

The case of Slovakia was simpler. Here the Germans helped to
strengthen an already existing defence organization of the Slovak
autonomists, the Hlinka Guards. Immediately after Munich the
Hlinka Guards took over power in Slovakia with practically no re-
sistance from any side. They established a sort of totalitarian regime,
abolishing all parties except their own and driving out the Jews and
Czechs. But within the Slovak autonomous movement there were
serious divergences of view. Slovakia, like Ruthenia, is much too poor
to live on her own resources. There is no party of independence in
Slovakia. Some elements inclined towards the maintenance of federal
links with the Czechs, others towards a return to Hungary under
some federal constitution, others wanted to make Slovakia a German
protectorate.

The Germans very successfully confronted the Hungarian party
and its Italian and Polish friends. In November 1938 the problem of
Slovakia and Ruthenia came under joint German-Italian arbitration.
The result was that Hungary recovered about one million inhabitants
with most of the larger towns and the most important railways and
roads of both provinces as well as the most fertile lowlands. But
Slovakia and Ruthenia, deprived of their granary, of important road
and railway communications, and of most of their towns, remained
only more helplessly dependent upon Germany for all that. Germany
has preserved her spearhead, the eastern part of Czecho-Slovakia,

110 THE NEW GERMAN EMPIRE

pointing towards Rumania, the Black Sea, and the Soviet Ukraine.
Thus Germany has acquired, within Czecho-Slovakia, two small
vassal States which did not at all mind their vassalage. It is a character-
istic case of south-eastern psychology. In its independence, Ruthenia
remained in utter wretchedness. Slovakia, instead of the mild rule of
the Czechs, had now accepted the harsh rule of the Germans. It gave
them a chance of venting their resentment against their nearest kin
and neighbour, the Czechs. As to the Czechs themselves, the three
million Slovaks and Ruthenians under German orders would be suf-
ficient to keep them to the German allegiance. And they must even
be grateful to Germany for having kept these two provinces within
the borders of a federal Czecho-Slovakia against the Hungarian
claims. There seemed to exist a solid basis for German-Czech col-
laboration.

This collaboration was wrecked by excessive German demands.
The Germans obtained a road through Czecho-Slovakia under Ger-
man sovereignty which cut the republic in two. They obtained the
right for the German minority to organize on Nazi lines. They ob-
tained an unlimited prorogation of the Czech parliament. They ob-
tained the cancelling of the Czech tariff for Sudetenland goods. But
every new concession on the part of the Czechs only led to new Ger-
man claims.

The Germans claimed special rights on the Czech railways. They
claimed a leading part in the administration for the German minority,
about one-hundredth of the population after Munich. They claimed
a purging of the army from all independent-minded commanders.
They claimed the introduction of the German type of anti-Semitism.
They claimed part of the Czech gold-reserve as a cover for the Czech
currency in the Sudetenland, while refusing to take over a propor-
tionate part of the Czech debt. They aired the idea of a customs and
currency union with Germany.

All these claims were a tremendous justification after the event for
the Benes policy. His old partisans were fairly strongly entrenched in
the army and in the diplomatic service. They had their outposts in

SOUTH-EAST: CZECHOSLOVAKIA 111

the administration, and with growing German demands the diver-
gence between the Benes and the Beran groups appeared increasingly
insignificant. Germany had contrived to unite the Czech nation again
against her.

The real danger for Germany arose out o the international contest
in which this Czech resistance evolved. Ever since January 1939, from
Spain to Rumania, the German policy had encountered reverses. If
Germany was not even able to put down resistance in Prague, her
prestige acquired at Munich would be lost. There remained nothing
for it but to march into Prague.

The coup was carefully prepared. The Slovaks, subservient to Ger-
man orders, were used as a pretext. The proclamation of Slovak inde-
pendence was sure to provoke incidents which would provide a pre-
text for German intervention. Had the Slovak problem been the real
issue, there would have been no reason for the Germans to march into
Prague. But the aim, from the beginning, was to annex Czecho-
slovakia as a whole. In the Czech parts of the country the German
troops came as conquerors, in the Slovak parts they were supposed to
come as friends; but the result was the same.

The effects of the Czech tragedy can only be described as a serious
check to the original Nazi conception of empire-building. In the
country where the Nazis started with the greatest chances, they had
been forced to abandon the idea of indirect rule through their friends
in favour of ruthless conquest. That General Gajda, the Czech Fas-
cist leader, is now proclaimed Fiihrer of the Czechs at the point of
German bayonets does not change the situation. This man had not
been able to win a single seat in parliament for his party. Had the
Germans ruled Czecho-Slovakia through Beran, there would have
been no need for their direct interference. Their proclamation of
Gajda is liable to ruin what little prestige Fascism has among the
Czech people.

But the Czech problem cannot be understood as a local Czech affair
only. Czech resistance to German claims, since January at least, was
one element in a development concerning the whole south-east. Ev-

112 THE NEW GERMAN EMPIRE

erywhere, in these regions, the German drive., as we shall see in the
next chapter, had encountered serious resistance. Everywhere German
prestige, which seemed so unchallenged after Munich, had suffered.
Something very near an anti-German bloc was in the process of aris-
ing in the south-east. The German stroke at Prague was largely aimed
at removing this threat, at restoring German prestige, and at launch-
ing a new German offensive in the whole area.

To a certain degree, Germany has attained these aims. But she has
done so by changing her conception of imperialism in the wider area
of the south-east, just as much as she had done in Czecho-Slovakia
herself. The conquest of Prague, the encirclement of Poland from the
south through Slovakia, the advance towards the Rumanian border
have instilled fear into the Governments of all the south-eastern coun-
tries. So far Germany has been successful. But with fear goes hatred
and a preparedness to resist if there is a chance. The Germans no
longer come as friends. They are expected now to conquer and to
oppress. In the whole south-east they have moved from a policy of
indirect rule to one of main force.

CHAPTER IX
THE SOUTH-EAST: CONCLUSION

THE problems which brought about the downfall of Czecho-
slovakia are clearly outlined in all the other countries of the south-
east. In all the countries between Hungary and Greece, the original
German conception was one of indirect rule through close economic
co-operation and through pro-German Governments and mass move-
ments. In all these countries, however, German indirect rule meets
with the most serious difficulties, and it is very doubtful whether
Germany in the end will be able to do without direct conquest. It is
equally doubtful whether she will be able to swallow as much as she
needs in order to establish firmly her domination.

The case in many respects is much more difficult in most o the
countries concerned than it was in Czecho-Slovakia. German methods
of exploitation may be somewhat less ruthless in Yugoslavia or Greece
than they were in Czecho-Slovakia,, but then most of the Balkan coun-
tries control products absolutely indispensable to German rearma-
ment, and she cannot treat them with much consideration. She must
have her wheat, cotton, oil, antimony, bauxite, copper, lead, etc., and
cannot pay for them adequately. In the case of Rumanian oil at least,
German demands are absolutely essential for Germany's political in-
tentions and she must try by every means to reduce Rumania to a
state of complete economic subjection.

Yet while her economic needs are very urgent, her political sway
over those countries is not assured. Czecho-Slovakia, after Munich,
lay before Germany like a broken reed and yet attempted resistance.
The other Balkan countries have means of resistance and are not
ready to give up without at least some attempts at putting these means
to use. It was a mistaken impression when, after Munich, the world
believed that Germany would no longer find any resistance in the
Balkans. It is true that no Balkan country could resist German armed

113

114 THE NEW GERMAN EMPIRE

intervention without the help of either the western powers or Soviet
Russia. But as long as there is the slightest chance of such help forth-
coming, none of the Balkan countries is likely simply to give in.

At present they are all playing for time, giving in to German de-
mands, especially in the economic field, but at the same time trying to
keep their independence and to wait for better times. It is very un-
likely that this game can succeed in the long run in any of the Balkan
countries. But it is not intended for the long run. If it fails, it will still
have had the effect of forcing Germany away from her conception of
indirect rule towards the exceedingly dangerous policy of direct con-
quest.

This whole game obviously makes part of the diplomatic battle
between the great powers. And this diplomatic contest is increasingly
conducted as a fight for position preliminary to the outbreak of actual
hostilities. The power nearest to the spot is not even Germany but the
Soviet Union, Russia, however, is interested only in the independence
of her immediate neighbours, Poland, Rumania, and Turkey. Her in-
terests hardly go beyond that modest aim. France, which after the
War was paramount in that part of the world, has cleared out almost
completely. England never had any very strong interests, except in
Greece and Turkey, and if today she is widening the scope of her
activity it is in view of the probability of more serious developments.

The power primarily interested in the Balkans was in fact Italy.
Italy had fought the Great War largely in order to attain supremacy
in the Balkans. She failed to reach that aim through the peace treaties.
Under the Fascist regime she had again tried and had in spite of
considerable resistance acquired a substantial amount of influence in
all the countries concerned. Albania had become a de -facto Italian
protectorate and Italy's bridgehead in the Balkans long before Italy
wantonly conquered her by main force. But the keystone of the Italian
position was her alliance with Austria and Hungary, which from 1934
onwards had transformed these two countries into something very
near Italian protectorates. Relations between Rome and Warsaw were
decidedly good; Czecho-Slovakia could be trusted to be hostile to Ger-

THE SOUTH-EAST: CONCLUSION 115

many. Thus Italy had succeeded in forming a complete barrier against
German intrusion into the Balkans.

Germany was well aware why she encouraged Mussolini's Ethi-
opian adventure. While Mussolini conquered African mountains,
which for many years to come must remain unprofitable, Germany
concluded an alliance with Austria and at the same time broke into
Italy's markets in the Balkans. Yugoslavia and Greece, especially, had
been seriously hit by the sanctions, and Germany offered to buy the
goods which they could no longer deliver to Italy, but on condition
that she would receive a substantial share of their products. Ever since
then the share of Italy in the Balkan trade has decreased and Ger-
many's share has grown. The political effects have been equally im-
portant. It must be remembered that at least in Yugoslavia, Greece,
and Turkey, Italy was extremely unpopular and that these countries
were only too glad to find German support against Italian pressure.

It is an irony of fate that Italy concluded her alliance with Germany
just at the moment when Germany was despoiling her. She had no
choice, for the Ethiopian War had spoiled her relations with the west.
And then Hitler saw to it that Italy involved herself in a new cosdy
and unprofitable adventure in Spain while he himself invaded Aus-
tria and Czecho-Slovakia. This finally broke the Italian barrier
against German penetration of the Balkans. The possibility of direct
military intervention was now added to German political and eco-
nomic influence. Today Germany takes more than forty per cent of
Hungary's and Yugoslavia's trade, three and five times the trade of
Italy with these countries. Before 1936 the German share in both coun-
tries was less than the Italian one. And the political balance in both
countries has shifted even more strongly.

We cite these two countries merely as examples. Similar develop-
ments have taken place in the whole south-east. The chief effect of
German-Italian co-operation was invariably the driving out of Italy.
This applies not only to the Balkans. Beyond them lie the vast lands
of the Near East, where Italy and Germany are attempting to uproot
French and English influence. Whether they will succeed is another

116 THE NEW GERMAN EMPIRE

question. But in case of success, here too the major share will go to
Germany.

The German Empire in the south-east is built upon the ruins of the
would-be Italian Empire. It is an unexpected result of Mussolini's
drive for Italian greatness. The Italians are a politically gifted people^
and their average statesmen knew the art of getting considerable slices
of territory through modesty and manoeuvring. Not one of them
would have conceived the idea that anything could be more impor-
tant to Italy than her position in the eastern Mediterranean. It needed
the would-be genius of Mussolini to throw all this away for the con-
quest of African mountain fastnesses and of an untenable position in
Spain. Whatever Italy in the end will keep, she will now keep as a
vassal of Germany.

Nowhere is this situation clearer than in Hungary, which from be-
ing most directly under Italy's influence has become the country most
directly under German sway and this against all obvious interests of
Hungary herself. As pointed out in an earlier chapter, the Hungarian
claim for treaty revision is one of the chief elements of disturbance in
that area and the one which lends itself most to foreign intervention.
Of the regions Hungary lost through the War, Croatia, which is now
Yugoslav, before the War had enjoyed home rule under Hungary.
Hungary docs not raise any claim to that area. A small German-
speaking area on Hungary's western borders, the so-called Burgen-
land, was given to Austria at the peace conference and has since been
greatly coveted by Hungary. But Hungarian claims for this territory
were dropped when Hungary and Austria both came under Italian
tutelage, and now when this region has become German, there is no
longer any question of a revision in favour of Hungary.

Hungary, however, upholds all her other claims. She claims Slo-
vakia and the Carpatho-Ukraine; she claims Transylvania from Ru-
mania and the so-called Voivodina, a stretch of country on her south-
ern borders, from Yugoslavia. But in respect to each of these claims
she has a minimum and a maximum programme, the former on lin-
guistic, the latter on historical grounds. Czecho-Slovakia, Rumania,

THE SOUTH-EAST: CONCLUSION 117

and Yugoslavia acquired considerable compact Hungarian minorities
through the peace treaties and it is these minorities which Hungary
claims back in the first place. But the greater part o the territory
ceded to these three countries was not Hungarian in language but
Slovak, Ruthenian, Rumanian, and Serb. Only the upper classes in
town and country were Hungarian. Yet Hungary claims these regions
on the strength of the historical unity of the country under the crown
o St. Stephen within the natural boundaries which she held for more
than a thousand years. The claim is stronger in the case of Slovakia,
the Carpatho-Ukraine, and the Voivodina than in the case of Transyl-
vania, which had long enjoyed a sort of home rule under the Hun-
garian crown.

There is no absolute boundary line between the minimum and the
maximum programme of revision, For this the linguistic boundaries
are not nearly clear enough. The nationalities are intermingled and
in some cases, e.g., in the Voivodina, to such an extent that it is im-
possible to say which area belongs to which. Besides, there are not only
Hungarian minorities. Will the Germans in the Voivodina and in
Transylvania go to Hungary, or to Yugoslavia and Rumania respec-
tively: These German minorities, in case of treaty revision in that
area, will act entirely upon orders from Berlin and can decide the
issue.

But on the whole the German position is clear and is In absolute
contradiction to the Italian view. Italy backs Hungary's historical
claims, the claims for full restitution. Germany backs only her lin-
guistic claims. The question for the first time came to a head after
Munich, when Germany and Italy arbitrated between Hungary and
Czecho-Slovakia. The German view obtained as against the view of
Italy and Hungary, which was backed by Rumania and Poland. In
accordance with the Nazi principle of "one language, one country,"
Hungary got back her minorities and nothing more, though Italy ob-
tained for her a fairly broad interpretation of what actually was
Hungarian-speaking country.

The German attitude is certainly not dogmatic. The Vienna award

118 THE NEW GERMAN EMPIRE

(the arbitration just mentioned) was dictated by a number of sec-
ondary considerations. Germany regarded Slovakia as her vassal
whom she wanted to protect and the Carpatho-Ukraine as her
spring-board against Poland. She wanted to prevent a common
Polish-Hungarian border which would help to create a bloc o neu-
trals (Poland, Hungary, Rumania, with the possible adherence of
the other Balkan countries) against the German advance. Finally,
she wanted to punish the Hungarian Government for insufficient
pliability to Nazi pressure.

But that did not prevent Germany from constantly fanning the
flames in that part of the world. While organizing the Slovak and
Ukrainian storm troops who defended their little countries against
Hungary, she at the same time helped to bring under Nazi influence
the Hungarian irregulars who constantly raided the border. The con-
stant small warfare which is now raging in these regions is all to her
advantage, and she has so far made no effort to discourage Hungary
seriously in the pursuance of her wider aims. She had to give in to
these Hungarian aspirations when on the day of the German entry
into Prague the Hungarians marched into the Carpatho-Ukraine,
broke up the Ukrainian nationalist movement in those parts, and es-
tablished a common border with Poland, much against Germany's
wish.

The Hungarian occupation of the Carpatho-Ukraine (or o Ru-
thenia, as it is now called again) is the first instance of Hungary's '
recovery of territory inhabited by non-Hungarians. The Germans
certainly regard it as only a temporary settlement and expect to swal-
low all Hungary some day. Yet the results are serious. The Ukrain-
ian nationalists feel themselves betrayed by Germany. As long as
Germany seemed to stand by the principle of self-determination, she
could be completely trusted by the oppressed nations of the south-
east. Now the Ukrainians know that they are only a pawn in a game
and would certainly be sacrificed in case of a German-Russian un-
derstanding. The Ukrainians, however, are one of the biggest prob-
lems of the south-east.

THE SOUTH-EAST: CONCLUSION 119

Stretching from the CarpathoUkraine over South-Eastern Poland
and Southern Russia down to the Caucasus, they count at least forty
million souls. Having no country of their own, they constitute the
biggest unsolved national problem in Europe. Hitler and his Russian-
born adviser on foreign affairs, Alfred Rosenberg, have consistently
worked for a German protectorate over an independent Ukraine. It
would give Germany control over one of the richest wheat-producing
areas in the world, over the coal basin of the Donetz with all its In-
dustries; it would cut off Russia from the Black Sea, so as to make
her entirely powerless and unimportant. It would crush Poland by
taking her in the rear. It would bring Germany so near the oil of
Baku that she could hardly be prevented from taking it. It would
bring her into dangerous proximity to India. German control of the
Ukraine was one of the stipulations of the Treaty of Brest-Lltovsk,
forced upon the Bolsheviks in 1918.

A German-controlled Ukraine is the greatest dream of German
imperialism in Europe. To it Hitler has had to sacrifice his co-opera-
tion with the Russian nationalist emigres, who do not want to give
up an essential part of Russia. This co-operation could certainly be
resumed at a later stage when the Ukraine would be independent
and the Soviet regime would be broken. But at present Hitler rightly
considers the potentialities of Ukrainian nationalism as being more
important than the dreams of rootless Moscow refugees in Paris
cafes. What the potentialities of Ukrainian nationalism really are, it
is difficult to say. In Poland, they are certainly very great. There are
about seven million Ukrainians living in Poland, more than ninety
per cent of them poor tenant farmers under Polish landlords, so that
social and national revolution in the Ukraine merge. The Poles have
reacted against this danger with a regime of sanguinary terrorism
which Is among the worst in Europe, and their attempts at creating
a pro-Polish movement in the Polish Ukraine have consistently
failed.

It is more difficult, owing to the lack of any reliable information,
to gauge the importance of Ukrainian nationalism in the Soviet

120 THE NEW GERMAN EMPIRE

Ukraine. Two things are certain. The peasantry of the Soviet
Ukraine was the richest and most property-minded of all Russia.
They loathed collectivization of land, and hundreds of thousands of
recalcitrant peasants from this area have been removed to die in
Arctic concentration camps. At the same time the Soviets., in con-
trast to Poland, periodically made serious and successful efforts to
create a Ukrainian-speaking upper class of political and factory offi-
cials, schoolteachers, etc., only to crush this same rising upper class
when it started to show symptoms of Ukrainian nationalism. Terrific
purges against Ukrainian nationalists within the Communist Party
of the Soviet Ukraine date back to as early as 1928 and have never
since ceased. There must be a lot of inflammable material in that
part of the world. Everywhere else the nationalism of a rising intelli-
gentsia has proved to be an important factor, but where, as in the
Ukraine, it is combined with peasant unrest it is threatening indeed.
The whole problem could certainly become practical only in case
of a war between Germany and the Soviet Union. In Russia, as little
as in Germany, a rising from within, lacking substantial support
from without, has small chance. And it is not likely that Germany
will attack Soviet Russia so long as she can get rich booty elsewhere
without war. In the meantime the Ukrainian movement remains a
big asset to Germany in her game with Poland.

Now, to come back to our starting-point, this greatest dream of
German expansion in Eurasia has been threatened and partly spoiled
by the minor question of Hungarian revisionism. It is obvious that
Germany cannot in the long run tolerate such a position. It is ob-
vious, too, that the conflict between Germany and Hungary is in-
evitable. Hungary's historical claims clash with Germany's wider
aims. In the meantime, it is true, Germany uses Hungary's historical
claims for her own ends. Having been forced to accept some of these
claims as a result of her rash march into Prague, Germany now en-
courages Hungary to raise these claims in full against Rumania. But
Hungary, while accepting German backing, has so far refused to
attack Rumania by main force.

THE SOUTH-EAST: CONCLUSION 121

The position would be different could Germany break up the
Hungarian regime from within and install a Nazi regime in its
stead. It seemed an easy task, and from month to month the world
expected it to happen. After the occupation of Austria, Hungary was
directly within reach of the German army, and it was almost certain
that in case of a German attack, nobody would come to her help.
In this situation Hungary had to make big concessions, had to join
the anti-Comintern pact, to conclude trade agreements extremely fa-
vourable to Germany, and to dismiss her former Foreign Minister
and replace him by a man more acceptable to Germany. Yet the final
surrender did not take place. On the contrary, Hungary is thwarting
Germany's Ukrainian plans.

The reason for this is that Germany's strong points in the Hun-
garian game are at the same time her weak spots. It would be all very
well if Germany, in Hungary, could co-operate with the aristocracy
and the business class connected with it. But the aristocracy has a
proud tradition of independence and power which is incompatible
with German aims, and the business class, even a small section of it
which is not Jewish, is in despair over Germany's trade policy. Ger-
many, by forcing her finished products upon Hungary, by forcing
her to sell mainly to Germany on barter and thus depriving her of
free exchange, stifles Hungarian industrial development. Since the big
depression, Hungary has set out to supply her own industrial needs,
and now Germany is attempting to throw her back to the status of
a mainly agricultural country. It is a policy which must be welcome
to the wheat-growing peasants who are, after all, the bulk of the na-
tion, but not by far its most powerful section. Everybody else is an-
tagonized.

In this situation, the Germans launched a real revolutionary move-
ment, a movement for the expropriation of the large landowners by
the peasants. It is a tendency deeply enough rooted in Hungarian
history. And the Germans naturally couple the outcry for agrarian
revolution with the traditional deep-rooted anti-Semitism of the
Hungarians, giving it a particularly ferocious twist. Incidentally,

122 THE NEW GERMAN EMPIRE

anti-Semitism in Hungary is hardly less revolutionary than agrarian
revolution. If the latter tends to destroy the landed aristocracy, the
former aims a deadly blow at the bourgeoisie, which to a very large
extent is Jewish. The Hungarian aristocrat traditionally dislikes the
Jew, but after all there are many ties of blood and interest between
the two groups.

The double battle-cry of agrarian revolution and anti-Semitism is
apt to unite the peasant masses with the non-Jewish intelligentsia
against the traditional ruling class of Hungary. But precisely for that
reason it is a manoeuvre of dubious value. The Nazis cannot wish to
unleash revolution in Hungary while keeping down the masses in
Austria and Czecho-Slovakia. And at the same time their policy is
likely to alienate the Hungarian aristocracy, which otherwise might
be a natural ally. This aristocracy has stood many shocks. It has out-
lasted the Turks, the Habsburgs, and the Bolsheviks. It combines
great shrewdness with esprit de corps and ruthlessness. The Germans
have already had occasion to notice this.

Their conception was one of undermining the traditional ruling
classes in Hungary by driving one Hungarian Government after an-
other towards Nazism. Under mass pressure, subsequent Govern-
ments would be forced to adopt programmes increasingly near to the
Nazi point of view, until no opposition to Nazism would be left.
But so far, under incredibly difficult conditions, the Hungarian aris-
tocracy has had the better of them. The fate of the Imredyi Govern-
ment was characteristic in this respect, Imredyi suceeded Daranyi in
May 1938, when, as a result of Germany's capture of Austria, Nazism
in Hungary assumed dangerous proportions. At that time Imredyi
was regarded as the strong man who would wipe out Nazism. But
in the process of fighting against Nazi influence, he had to adopt a
great deal of the Nazi programme, ending up with an attempt to
create a totalitarian party in competition with the Nazis. Originally
Imredyi had been Regent Horthy's man. But the moment Imredyi
touched the traditional aristocratic parliamentarianism of Hungary

THE SOUTH-EAST: CONCLUSION 123

and began seriously to tackle agrarian reform, he was no longer
Horthy's man. All Hungary had paid lip service to Imredyi's pro-
gramme, and it was his own programme which brought him down.
Budapest, o course, had always known that he had a Jewish grand-
mother, but just for the fun of it, at the right moment, his adversaries
discovered another Jewish ancestor of his about a hundred and thirty
years back. This brought Imredyi down and had the additional ad-
vantage of holding up anti-Semitism to ridicule. A stout supporter
of the aristocratic party, Count Teleki 5 succeeded him and the Nazis
have to begin all over again.

It is quite conceivable that in its turn the Teleki Government may
come closer to the German point of view, but It is equally conceiva-
ble that again a Jewish great-grandmother will turn up In time for
one or another leading member of the Government. The Hungarian
aristocracy has outwitted many adversaries. In the present circum-
stances this game can hardly continue indefinitely. But it is not
likely to end sooner than Hungarian independence itself. And the
Germans, should they finally conquer the country, will find it very
difficult to rule it without its traditional upper class. This upper class,
in its turn, looks down, as upon parvenus, upon the oldest aristoc-
racies of Europe, and will not be ready simply to serve the Nazis.
There could be no question of successful physical resistance against
Germany on the part of Hungary. Yet the political problem of Hun-
gary is a hard nut for the Nazis to crack.

The situation in Rumania has many features in common with
that of Hungary, but there are outstanding differences too. Anti-
Semitism Is even more important in Rumania than In Hungary
owing to the almost complete absence of a national Rumanian mid-
dle class. The sons of wealthy peasants who now, through the uni-
versities, make their way to lucrative careers find the Jews the chief
obstacle in their path. It is only since the War that any real middle
class has gradually emerged in Rumania out of these peasant ele-
ments, and it is altogether fiercely anti-Semitic. It is from these

124 THE NEW GERMAN EMPIRE

elements that the pro-Nazi Iron Guard of Codreanu has been re-
cruited. It certainly has the allegiance of a very considerable section
of the active youth.

But the point about Rumania is this, that the politically active sec-
tion of the population is small. There is no very important peasant
unrest in Rumania, which carried out a substantial measure of
agrarian reform after the war. What peasant movement exists under
the leadership of M. Maniu belongs rather to the Left than to the
Right. The young Fascist intelligentsia in Rumania does not have
to fight against a ruling class with deeply rooted political traditions,
but it cannot count on fervent mass support as do the Hungarian
Nazis.

The upper classes, naturally, are outright anti-Nazis. The army,
which is traditionally pro-French and anti-German, the very influ-
ential Orthodox Church, the old-style politicians, and the Jewish
bourgeoisie form a bloc which it is almost impossible to destroy.
This bloc is quite able to beat the Nazis at their own game. Rumania
has a thorough strain of orientalism in its tradition, and torturing
and killing political adversaries were taught to the Rumanians by
the Turks long before there were Nazis.

In their own way the Rumanians have been completely successful
for almost a century. It is King Carol who is the embodiment of
their specific political tradition. Now that he feels himself threatened
by the Nazi advance, he is hampered in his actions neither by the
democratic qualms of the Czechs nor by the point d'honneur of the
Hungarian aristocracy. He simply fights back. It is a terrible thing
to say that the countries most successful in resisting Nazi methods
are those who have been least imbued with the decencies of western
civilization. It is a fact, however.

After Munich, King Carol came to London to ask for help. He
did not get all he wanted and went to Berchtesgaden to ask for a
compromise. Then Hitler thought that he had got him and appar-
ently King Carol did nothing to disillusion him. It so happened that
Codreanu and a number of his mates found themselves in prison

THE SOUTH-EAST: CONCLUSION 125

for a couple of murders they had committed with their own hands
In the open street. Hitler expected to see Codreanu Invested with
power after his conversation with King Carol But Rumania as a
whole revised her ideas concerning pogroms after a fortnight's Inter-
lude of fierce anti-Semitism In February 1938 led to a complete stop-
page of business. Since then Codreanu had been a good, deal less
popular, and Carol found himself strong enough to take stern meas-
ures. Codreanu and a considerable number of his followers were
killed "while trying to escape."

The King, with the support of army and Church, has established
a sort of totalitarian dictatorship of his own, wiping out the Ruma-
nian Nazis. There was some commotion in the country but no serious
sign of disintegration. Only the German minority, strictly organized
on Nazi lines, remains a very serious problem.

There is no country like Rumania to prove that economic and
political developments need not coincide. Rumanian oil is indispen-
sable to Germany and she must get It by threats or Inducements. At
first Hitler had to take meekly the killing of his lieutenant Codreanu.
The fact that Germany must at all costs remain on amicable terms
with Rumania in order to get Rumanian oil did not in any way
weaken Rumania's position. Almost immediately after the dramatic
catastrophe of Rumanian Fascism, the Germans signed a new trade
agreement. For years now they have taken twenty-five per cent of
Rumanian oil.

Only after the collapse of Czechoslovakia did the situation
change, and Germany by means of direct military threats forced a
new trade agreement upon Rumania. Its provisions are far-reaching.
Not only is the German share in Rumanian oil Increased but the
Rumanians grant the Germans the right of opening new wells with
their own men and equipment. Rumania promises to develop both
her mining industry and her agriculture on lines fitting into the Ger-
man four-year plan. The effects remain to be seen. But the idea of
Germany's getting political control over Rumania merely by eco-
nomic penetration is somewhat too simple.

126 THE NEW GERMAN EMPIRE

Hungary., in case of an international clash, may side with Ger-
many. Rumania, despite the German economic penetration, will
certainly be among her enemies, unless she is thrown to the wolves
unsupported like Czecho-Slovakia.

The situation in Yugoslavia is much more complex, owing to the
extreme complexity of the political structure of that country. Ger-
many, both in the west of the country and on the Hungarian bor-
, der, spends a lot of money on buying up land for German colonists,
thus artifically creating a minority problem. German trade with
Yugoslavia has been considerable, but there is no other country
where it has led to so many conflicts, because of the classical German
methods of running up a balance against themselves and then cov-
ering it by deliveries of inferior quality or utility. After Munich,
Herr Funck, the present German Minister of Economics, offered
Yugoslavia a trade agreement which would have fitted her into Ger-
man rearmament plans, developing her production of raw materials
at the expense of her industries. But this agreement was not ratified
and conflicts continued about the operation of the narrower agree-
ment in force.

As elsewhere, it is the political and not the economic aspect which
finally decides. And here for many years the Germans backed the
wrong horse, the extremely unpopular Government of Stoyadino-
vitch. Stoyadinovitch, an exponent of the army and a very strong
Serbian centralist, found little support among his own Serbs and was
fiercely hated by the Croats. Only the Mohammedans and the
Slovenes gave him full support. But the Slovenes, who are strong
Catholics and inhabit the westernmost part of Yugoslavia, grew in-
creasingly wary about German pacific penetration. After all, the rail-
way from German Vienna to Italian Trieste leads right across their
territory. In case of war, the Axis would have to occupy that railway,
and the Slovenes, inveterate enemies of the local Germans, could not
expect mild treatment at the hands of Germany.

Thus even the Slovenes turned about, and their new policy is well
in agreement with the feelings of the army, which is fiercely and-

THE SOUTH-EAST: CONCLUSION 127

German by tradition. It was really the German threat that quite un-
expectedly brought Stoyadinovitch down, though it would be a mis-
take to describe him as completely pro-German. The simple fact
about Stoyadinovitch was that, hated as he was by his people, he
could not afford to offend Germany.

At first his downfall was regarded as a considerable setback to
Germany. The Regent Prince Paul made known his Intention to
construct a Government on a broader basis, including the Croats
after redressing their grievances against Serbian centralism. The
Serbs on the whole must be regarded as anti-German, but the bulk
of Croat opinion is not only anti-German but very strongly pro-
French and pro-British. Yet the fall of Stoyadinovitch was less of a
German defeat than appeared at first.

The Germans at that moment changed their game. They had
backed a weak and unpopular Government against the masses. They
now decided to permeate the mass movements themselves. The
Croats have generally shown as little desire to come to an under-
standing with the Serbs as the Serbs have shown to satisfy the griev-
ances of the Croats, Germany is now setting out to give the Croatian
nationalist movement a twist in her own favour.

On the face of it it is not an easy task. There was a time when the
Croatian nationalists flirted with Moscow. They have always been
strongly democratic, and the claim for an end to the dictatorship
and for genuinely free elections has been their main plank since 1928.
Moreover, they are ardent Catholics. Yet deeply discredited as de-
mocracy Is since Munich, everything is possible. No nationalist
movement in Eastern Europe puts democracy before its national
ideals. And if the Germans succeed in convincing the Croats that they
will help them, they will have won the race. They may then follow
a policy of making the Yugoslav Government bend to their wishes
by pressure from without and within while sowing discord and revo-
lution inside Yugoslavia's borders. This new German policy has
much greater chances than the old one.

Yet difficulties may arise at a later stage. If one compares Poland,

128 THE NEW GERMAN EMPIRE

Hungary, Rumania, and Yugoslavia, the German chances in these
countries can be summed up as follows: Poland would be difficult
to conquer and almost impossible to rule; Hungary would be easy to
conquer but difficult to rule; Rumania would be difficult to conquer,
but once conquered would probably be easily held with the help of
the Iron Guard. Yugoslavia might be conquered with some difficulty,
but that the proud Serbs and the wily Croats could ever abstain
from a fierce vendetta against their German conquerors is almost
inconceivable. Generally speaking, Germany must find it very difficult
to rule over Slavs.

The position in Greece is still fairly similar to that which obtained
in Yugoslavia before the fall of Stoyadinovitch. Here too the Ger-
mans are backing a weak and unpopular Government which is de-
pendent on their support precisely because of its weakness. There is
this difference between Stoyadinovitch and the Greek dictator, Gen-
eral Metaxas, that the latter is pro-German, not out of opportunity,
but out of deep conviction. He is German-trained, and while the
Yugoslavs always tried to keep up a simulacrum of parliamentarian-
ism, Metaxas is toying with the idea of a totalitarian party ruling the
country under his leadership. But so far nothing much has come of
these plans. It is still simply the rule of the army which obtains in
Greece, with almost all the people hostile to it.

Germany won hegemony in Greece owing to many reasons. The
country is traditionally anti-Italian and pro-British, but Metaxas is
anti-British too. Thus Germany was really his only choice. Economi-
cally the Germans got ahead of Italy during the period of sanctions
and have kept a firm grip ever since. But in Greece, which must im-
port most of her food, the scarcity of free exchange which results
from bartering with Germany is a particularly serious problem.

There is one aspect of the Greek situation, however, where Ger-
many's position is really splendid. This is the direct German intru-
sion in Greek administration. Everywhere in the Balkans, Germany
makes big efforts to obtain key positions for German agents. But in

THE SOUTH-EAST: CONCLUSION 129

most countries German methods are only indirect. What key posi-
tions the Germans acquire are mostly connected with economic ac-
tivities. Officers and engineers concerned with armament deliveries,
with the creation of industrial centres, and with town-planning must
obviously know a great deal about the vital spots of the countries
where they work. But in Greece the German personnel plays a larger
part. There, as in Bulgaria and in Spain, the Gestapo quite openly
maintain her officers, and Germans hold important positions in the
State administration. Even so, the attitude of Greece, in case of an
international clash, cannot be regarded as certain. It has been seen
that foreign advisers in a country have been got rid of at the last
moment. The English naval mission to Constantinople before the
War, which did not prevent Turkey from joining the other side, is
one notable instance.

Of all the countries of the south-east, Bulgaria is the smallest (next
to Albania) and the one most directly under German influence.
Germany took more than sixty per cent of her trade in 1938 and may
take anything up to eighty per cent in 1939. All Balkan currencies
are to a large extent dependent on the whims of the Reichsbank,
but it could be said of Bulgaria that her currency is actually managed
from Berlin. Bulgaria has no strong desire to become industrialized.
Being mainly a peasant country, with exceedingly modest require-
ments, her economic interests clash less with those of Germany than
is the case with any other Balkan country. The rule of the Germans
in her economic life and administration is great indeed.

Politically the position of Bulgaria differs from that of ail of her
neighbours in so far as she ranks among the defeated of the Great
War and therefore favours treaty revision. All the other Balkan coun-
tries would certainly prefer neutrality to any other policy, and this
desire is embodied in the Balkan Pact between Turkey, Greece, Ru-
mania, and Yugoslavia. The pacific intentions of Bulgaria are not
so certain. To this day she has refused to sign the Balkan Pact,
though she has constandy moved nearer to the signatories since

130 THE NEW GERMAN EMPIRE

1934. Yet her aspirations for treaty revision have not died. The Ger-
man conflict with Rumania in particular has revived Bulgarian hopes
for recovery of the territory lost to that country.

As in so many other cases, here again Germany's assets are at the
same time her weak spots. Bulgaria's desire for treaty revision cer-
tainly works in favour of Germany. But German backing of Bul-
garian nationalism is bound to raise the suspicions of all those who
want to get rid, once and for all, of the past and its conflicts. Now
such a desire to break completely with the past is the very essence
of the policy of the present Bulgarian Government. Here interna-
tional and national questions are inextricably intertwined.

Bulgaria's chief quarrel was not with Rumania but with Yugo-
slavia for Macedonia. For more than ten years, from June 1923 to
May 1934, the armed gangs of Macedonian refugees terrorized every
Bulgarian Government, threatening disaster if Bulgaria came to a
sincere understanding with Yugoslavia. At times, the Macedonians
were the real masters of the country, and it was mainly owing to
their internal splits that their influence later declined. In 1923 Pro-
fessor Zankov 'overthrew the peasant Government of Stambuliski
with the help of the Macedonians and attempted to create a sort of
Fascist dictatorship. He failed and the country returned after a time
to a half-hearted sort of democracy.

Then, in 1934, the military coup of General Georghiev overthrew
democratic government. But this time the Macedonians did not gain
from the rising. On the contrary, the new Government was deter-
mined to make an end of their tyranny and wiped them out in just
retribution for their unspeakable murders and atrocities. Ever since,
the relations between Belgrade and Sofia have been decidedly good.
The military dictatorship of Georghiev after a time gave place to the
administrative dictatorship of Kiosse-Ivanov. Under him Bulgaria's
foreign policy remained unaggressive and the regime grew decidedly
milder. Kiosse-Ivanov is an old diplomatist not given to harsh meth-
ods, and he has most definitely the backing of the King.
The political position in Bulgaria, therefore, is this: very consider-

THE SOUTH-EAST: CONCLUSION 131

able masses unflinchingly stick to the peasant party in spite of its
official dissolution. It is a mass movement o the Left. On the other
hand there are the Fascist groups whose most outstanding leader is
Professor Zankov. They are exceedingly pro-German and clamour
for a more active policy in the matter of treaty revision. But their
influence has been weakened by the destruction of the Macedonians,
and their chief following now is university students and similar
groups, not a negligible quantity in a country such as Bulgaria. The
Government which, like most Balkan dictatorships, has no very
strong following of its own, rejects both their bellicose intentions
and their Fascist views. While constantly drawing closer to the
Balkan Pact, it at the same time undertakes a policy of return to
normality at home, including even a measure of parliamentary con-
trol. In these conditions it would certainly be a mistake to describe
Kiosse-Ivanov as a German agent. Even in case of an international
conflict Bulgaria would probably attempt to sell her neutrality at a
high price rather than share in the fighting.

An attempt at summing up the situation in the whole of Eastern
Europe might lead to the following conclusions: the dictatorships
which rule everywhere from Estonia to Greece are Invariably weak
and in many cases actually tottering. Almost everywhere they are
threatened by mass movements of the Left and of the Right. But
the chances of the pro-Fascist elements' getting the upper hand
merely by their own forces are everywhere very doubtful, and the
very extremism of the Fascists makes it more doubtful whether they
can get command without the use of main force. Besides, there are
countries without any strong Fascist movement, such as Greece,
Yugoslavia, and the Baltic countries. There are others such as Poland
where a Fascist conquest would not favour Germany. The anti-
German trends are of the most various kinds, but there is no country
where they are not strong. German preponderance in those parts was
mainly due to the absence of any serious countermove on the part of
the other great powers, and even so is not assured in war. As soon
as the influence of any other great power is felt in those regions, re-

132 THE NEW GERMAN EMPIRE

sistance against Germany grows to such an extent as to threaten her
sway. It is therefore likely that in many cases the German policy of
indirect penetration will fail and that the Germans will be driven
to the use of main force, thus accelerating the mad drive towards an
international clash. There is obviously little doubt that Germany
could occupy much of the area concerned by main force at any time
she chooses.

But it is precisely this possibility of an occupation by main force
which raises the basic issue. Granted that Germany would be able
to hold what she conquered, what would these possessions mean to
her? The population of these regions is mostly Slavonic in language
and almost everywhere near to the racial and psychological type of
the Slavs. The Germans traditionally despise the Slavs (whom did
they ever not despise?). But the birth-rate of the Slavonic peoples
is much higher than that of Germany, their vitality is enormous,
and their hatred of the Germans very deep-seated. The Nazi regime
itself excludes every possibility of a conciliation. It has been found
difficult for an empire to rule in the long run even old races such
as the Indians and the Egyptians. But how, in the long run, an em-
pire would be able to rule young, vital, rising people without any
attempt at merging the conquerors and the conquered is a riddle
which the wise men of racialism must be best able to solve.

There is one country in that region which remains completely out-
side all these considerations: Turkey. The Turkish dictatorship is
not weak, but extremely strong. Its structure is similar in certain re-
spects to that of the German regime. Opposition parties in Turkey
have been not only formally dissolved and driven underground;
actually they no longer exist. There is very little political life in the
proper sense of the word in the country, and no power can hope to
win influence in Turkey by bringing pressure from within to bear
upon the Government. There are only two ways of winning Turkey.
The one would be an attempt at direct conquest, and that for a great
many reasons would be an exceedingly risky affair. The other is to

THE SOUTH-EAST: CONCLUSION 133

convince the Government as It is of the usefulness of German friend-
ship.

In Turkey, more clearly than in other countries, the Importance
of the political as against the economic factor can be understood. The
type of trade between Turkey and Germany does not essentially
differ from that between Germany and many other countries. Ger-
many stands at the top of the list for Turkish exports and Imports.
Turkey has experienced the same difficulties with German trade
methods as other countries. But the political effects have been totally
different.

In a way Germany has been quite successful in gaining Turkish
friendship. But this friendship does not go further than the strictest
maintenance of Turkish Independence allows. Turkey economically
and politically profits from the present international tension. Being
a strong power, she Is wooed by Germany, Russia, and Britain. Be-
sides constant economic help from Russia at practically no cost to
herself, she has got quite a favourable trade agreement with Ger-
many and at the same time accepted a British loan to the amount of
^16,000,000. Germany tried in vain to drive out British competition
in this field. After Munich, Germany granted ; 10,000,000 of so-
called credits which are really German Industrial deliveries to be
spread over ten years In exchange for Turkish goods. But these
much-advertised credits are in reality not much more than a rear-
rangement of former German contracts. Turkey does not want to
become dependent upon Germany.

For this there is a definite reason: Turkey Is the lucky, or as the
case may be the unlucky, possessor of the Straits, which are a stra-
tegic crossroads of the first order. The Straits constitute the easiest
access from the west and from India to Russia. Their closure decided
the collapse of Russia during the last war. It is a foremost British as
well as Russian concern to keep them open. And this Interest coin-
cides with the Turkish desire to keep the Straits open except when
the Turks themselves wish to close them.

Germany, however, must desire to close the Straits at all costs in

134 THE NEW GERMAN EMPIRE

case o war, even if either Russia or Britain remained neutral, in
order to prevent as much as possible any collaboration between these
two powers. Turkey is therefore rightly afraid of a German breach
of her neutrality in case of war and has shown great eagerness to
join in some arrangement of collective security which would guaran-
tee her complete dominion over the Straits.

But this is by no means the whole story. German periodicals and
newspapers today quite openly revive the old Berlin-Baghdad idea,
the idea of the German penetration of the Near and Middle East,
with India as the final goal. The oil fields of Mosul and of Iran are
alluring bounties. Germany today is carrying out a big propaganda
campaign in Iraq as well as in all other Arabic-speaking countries.
In Iran she already holds second place in exports and imports (the
first place is held by the Soviet Union) and is developing Iranian
basic industries and civil aviation. It must not be forgotten that in
all these attempts Germany only returns to the old dreams of the
War days.

These plans are not yet very much emphasized, but there is little
doubt that in a way all Germany's campaigns in the south-east are
only a vanguard encounter on her march towards Asia. The British
Empire is unanimously proclaimed decadent by the foremost mili-
tary theorists of Germany. The inference that Germany aims at strik-
ing at its most important link would be obvious even without the
precedent of German action in Turkey, Iran, and Afghanistan.

Germany cannot contemplate naval action in those parts. She can
only, as we shall see in the next chapter, attempt to cut British sea-
routes to India by an attack by land. For her own advance she must
rely on land-routes, thus reviving an old Napoleonic idea. There are
two main land-routes to India. Both lead through Iran, the one on
the northern shores of the Black Sea through the Ukraine, the other
one along its southern shores through Turkey. If Germany wants to
strike seriously in the Middle East,, as she undoubtedly does, she must
make Turkey her vassal. Action with the Ukraine as her only basis
could not be effective. Turkey willingly fitted herself into that role in

THE SOUTH-EAST: CONCLUSION 135

1914. But the Turkey of 1939 Is a different country. She does not
want to be a vassal o any power. The strategic importance of the
country Is so great that she can expect support In case of an attack.
And unlike the Balkan countries she has every means of defending
herself. The fight for Turkey will largely decide the fate of the new
German Empire.

CHAPTER X
AFRICA AND THE MEDITERRANEAN

WITH Africa we reach the sphere o German colonial claims proper.
In Africa, Germany to a large extent uses methods different from
those applied in other parts of the world. There from the outset she
renounces methods of peaceful penetration and is openly out for
territorial expansion. But that is not to say that the German approach
to African problems is different in all respects from what we have
so far described in relation to other parts of the world. In Africa, as
elsewhere, we must consider two different aspects: Germany's im-
mediate territorial expansion and the indirect aims connected with it.

So far Germany has raised clearly defined claims only to her for-
mer African colonies, and claims of a less precise sort for a share in
the colonial possessions of the world. But these definite claims, here
as in other cases, give access to much wider ends. The main problem
for Germany, as we are going to show, is not to acquire this or that
stretch of African jungle or desert but to get domination of the two
main sea-routes between Europe and the East the Mediterranean
and the Cape. It is therefore impossible to separate the problems of
Africa proper from the problems of the Mediterranean. Egypt and
Palestine, Spain and the Spanish zone in Morocco, must be treated
under one heading.

But let us first consider the German colonial claims proper. Ger-
man colonial possessions before the War lay partly in the Pacific, and
partly in Africa. The German case for the return of her former colo-
nies is essentially built upon the contention that she was unlawfully
deprived of them at the peace conference. It is noteworthy in this
context that no serious claims have ever been raised for the return
of the German colonies in the Pacific. There are many signs that
Germany views Japan as the second great world power which is to
remain after the expected crash of all the older empires. And the
136

AFRICA AND THE MEDITERRANEAN 137

Pacific is regarded as a Japanese zone of influence. It is perhaps
amusing to speculate that if German dreams came true India would
inevitably become an object of contention between Germany and
Japan. At any rate, Germany is making serious efforts to win over
sections of the Indian Nationalist movement. But beyond CalcEtta
there is no sign of German interference. This part of the world is
regarded as a Japanese preserve.

If this factual renunciation of her Pacific claims weakens Ger-
many's legal and moral case for the return of her old colonies, there
still remains the economic case. For a long time Germany main-
tained that she needed colonies in order to settle her surplus popula-
tion. It always was a specious claim because Germany's African colo-
nies could not in any case take any substantial number of whites. In
the meantime the Nazis, while claiming colonies on the ground of
the overpopulation of Germany, are themselves increasing that over-
population by their drive to raise the birth-rate.

But the decisive fact is obviously that all the talk about over-
population has become obsolete. That argument could impress peo-
ple while Germany had eight million unemployed. It is meaningless
today when Germany is suffering from an acute shortage of labour.
This shortage is bound to increase apace with the expansion of the
German Empire. More and more men will be needed to rule subject
countries, and less and less will be available for productive work in
Germany itself. If the German attempt at empire-building succeeded,
the Germans as a whole would become increasingly a race of rulers,
leaving the heavier and more subordinate tasks to their subject races.

In the meantime Germany makes attempts to rally to her colonial
claims countries which she hopes will one day become her vassals,
such as Poland. The hope held out to smaller nations for a share in
the German colonial empire is one more method of German indirect
penetration in the countries concerned.

If the talk about overpopulation is of no value at all, the same
thing cannot be said about the value of the former German colonies
as producers of raw materials. It is not that Germany could get any

138 THE NEW GERMAN EMPIRE

essential raw materials out o her four former African colonies (Tan-
ganyika, South- West Africa, Cameroons, and Togoland), or for that
matter out of her former Pacific colonies. The most important raw
material that she could get would be vegetable oils (twenty-three per
cent of German imports are produced in former German colonies)
and sisal, which is produced in Tanganyika in much greater quanti-
ties than Germany needs. Even at present, Germany imports these
goods from her former colonies, thus taking about forty per cent
of the exports of Tanganyika and of the Cameroons and more than
eighty per cent of those of Togoland. But all this does not account
for much in the German trade balance.

The real advantage to Germany would not lie in the supplies she
could herself receive from her former colonies but in the exports of
these colonies to third countries through which Germany might,
once she owned them, acquire free exchange. This would be a defi-
nite advantage. The total exports of all the former German colonies
amount to something like 156,000,000 marks. But of them a con-
siderable part must be accounted to the exports of her Pacific colo-
nies (especially the phosphate exports from the British mandate of
Nauru). The rest must be balanced against imports to the colonies,
and the balance cannot by any means become considerable. Germany
maintains that she would develop the natural resources of her formef
colonies extensively but this is a doubtful proposition in view of her
own industrial difficulties. Yet some items of the production of this
region, such as South-West African diamonds, would undoubtedly
constitute valuable assets for Germany.

Before the War, Germany's colonies were generally regarded as
hardly worth having, and the costs of administration and economic
development were much higher than any political or commercial
advantages they might provide could possibly warrant. In spite of
all the colonial propaganda on the part of Germany, it is very doubt-
ful whether the situation would now be different. It is certain that
Germany regards her colonial claims, like all her other present
claims, only as stepping-stones to something else.

AFRICA AND THE MEDITERRANEAN 139

This "something else" might be the acquisition of a wider colo-
nial area. Germany may hope to be able In an International crisis to
raise gradually her colonial claims until they cover territory which
never belonged to Germany, such as the Belgian Congo or some for-
mer Portuguese colonies. This again would be in keeping with
German pre-War policy. The German conquest might be covered
by some scheme of co-operation between all colonial powers, though
It is very doubtful whether Germany would regard such a scheme
as more than a plausible propaganda argument. In the end Germany
probably would not accept anything but full sovereignty over any
colonial territory she might acquire.

Vague as these larger German claims are at present. It is impos-
sible to say anything definite about the value such wider conquests
could have for Germany. They would probably at least supply her
with a not unimportant amount o rubber, one o her basic raw ma-
terials for rearmament, and would generally tend to improve con-
siderably her trade balance. But the decisive elements for the
acquisition of self-sufficiency do not He In Africa. Oil Is to be had
in Rumania, Mosul, and Persia, iron in Sweden, Lorraine, and
Spain, foodstuffs and many minerals In the south-east. Tin and
nickel could not be found in sufficient quantities either in Europe
or In Africa. The economic value of any African colonies to Ger-
many Is therefore doubtful, and their value in case of war would
entirely depend upon the domination of the seas.

Whatever economic value it promises, there is a specific psycho-
logical element involved in any German domination In Africa. The
Nazi regime could not subsist if all its subjects were Nordics or
reputed to be so. It can keep up its specific psychological appeal only
by opposing the superior race of light to the inferior races of dark-
ness. This, strange as It may seem, is an essential element of Nazism.
So far the Jew has been the scapegoat, but the psychological value
of the Jew for the Nazi regime Is rapidly decreasing. The Jews are
driven out. At the same time anti-Semitic propaganda in Germany has
obviously overreached itself; the margin between the alleged power

140 THE NEW GERMAN EMPIRE

and dangerousness of the Jews and their misery is really too great. And
finally, eighty million people oppressing half a million or one mil-
lion really cannot provide the desired feeling o superiority.

The Slavs could not be used as substitutes for the Jews,, for., how-
ever much the Slavs are despised by the Germans, Germany cannot
waive all attempts to make them willing subjects of the German
Empire. But the black race would provide an excellent substitute.
Black skin is even better than black hair. The Negroes are most em-
phatically described as an inferior race in Germany; the equality
granted to them in France and the participation of black troops in
the occupation of the Rhineland are standard subjects of anti-French
education in Germany. The black race is on the whole not sufficiently
developed politically to need much consideration. Germany in Africa
need not make, and if she gets a chance will not make, any attempts
at indirect rule. Moreover, the Negroes are numerous enough to give
the Germans the feeling of really being a superior race, ruling over
hosts of sub-men.

Official publications in Germany proclaim that the blacks ought
not to be admitted to any more highly skilled work, ought to be
given no education or only a minimum amount of it, and that their
religious life should be subject to special restrictions. The German
idea of the black people is that they ought to be kept in a sort of
collective slavery as against the slavery under individual owners to
which they were subjected before the age of liberalism. This, how-
ever, is not incompatible with German propagandists' being inter-
ested in the movements of the natives in South Africa.

The psychological aspect is certainly not the basic one at present,
though in the long run it may be very important indeed. But as
things are, Germany has no chance of acquiring at once a very wide
African empire. She might get back her colonies and even something
more in an attempt at conciliation, provided she can convince the
older colonial powers that she will then be satisfied. But she cannot
by any means make wide conquests in Africa so long as she has not

defeated Britain and France. The way to an African empire leads

AFRICA AND THE MEDITERRANEAN 14!

through victory In Europe. And the practically decisive problem,
therefore, is not at all what value any African colonies might have
for a well-established German empire, but what value her former
colonies could have for her in case of an international conflagration.
Here we return at once to a well-known field and well-known meth-
ods. As in other cases, so in the case of her African colonies, Ger-
many's territorial claims are not an end in themselves but intended
to give access to wider aims.

Germany's most Important goal Is undoubtedly the Union of
South Africa, even though It is a goal never yet openly mentioned
in German propaganda. South African politicians themselves are
well aware of the threat. The Importance of the Union for Germany
is obvious and manifold. The Union dominates one of two sea-routes
to India and probably the essential one In case of war, as the Mediter-
ranean will be closed In case Italy joins the German side. The Union
Is the greatest gold-producer in the world. As it is doubtful whether
the United States, in the next war, will deliver armaments on credit,
cash In case of war will be nearly all-decisive. If Britain could not
dispose of South African gold, she would find very great difficulties
in meeting her needs. Germany, by gaining control of South African
gold, would at one stroke get rid of all the limitations imposed upon
her by the lack of free exchange. The other assets of the Union, such
as her wool and her diamonds, would be fine acquisitions Into the
bargain.

The Union has only one and a half million white Inhabitants s and
towards them Germany can use all the methods she uses towards
other white communities. The small number of whites spread over a
very wide territory makes the attempt rather easier. As long as she
does not rule the seas, she could never hope to conquer South Africa
by force alone. But she can hope to conquer it by her usual methods,
a combination of working from within and threatening from with-
out. In this scheme the former German colonies, once returned to
Germany, would play an important part.

It is not likely that Fascism in the precise meaning of the term

142 THE NEW GERMAN EMPIRE

could have much chance in South Africa. The strong Calvinist tra-
dition of the Afrikander community on the one hand, and the eco-
nomic stability of the Union on the other, are serious obstacles. It is
true that, as against the safe position of business in the Union, there
stands the poor white problem. The poor whites in the towns, and
certain farmer elements suffering from all sorts of difficulties in the
countryside, would provide an almost ideal recruiting field for a
Fascist movement. But there is lacking in South Africa that broad
stratum of frightened bourgeoisie and a despairing proletariat which
in Germany and Italy received the Fascists as saviours.

Yet if Fascism in the proper sense of the word is unlikely, there
exist sufficient elements in the political structure of the Union to
bring about moves favourable to Germany and unfavourable to the
British connexion. There are at least three major elements which
may work in such a direction. There is, first, anti-Semitism, a very
serious matter in South Africa, and a sort of prolongation and exacer-
bation of the hatred of the poor Boer farmer for the rich un-
Calvinist bourgeoisie of the Rand. There is, second, the native
problem, most important among all political problems of the Union.
Here, it is well known, the British and the South African views
diverge, the British view being dictated by humanitarian considera-
tions and the South African one by the Rand's policy of cheap labour
and the slave-owning traditions of the Boer community. It is true
that outside the three British protectorates in South Africa, the Union
can deal with its natives as it likes. Yet the affinity of the Union view
in this matter to the German view is much closer than to the British.
It is a matter where South African opinion is extremely sensitive.
Anti-Semitism and resistance to the rise of the Negro merge to-
gether into something very near a German racial point of view.

These problems, finally, play their part in the controversy around
the Afrikander extremists, the "nationalists" or Malanite Party. A
few years ago it seemed that the old controversy between the British
and the Afrikander community would come to rest, with only a
small and decreasing minority of the Boers remaining outside the

AFRICA AND THE MEDITERRANEAN 143

fold of the United South African Party, where British and Afrikan-
ders co-operate. But things have taken another turn and Malanite
Influence Is undoubtedly growing. Its strength in the country at
present Is certainly greater than Its strength In parliament and there
Is no doubt that the recent centenary o Dingaan's Day (the victory
of the Boer trekkers over the Zulus) has given It a new impulse. The
Malanite movement grows on hostility to the Jews, the Negroes, and
the British at one and the same time, however strange this proximity
may be.

As usual, the growth of the extremists makes the moderates hesi-
tate In their course. The controversies about the celebrations of
Dingaan's Day, with the refusal to play the British national anthem,
have shown that a current of separatist opinion exists even outside
the Malanite fold. South Africa has this In common with Ireland:
It has always been a dominion with a non-Anglo-Saxon majority. And
If the British element is stronger in the Union than In Ireland, the
feelings of at least one section of the non-British element need not be
very different in both cases. The International Implications, how-
ever, are quite different. A free Ireland is not very likely to turn pro-
German. There is little doubt about the German sympathies of the
Malanites.

These trends are serious enough, but It is not likely that any of
them could come to a head In time of peace. In time of war, It would
be quite a different matter. Most probably there will be no repetition
of the Boer rising of 1914. But there may be a much more serious
separatist political movement. It all depends on the fate of Tangan-
yika.

The Germans have their finger In the pie, first of all In the general
line of anti-Semitism, race propaganda, and anti-British policy, but
in addition In three definite respects. There is first the German col-
ony in South-West Africa. This colony, though only a few tens of
thousands strong, attempts to play the role of a real Henleln party
In South Africa. On the one hand it claims the right of secession to
Germany; on the other hand it works as a spearhead for all and-

144 THE NEW GERMAN EMPIRE

British tendencies. Agitation has grown so bad that special police
measures had recently to be taken. Second, there is the German
claim for colonies which may in many ways threaten South Africa,
directly and indirecdy. This threat, as usual, brings about attempts
at conciliation as well as attempts at resistance. There are elements
in the Union, best represented by Pirow, the War Minister, who
would not at all like the Germans to come too close to the Union
and just for that reason would prefer a policy agreeable to German
wishes; witness Pirow's recent journey through Europe and his visit
to Hider.

Finally, and chiefly, there is, just as everywhere in Europe, the
threat of the German bombers. This threat at present is non-operative,
and as long as it does not actually operate all other German moves must
be regarded as not very dangerous in themselves. But if Germany got
back even the single colony of Tanganyika, Johannesburg would be
within easy bombing range of the German air force. Without ever
actually becoming a reality, this threat might completely upset the
political balance. The small white communities outside Europe and
America are all out for protection, and the British navy is, the most
powerful means of protection for them all. But the British navy
would be no protection against German bombers. If Tanganyika
became German again, the Union would have to take very strong
and expensive protective measures of her own and might in the
end be forced to fight a destructive war which would certainly not
rouse the enthusiasm of the Afrikander community. Under such
circumstances the separatist movement might become dangerous.

It is perhaps interesting to note that in South Africa, even more
than elsewhere, Germany's economic action is entirely subsidiary to
her political one. Germany has concluded a barter agreement for
wool which as usual benefits the section most friendly to Germany,
in this case the Boer farmers. But if it were only for that, the problem
would not be very serious.

Thus the German conception of the conquest of Africa takes

AFRICA AND THE MEDITERRANEAN 145

shape. Germany, through a protectorate over a South African Union
entirely dominated by the Afrikander element, to the exclusion o
everything British, might rule the whole southern part of the conti-
nent and keep down the natives: this Is the essential plan. Again
such a plan may seem fantastic. But there are no German plans
which are not fantastic. Germany's approach to the African problem
Is identical with her approach to all other problems. Her scheme is
one of conquest by political means with little or no use of arms. If
it succeeded, it would break the backbone of the British Empire.
But given the geographical distances on the one hand, and the Im-
mediate British interests involved on the other, her chances of suc-
cess are certainly very doubtful. She will try, however.

And it is not only In the southern half of the continent that she will
try. The northern half is at least as important. But in the north there
Is no white community such as the Afrikanders on which to place
her hopes. And incapable as Germany is of direct conquest, she
must rely in certain respects, at least, upon her action In the mother
countries. This at least applies to the Guinea Coast. Farther north
the situation is again different.

On the Guinea Coast the German claims at present appear as
almost subsidiary to those of Italy. We have dealt with the position
in these parts already, indirectly, when we discussed the position of
Alsace. The juxtaposition of Alsace, the Cameroons, and Togoiand
may seem strange and would in fact be meaningless if German ex-
pansion were an affair of military conquest. But the political aspect
is altogether decisive. And Alsace has this In common with Togoiand
and the Cameroons, that they are territories which Germany may
claim back from France. The settlement between France and Ger-
many, in its turn, is not an isolated matter. It Is one and the same
problem as the setdement of the French-Italian antagonism. If
France, under German pressure, would give up Tunis and Djibouti
and renounce the integrity of her possessions, Germany would cer-
tainly get the French mandates into the bargain, at the moment of

146 THE NEW GERMAN EMPIRE

the collapse of French resistance. And i French resistance once
collapsed, it would certainly not be a matter of the former German
colonies only, but of all French West Africa.

Besides, the problems of the Guinea Coast are inseparable from
the problems of North Africa, because the whole conflict centres in
the Italian demands for Tunis, if for no other reason. And in North
Africa, Italian help for German plans can be more direct, and Ger-
many in North Africa is not even limited to Italian support. There
is Nationalist Spain and there is the Arab nationalist movement.

On the surface it may seem as if in North Africa it were not a
question of Italian support for Germany but of German support for
Italy. The Mediterranean, and especially North Africa, seem to be
a preserve of Italian expansion. But this would be underestimating
the German capacity for expansion.

A look into any German newspaper is sufficient to convince one
that Germany is at least as interested as Italy in the Palestinian
troubles. Anti-Semitism provides an easy link between Germany and
the Arab extremists. More likely than not, Italy has recently adopted
anti-Semitism partly in order not to lose the race for popularity
among the Arabs. Already, in this matter of anti-Semitism, Italy
appears in the wake of Germany, even in North Africa and the Near
East. Moreover, Italy has a very bad record with her own Arabs in
Libya, whereas Germany's record is clean. Germany in Palestine,
at least, can work through a German minority.

German action in the Arab world, moreover, is not entirely lim-
ited to Palestine. Leading men of the German regime have been
keen about keeping in close contact with the Arab leaders and rulers.
As early as December 1937 Herr von Schirach visited Damascus and
Baghdad as well as Teheran and Ankara. A special department for
the Near East exists in the German Ministry for Propaganda under
the head of a certain Dr. Rudiger. Germany has opened diplomatic
relations with Saudi Arabia and very strongly emphasized the fact.
Finally, she does everything in her power to strengthen her position

AFRICA AND THE MEDITERRANEAN 147

In Egypt, where she holds second place In Imports and exports and
provides important Industrial plant.

The German game In these parts of the world is perhaps less ob-
vious than elsewhere, but they are certainly not neglected. In Egypt,
too, the more extreme forms of nationalism may be an asset to Ger-
many, and much more so than to Italy, because the proximity of
Libya does not make for Italian popularity. There are persistent ru-
mours of German motorized divisions being specially trained for
desert warfare, and of the presence of German troops In Libya. The
threat to Suez is quite unmistakable, but the German-Italian compe-
tition is no less evident in these parts. If Germany has prevailed upon
her Axis partner to give her a direct share in her actions In the east-
ern Mediterranean, It Is doubtful whether Mussolini gave his assent
very willingly. In substance, Germany In the Arab world is repeat-
Ing the game she played with Italy In the Balkans. If she has no
aspirations In Tunisia, and none perhaps In Algiers, she certainly has
in the countries around the Suez Canal and the Red Sea.

This allows us to define more clearly the position Italy would have
within a German Empire. It would not differ essentially from that
of many other peoples. It would not be similar to that of Japan. At
present, at least, Germany treats Japan as her only equal, a country
whose interests she respects and whose zones of Influence she avoids
touching. In the case of Italy, the aim of German policy Is, on the
contrary, to bring her into as complete a dependence as possible.
The Italians, once the German Empire was complete, would play
a not very different part from that of other nations within it. The
method of ruling might be considerably more indirect than In other
cases, and Italy might enjoy a privileged position among Germany's
vassal countries. But Germany, even now, does not treat Italy as a
real equal, and has no intention of allowing her to follow an in-
dependent policy. Even at this early stage, Germany sees to it that
Italy will not have any important zones of influence of her own,
free from German interference. Germany has driven Italy out of

148 THE NEW GERMAN EMPIRE

the Balkans, is gradually getting hold of precisely that Arab national-
ist movement which otherwise might be the spearhead of Italian
expansion, and at the same time proves herself to be a very success-
ful competitor of Italy in Spain. Thus, while Mussolini dreams of
a Mediterranean Empire of his own, he is in fact helping to create
Germany's Mediterranean Empire, both in the eastern and in the
western Mediterranean. Already his liberty of movement is restricted.
It would vanish completely once Germany had reached all her aims
in Europe. In the case of Italy, as in any other case, German control,
once established, would rapidly move towards an ever more ruthless
form of domination.

It is true that at present the Germans still emphasize their modera-
tion in all Mediterranean affairs. As in the case of the Arab national-
ist movement, so in the case of Spain, they have contrived to appear
as true friends, where Italy appears as a potential conqueror. That
is precisely the German way of squeezing out the Italians. Whereas
Italy acquired a considerable amount of unpopularity in Spain, by
giving a considerable amount of support to the Nationalists, Ger-
many, with much more limited help, and much greater restraint,
has acquired great influence and popularity. Already the major share
of Spain's iron-ore exports goes to Germany. And it is at least con-
ceivable that British and French efforts to remove the Italians from
Spain will in the end benefit the Germans.

There are obvious reasons why Germany must tread her way care-
fully in Spain. General Franco is so much wooed on all sides at pres-
ent as to be quite independent of German support, and the geo-
graphic conditions exclude any possibility of direct German inter-
ference except with the consent of France. On the other hand, the
assets to be gained by Germany are enormous. The Spanish zone in
Morocco is one strategic base for the starting of a Mohammedan re-
volt against France, and if Germany wields more influence than
Italy with Franco, her influence in the Mohammedan world in the
western Mediterranean will be all the greater for it. German designs
upon Morocco are again only a repetition of moves made before the

AFRICA AND THE MEDITERRANEAN 149

War. Then there are the Canaries, Invaluable as a naval and air base,
threatening Britain's Atlantic sea-route to India and lying within
bombing distance of Brazil. Finally, there is Spain's prestige in South
America, and If German influence on that continent works In close
conjunction with Nationalist Spanish Influence, the effects must be
considerable indeed.

In Spain, as elsewhere, German success or failure depends finally
upon the Issue between the political forces within Spain, meaning
by that, not the issue between the Republicans and Nationalists which
is settled already, but the one between Monarchists and Fascists
within the Nationalist camp. Formerly In Nationalist Spain there
existed only one party, but in fact this party Is divided Into two
strongly opposed wings. The Fascists in Spain already look much
more to Germany than to Italy for guidance. It Is true that a large
part of the army, and the Church, the aristocracy, the civil service
are Monarchist, and the Fascists at present have hardly a chance of
complete success. But this might change once Germany were able to
hold out to Spain serious prospects of territorial aggrandizement in
Morocco or elsewhere. Spain, like Italy, might become a favoured
nation under the German Empire, with colonial possessions of her
own, but under strict German control. In the meantime the vision
of a new Spanish Empire might tip the balance inside Spain In fa-
vour of the pro-German Fascist forces. They would certainly get the
upper hand once Spain believed that there was no other master In
Europe but Germany.

CHAPTER XI
LATIN AMERICA

THERE is no other instance so suggestive of the unlimited character
o German expansion as Germany's penetration of South America.
Germany obviously wants to trade with the South American coun-
tries and wants to trade with them advantageously. The Latin Amer-
ican countries in their turn have almost all been severely hit in their
economic life for various reasons and are eager to find an outlet for
their surplus products in the German market. The lack of foreign
exchange makes every commercial transaction with Germany prob-
lematic but there are, after all, methods now already traditional for
dealing with that situation. Germany's competitors in trade may com-
plain. But German trade expansion alone could never create a serious
political threat.

The position is, however, that in Latin America Germany limits
herself to trade as little as elsewhere. She is carrying out a very thor-
ough policy of political permeation which creates a serious threat both
to the interior stability of many Latin American countries and to the
stability of international relations in the western hemisphere. More-
over, it is not a question of German expansion alone. In Latin Amer-
ica the three main powers of the anti-Comintern pact meet. There
are countries such as the Argentine and Peru where Italian influ-
ence predominates. Others such as El Salvador are Japanese strong-
holds. And some of these countries are mainly the object of German
permeation.

It is difficult to distinguish clearly between the activities of these
three powers. At present, at least, in South America much more than
anywhere else, they act in close alliance. And there co-operation is
much more untroubled than, for instance, that between Germany
and Italy in the Mediterranean. The joint penetration of Latin
America, though never very strongly emphasized, is not the least
150

LATIN AMERICA 151

among the objects of the anti-Comintern pact. Whether this totali-
tarian friendship will last in the long run is another question. Italian
influence in due course may become tributary to German influence.
But it is difficult to see how German and Japanese interests should
not clash eventually.

Both Germany and Japan are still too weak in the regions where
their interests conflict to compete seriously against each other in po-
litical influence. At present only German and Japanese tentacles
meet in India. And in South America, where the action of both
powers is already stronger, they must still combine in their attempts
to overcome the resistance of the United States. But in the western
as in the eastern hemisphere Germany meets Japan as the only
competitor she really regards as an equal. Accordingly, in the best-
informed German circles, interest for everything Japanese is very
strong.

But in the present study we must limit ourselves to German policy
in Latin America alone, somewhat artificial as is its separation from
Japanese and Italian policy in that area. The question arises: Why
does Germany really make such efforts in Latin America?

One reason undoubtedly is rooted in European affairs, in the
hostility of Germany towards Britain. Germany has not forgotten
the lessons of the last War. She rightly suspects that in a European
conflict the United States may prove in the end to be the decisive
factor. And she wants in this way to create trouble for the United
States nearer home so as to make it more difficult for her to interfere
in the Old World. This, like so many other lines of German policy,
is only a continuation of her policy during the War. Even in 1916
Germany attempted to draw Mexico into war with the United States
in order to prevent American intervention in France. What Ger-
many is doing at present is partly a repetition of that policy on a
larger scale.

It is a dangerous game. By threatening the United States in her
own sphere of influence, Germany may bind the American forces
but is sure at the same time to rouse anger against herself which may

152 THE NEW GERMAN EMPIRE

precipitate a more active policy on the part of the United States in
Europe. Such has in fact already been the case. But Germany hopes
to counterbalance that effect by stimulating the rise of Fascist and
semi-Fascist movements in the United States which would follow a
pro-German policy, and she places her hopes upon the next presi-
dential elections and the possible victory of the isolationists.

But a tactical thrust against the United States is probably not the
decisive motive behind German political expansion in Latin Amer-
ica. Something deeper and more general lies behind that. General
Haushofer and the school of "geo-politicians" he leads, who wield
such influence in German foreign politics, insist on the impossibility
of Germany's remaining a purely continental power, meaning by
"continental" not a power limited to the European continent but a
power limited in the main to action on land. Germany is admittedly
aiming at becoming a "world power," and she cannot become that
without being at the same time a land and a sea power. Even at this
early stage of German expansion, while Germany still accepts re-
strictions in naval construction, she aims at breaking through the
"continental narrowness" which, according to Haushofer, would be
her doom-
None of Germany's aims, as so far described, can truly be regarded
as transoceanic. South Africa and India are transoceanic possessions
for the British Empire, but in the German Empire they would be
linked to the mother country by land-route. South America, from
the German point of view, is truly transoceanic, and an extension of
the German Empire to these parts would give Germany the stand-
ing of a real world power in her own eyes.

Besides, and this is probably the main reason for the German drive
in Latin America, the countries concerned are an ideal field for
German permeation. All the other tropical and sub-tropical coun-
tries, with one or two exceptions, are colonies or at least definitely
dependent on one of the major powers. Only Latin America consists
of independent republics, and belongs to none outside herself. At
the same time most of the Latin American republics have not reached

LATIN AMERICA 153

such a state of development where it would be very difficult for a
strong modern power to permeate them. In every other part of the
world, with the exception of the south-east of Europe, Germany
must be prepared to fight some other power in order to gain posses-
sion. Latin America is the only area outside Europe where she can
intrude entirely by indirect means. Thus Germany has thrown her-
self eagerly upon this relatively virgin field of colonial expansion.

Let us begin our analysis of German penetration into Latin Amer-
ica with a few general figures about the progress of German trade
in those parts. Germany's share per hundred in the imports of some
Latin American countries developed as follows:

*9*3

7929

*933

*937

Argentine

16.9

11.5

10.0

10.3

Brazil

x 7-5

12.7

12.0

23.9

Chile

24.6

*5-5

II-4

26.0

Colombia

14.1

14.4

17.8

13.4

Guatemala

20.3

14.2

12.3

32-4

Mexico

13.1

8.0

12.3

15.6

Peru

17-3

10.0

10.3

187

Uruguay

^S

10.2

8.6

1 1. 1

Venezuela

14.4

9 .2

11.4

13.6

Germany's share

in exports

per hundred

to these countries was as

follows :

/9/j

7929

1933

Z 937

Argentine

12.0

10,0

7-7

6.8

Brazil

14.0

8.8

8.2

17.1

Chile

21.5

II.O

6.9

9-5

Colombia

9.4

2.1

5.0

12.6

Guatemala

53-o

39-8

35-5

174

Mexico

5-5

7.6

9.6

9-4

Peru

6.7

6.1

7-7

13-7

Uruguay

19.5

14.9

14.8

13.2

Venezuela

18.9

47

M

2 -4

154 THE NEW GERMAN EMPIRE

These figures reveal certain interesting aspects. Most important
among them, perhaps, is the fact that of the economically most
important countries of Latin America the Argentine can hardly be
regarded as a sphere of German economic influence. Incidentally, in
this as in many other cases, the figures for 1938 will be rather more
unfavourable to Germany, owing to the international trade recession
and the decline in the purchasing power of the countries concerned.
The Argentine in the political sense is as little a German zone of
influence as a commercial one.

In addition to little Guatemala, the most important German posi-
tion both in imports and exports is Brazil, where the figures still
improved for Germany in the first half of 1938. For some years
German imports headed the list for that country as also for Chile.
But in Brazil this position was lost again to the United States in
the second half of 1938. For reasons soon to be discussed, there is an
assumption that Germany in 1939 may become the greatest im-
porter from Mexico. In all other countries Germany's trade position
is not yet paramount and bears no comparison to her position in the
Balkans, where she usually takes between forty and sixty per cent
of the products of the countries concerned.

Besides, the trend both of German exports and of imports as
expressed in percentages is anything but uniform. It is true that the
absolute figures until 1937 rose practically everywhere, but in a
number of cases the German share has lagged behind that of other
countries. This is due to many reasons. The Germans since 1933 have
captured South American markets as it were by surprise, with the
help of intensive propaganda, undercutting their competitors with
the help of large State subventions, forcing their imports upon coun-
tries as a condition of taking their exports, etc. In this process Britain
was far more severely hit than the United States, though it is true
that certain German goods compete seriously with American prod-
ucts. Thus the sale of German motor cars from 1936 to 1937 rose
from 764 to 1835 in the Argentine, from 1172 to 1906 in Brazil, from
73 to 774 in Uruguay, and accordingly in other Latin American

LATIN AMERICA 155

countries. Office supplies are another item where Germany competes
keenly with the United States. But on the whole German trade has
done no harm to American business, while severely hitting British
exporters.

But now these exporters are making serious efforts to retrieve their
losses while the United States is taking measures against the German
commercial threat. At the same time Germany is now up against the
results of her own trade policy., the dissatisfaction of Latin Ameri-
can countries with the blocked accounts in so-called "Aski" marks
(blocked marks solely for trade between Germany and South Ameri-
can countries), against the passive balance of trade with Germany
enforced upon many South American countries, etc. Latin American
Governments are now in some cases making efforts themselves to
cut down trade with Germany. We shall see one dramatic instance
of this in the case of Brazil. Undoubtedly the German market is
essential for many South American products. Yet the position is not
so hopeless as in the case of the Balkans, where Germany often can
simply dictate her conditions. There are, in Latin America, very
important competitors.

The net commercial advantage for Germany has nevertheless been
considerable. In absolute figures, German exports to and imports
from Latin America (in million Reichsmarks) developed as follows:

Imports Exports

1932 443.8 235.1

1933 284.6 286.1

1934 419.3 265.5

1935 546,5 290.8

1936 534.5 508.5

1937 850.1 652.1

1938 809.7 622.7

The figures for 1938 are in a way misleading because they refer to
the old Reich only. They reveal the trend of a recession of German
trade, but owing to the German conquests in Europe, the absolute

156 THE NEW GERMAN EMPIRE

figures were still rising. Generally speaking, the figures show how ex-
tremely advantageous South American trade has been for Germany.

But in South America, less than in many parts of the world, Ger-
man trade is the decisive factor. There is one exception, the case o
Mexico, because there trading with Germany released the Govern-
ment from very serious political difficulties. Everywhere else, it is
German political permeation which constitutes the dominant aspect
of the German advance.

In the early stages, Germany concentrated her efforts upon Brazil.
Brazil has always been one of the most conservative of South Ameri-
can countries. It is the largest and most important power in the Latin
American world. Last, it contains a German minority of many more
than one million, concentrated mostly in the south, in the states of
Santa Catharina and Rio Grande do Sul, and intensely nationalist.

Getulio Vargas, the Brazilian president, holds extremely authori-
tarian views and was glad to accept German backing. Things came
to a head in the usual South American manner on the occasion of
the re-election of the president. In November 1937 Vargas, feeling
himself insecure and his tenure of office threatened, abolished by
coup d'etat the constitution and proclaimed himself dictator. The
Germans thought that they were very near winning out completely
in Brazil.

It is very difficult to see through the intrigues which preceded and
followed that coup. At any rate, the coup itself was supported to a
degree by a totalitarian party, the Integralists. The leader of the In-
tegralists was not Vargas but a certain Salgado. The movement dif-
fered from Nazism in certain ideological aspects. In Brazil, where
practically every race in the world is represented, and where all
freely intermingle, the idea of race purity must seem fantastic. The
Integralist programme does not envisage any race purity but on the
contrary an amalgamation of races in order to create a specifically
Brazilian type. But as, at the same time, the Integralists are very
anti-Semitic, the Nazis need not mind very much the dark spots of
Integralist dogma.

LATIN AMERICA 157

The main impulse behind Brazilian Integralism is an extreme
form of that hostility against western influences, both economic and
cultural, which at present is sweeping all Latin America. As in other
Latin American countries, so in Brazil the young nationalists hate
the United States, Britain, and France which have invested capital
in this country and determined its cultural physiognomy. "Out with
foreigners" is the slogan. Yet the Integralists look to Germany, Italy,
and Spain for inspiration.

As a matter of fact, the Brazilian Integralists are the only move-
ment in South America which can be regarded as properly Fascist
in any real sense of the word. Dictatorships are the most common
forms of government in South America, but not every dictatorship
is Fascist. In fact most of the so-called "revolutions" in South Amer-
ica are carried out without any participation by the masses. And
where, as in Mexico and Peru, there have been real mass movements,
they have been revolutions of the Left and not of the Right. In most
Latin American countries, feudal remnants and race cleavage create
much too large a gap between the classes (which at the same time
constitute different races) to allow of the formation of a unified
national movement. Latin American dictatorships, therefore, are
never in any real sense totalitarian. The dictator may be master of
the State machinery. But the State machinery is hardly ever the real,
complete master of the country. The influence of the Catholic Church
and, even more, the enormous distances and bad communications
make any ideological regimentation a thing beyond possibility. And
in the economic field, the countries concerned must be only too happy
if they find a sufficient amount of uncontrolled individual initia-
tive. The Fascist ideas borrowed by various Latin American dicta-
tors are only a thin veneer over entirely different systems of govern-
ment.

The case of the Brazilian Integralists, however, is different. This
is probably due, in part at least, to the absence of any colour line in
BraziL|Here the struggle of the natives against foreign influence
does not coincide, as in Mexico, with the struggle of the coloured

158 THE NEW GERMAN EMPIRE

people against the white inside their own country. Some measure
of national unity can therefore be achieved in Brazil.

At any rate, the establishment of dictatorship, not only by way of
fact but in principle, appeared to the Integralists as a prelude to the
establishment of their own totalitarian ideal. There was a good deal
of naivete in that calculation. Vargas is a typical Latin American
caudillo, caring for his personal rule and nothing else. After having
achieved power, he had no intention of giving it up in favour of the
Integralists. Disappointment led to a desperate determination on
the part of the latter, and in May 1938 an Integralist rising against
Vargas broke out in Rio de Janeiro. By surprise, it scored a con-
siderable initial success, but was defeated after a few hours. It proved
that in reality even the Integralists are something very different from
a true Fascist party. There had been litde undermining of the posi-
tion of the Government from within, and the Integralists had thor-
oughly misunderstood the Fascist method of seizing power with no
actual use of arms or very little. Theirs was an armed rising in the
typical South American manner, prepared in secret and executed
by a small group, with the general indifference of the masses.

The Germans themselves had been misled by the analogy between
Integralism and Nazism and had backed the wrong horse. They
had heavily supported Salgado, who had made the German colo-
nies in Santa Catharina his stronghold. Thus the Integralist rising
in one single day spoiled for Germany the results of many years of
tenacious effort. From that moment onward, relations between Brazil
and Germany have become clearly hostile.

Official Brazilian statements accused Germany of having helped
in engineering the rising, and a number of representatives of German ,
firms were arrested on a charge of high treason. German diplomatic
intervention led to the release of the men in jail and to a recantation
of the Brazilian Government in the matter of German complicity
in the rising. But Vargas did not let himself be stopped in his meas-
ures against the German community in Brazil. That community.

LATIN AMERICA 159

under very strong pressure, had been rigidly organized on Nazi lines
and was now forcibly broken up. Not only were their political and
cultural organizations dissolved, even their private schools were
closed. Worst of all, the Government initiated a drive to break up the
German settlements themselves and has attempted to scatter the
German colonists all over the country. Under such pressure there be-
gan a significant movement of Germans of Brazilian nationality
back to Germany.

Consequences in the commercial field were no less serious. Despite
her brilliant position in Brazilian trade, or rather as a consequence
of the methods by which she had acquired that position, Germany
had aroused a great deal of ill-feeling among the economic leaders
of the country. It was therefore easy for Vargas to strike back at
Germany in the sphere of finance. In June 1938 Germany owed Brazil
not less than forty to fifty million Aski marks. (As usual, it is im-
possible to convert this figure into dollars because Aski marks can
be used only for the purchase of German goods and have no value on
the open market.) At that moment the Brazilian National Bank
stopped all financial transactions with Germany pending the recov-
ery of the German debts. After a month of nervous negotiating, a
new agreement was reached. Brazil, after all, could not in the long
run dispense with the German market. It is not so much coffee,
Brazil's staple product, which matters in German-Brazilian trade
relations, but cotton and cocoa. Brazil has made serious efforts to
get away from her one-crop agricultural policy, but could hardly
have developed other crops, and especially cotton, without an outlet
in Germany. Yet in the renewed trade agreement Brazil obtained
exemption from the Aski-mark system for her cotton and cocoa.
These two products have since been paid for in free exchange.

Thus Brazil is one of the few countries which so far have pushed
back the German advance very successfully. While taking full ad-
vantage of the German market, Brazil has avoided becoming eco-
nomically subservient to Germany and at the same time has got rid

160 THE NEW GERMAN EMPIRE

o German political intrigues in a very thorough manner. In the
field of international affairs, the United States is the principal bene-
ficiary of this development.

But if Brazil is an instance of successful resistance, Mexico is an
instance of extremely successful German penetration. German efforts
in Mexico have been continuous since the advent of the Nazis and
have been little hampered by the revolutionary character of the
Mexican Government. German propaganda simply disregarded the
"Marxist" character of the Mexican revolution and maintained that
both Germany and Mexico had achieved their national revolution
and ought therefore to be allies. The very strong anti-foreign and
anti- Yankee feeling prevailing in certain sections of Mexican public
opinion gave this propaganda a chance. And in the context of en-
mity against the foreigners, even German anti-Semitic propaganda
went off all right. In a conflict with the Anglo-Saxon powers, Mexico
would obviously welcome any ally.

Yet in the purely political sphere the effect of this propaganda was
limited. Germany was still too far off to be very valuable as an ally.
More important, the Mexican Government is too emphatically "anti-
Fascist" to be likely to collaborate closely with Germany, though
the weight of these ideological antagonisms ought not to be over-
rated. Mexico is living under a dictatorship which might quite well
evolve on totalitarian lines, and it would then make little difference
whether or not the Government described itself as anti-Fascist. Yet,
the slogan of anti-Fascism has its importance in German-Mexican
relations under a different aspect.

While trying to convince certain elements in the Government
camp, the Germans at the same time did not refrain from support-
ing adversaries of the Government who are generally though inac-
curately described as "Fascists." Outstanding among them was Gen-
eral Cedillo, the governor of the state of San Luis Potosi in the
north. President Cardenas, with great energy, forestalled an immi-
nent rising of this governor, which was intended to be a counter-
part to the Franco rising in Spain. Public opinion was agreed that

LATIN AMERICA 161

the Germans had had their fingers in this pie. And when Cedillo's
rising collapsed right at the beginning, German prestige was in-
volved.

Yet Nazi Germany has always contrived to collaborate with two
hostile factions at once. In Mexico there were special reasons why
they could strongly influence Cardenas while conspiring with Ce-
dillo. Germany had helped the Mexican Government in its difficul-
ties over oil.

This is not the place to discuss the implications of the conflict of
the Mexican Eagle and of other oil companies with the Mexican
Government. One thing is certain: the development of the conflict
has brought to light how extremely dangerous it is at present for big
democratic countries to take strong action against their smaller
neighbours. For the result of Anglo-American action in Mexico was
to call the Germans in. The taxes imposed upon the oil companies
may have been unbearably high, as those companies maintained, or
acceptable, as was the view of observers friendly to the Mexican
Government. But at any rate Sir Henri Deterding and his colleagues
felt sure that in case of a rupture they would not be the losers, be-
cause the Mexican Government would be unable to sell and to ship
the oil it had expropriated. And this would in fact have been true
had there still existed that solidarity of the "capitalist" powers which
fifteen years before had prevented the Russians from getting foreign
loans at terms acceptable to them. But in the meantime Fascism had
arisen.

Germany was not interested in English and American claims. She
needed oil badly. She would be able to strike a favourable bargain
with Mexico, and at the same time, by helping the Mexican Govern-
ment out of its difficulties, would get a hold over it. This would se-
cure further oil supplies and a fine stronghold in the western hemi-
sphere.

The oil companies had calculated that even in case of Mexico's
finding buyers the companies would have a sufficiently strong hold
over the oil-shipping interests to make oil transport impossible. What

162 THE NEW GERMAN EMPIRE

actually happened was that an American firm, W. R. Davies, con-
tracted with the Mexican Government for the delivery of a very
considerable amount of oil of which by far the greater part went to
Germany and most of the rest to Italy. Transport was largely carried
out by Japanese tankers, and the German navy in 1938 was largely
fuelled with Mexican oil. In the course of the negotiations, the agree-
ment assumed ever wider proportions. The first amount mentioned
was two million barrels, but soon increased to twelve million and
finally to seventeen million barrels, of which fifteen million were
actually delivered to Germany in 1938. Mexican oil production in
1937 had been twenty-five million barrels, so that only ten million
remained for the Mexican Government to place, and of these a con-
siderable amount went to Italy and other countries. It is true that the
output of Mexican oil in 1937 was only a quarter of what it had been
in 1921, but at any rate the plan of the oil companies had been de-
feated. As a result, it is expected that in 1939 Germany will hold first
place in Mexico's imports. She is delivering to her in barter against
oil, heavy machinery, equipment for irrigation, agriculture, and re-
fineries, typewriters, office equipment, cameras, etc.

With that move, German influence in Mexico has become a serious
matter and is probably bound to grow. Mexico is perhaps the only
case where, owing to the special policy of the oil companies, German
trade methods have worked entirely in favour of German political
influence.

But German influence in Mexico is as nothing compared with
German influence in the small republics of Central America. Guate-
mala must definitely be regarded as a German zone of influence,
with the local dictator imitating Nazism to the best of his ability and
Germany predominating in trade. The situation in Honduras is not
very different, and El Salvador, under the ruthless rule of President
Martinez, is a real stronghold of joint German and Japanese influ-
ence. The manager of the State-owned Farm Loan and Mortgage
Bank is himself a German, while Italy provides aeroplanes and trains
pilots. German purchases from El Salvador are infinitesimal as com-

LATIN AMERICA 163

pared with American purchases, yet the political trends are heavily
against the United States. German and Japanese penetration in Nica-
ragua has not yet gone quite so far but is growing. These almost un-
noticed little backward republics constitute a serious danger spot in
view of the proximity of the Panama Canal and of the possible effect
of events there upon Mexico. The law of the German advance in
these parts of the world is simply that it is strongest where resist-
ance is weakest. That applies equally to the northern part of South
America. Thus Colombia is resisting German influence quite suc-
cessfully, whereas in Ecuador it is growing because of the success
of German trade. Peru, farther south, is an Italian preserve, but in
Chile German influence is strong again owing largely to the strong
colonies of German setders. It has, however, suffered a severe set-
back by the recent election of a Popular Front candidate to the presi-
dency.

Summing up this complex picture, a few conclusions emerge. In
trade, Germany, all over Latin America, is a serious competitor to
Britain but only a slight nuisance to the United States. In politics
it is the other way round. German, Italian, and Japanese intrusion
constitute a very serious threat to the Pan-American good-will policy
of the United States, and the effect of this intrusion in case of a large
international conflict would be quite incalculable. Certainly South
America would not again be a quiet backwater in the turmoil. Yet
the usual German methods of penetration are not fully applicable
in South America owing to Germany's incapacity to exert a physical
threat to any adversary in that area. That was very clearly brought
out in the German Brazilian conflict.

All Latin America, from the Rio Grande to Cape Horn, is swept
with German news, German radio, German whispering campaigns,
German goods, and German advice. Yet no Government in that
continent need give up its free hand to Germany. They all are under
the spell of the United States. Under these circumstances it is prob-
ably safe to say that German influence in Latin America both in
trade and in politics will decline wherever the large democracies take

164 THE NEW GERMAN EMPIRE

serious counteraction. Given such action, Fascist penetration into
Latin America will not constitute more than a second-rate influence.
Without it, it might be very serious even at the present stage.

All this would be different once Germany had won domination
over the European continent and broken up the British Empire.
Then the threat to the United States by way of Latin America would
become very strong and dangerous indeed. But at present this is only
a dream.

CHAPTER XII
CONCLUSION

EVEN in this short survey certain general aspects of German expan-
sion have come quite clearly to the surface, so that we have merely
to repeat a few conclusions which are scattered through our text.
Two facts are outstanding. German expansion is unlimited in its
aims; it moves in the direction of the weakest resistance much more
than in the direction of some definite object. But its final aim is
world domination. This advance in the direction of weakest resist-
ance links the first aspect of German expansion (its lack of limited
aims) to the second: German expansion is primarily political, and
economic in the second place. The military aspect, at least at pres-
ent, does not generally operate directly but only as a potential
threat.

This is tantamount to saying that Nazi expansion is primarily an
attempt at a Fascist world revolution stimulated and backed by Ger-
many. Here, and only here, lie Germany's chances. If all the coun-
tries threatened by her united against her, she would be crushed by
overwhelming force. She sets her hope in a disintegration of her ad-
versaries, in the supposed decline of democracy and in the revolt of
the more mature colonial and semi-colonial nations against the old
empires. However much she may lure her potential enemies into
temporary alliances, a fight along ideological fronts is the mainstay
of her policy. She could never, in the long run, put up with the exist-
ence of a democratic country. The breaking of the power of Britain,
France, and the United States is therefore her main aim.

Taken in itself, such a scheme of world revolution may hold out
splendid prospects. The disintegration of all existing political forms
is in fact considerable. German use of main force seems to play
merely the role of the midwife who sets the revolutionary forces free.
And the result might conceivably be a commonwealth of Fascist na-

165

166 THE NEW GERMAN EMPIRE

tions under German and Japanese guidance, built upon ideological
unity and economic division of labour.

But this ideal picture does not hold good in practice. It is not only
that the old powerful democracies cannot expect anything but disas-
ter from such a scheme. The small nations which Germany wants
to unite in a revolt against the old large countries are bound to suffer
as much or more. For there are forces inherent in Fascism of both
a psychological and an economic character which make it unfit as a
balanced and durable form of government. Germany may cleverly
use the interests and ambitions of others for the disintegration of her
adversaries, but once she comes to the establishment of her own
empire she quickly turns from a policy of co-operation between her-
self and her subject countries to a policy of ruthless oppression and
exploitation. It is probably safe to say that for such a policy she can-
not be strong enough in the long run. Putting the same idea in
broader terms: no power could ever be strong enough for such a
policy. Even the Romans and Persians ruled their vast empires with
a large measure of local self-government and their rule took account
of the legal, moral, and religious traditions of their subjects. An em-
pire which rules entirely by force is the worst of horrors. But fortu-
nately the worst of horrors can never last for long, even if it succeeds
for a time.

There is no use denying that the German ideal of a Fascist world
revolution is a challenge to our whole western civilization. If the
challenge succeeds, it will not be due to overwhelming force of arms,
but to the weakness of the moral, religious, and political impulses
of the opposing side. That such weakness exists is the basic assump-
tion of the German game, and, to a degree, it is an undeniable fact.
But whether resistance to Fascism will in the end collapse, or whether
values which have become somewhat time-worn acquire new vitality
in the struggle against Fascism, only the future can show. But even
if it collapses, the German sweep will probably have no more than
a disruptive and disintegrating effect. Unreason in history is always
followed by reason. Revolutions, after a period of violent reaction,

CONCLUSION 167

end in some sort of stability. But it is never the revolutionaries them-
selves who establish the new stable regime. It is impossible to say
how far the Fascist world revolution will go. But it is certain that
its heirs will not again be Fascist. Even if Nazi Germany sweeps
half the world or more, she will in the end collapse., owing to her
inherent instability. She would then have been the pace-maker for
some other regime not yet discernible.