Economics and The Public Welfare

Chapter 72

International Political Relations in the Decade of the Thirties

The economic crash of 1929-1932 was accompanied, as we have seen, by a breakdown of international credit and by a great intensification of economic nationalism, which, of course, made the breakdown of international credit more complete. If goods could not move in international trade, and if the whole burden of paying debts had to fall on gold, then there was not enough gold available for the purpose, and international debts could not be paid.

The Breakdown of International Political Cooperation. With this came a great disintegration of international political relations, and a general failure of international political cooperation. The agreements and the treaties and the organizations, notably the League of Nations, which had been designed to make a peaceful world, proved feeble and undependable reliances. And the predatory governments, which had been held in check in the decade of the 1920’s, increasingly found that they had free hands. The first manifestation of this was in 1930 when Secretary Stimson’s protests against the occupation of Manchuria (called Manchukuo by the Japanese) met little response from Britain or from the League of Nations.

Germany and Italy Helpful Till Hitler Came In. Germany remained, so long as the democratic government lasted, a peaceful country whose government made every effort at conciliation. Mussolini, moreover, was a very good citizen of Europe from about 1930 down to the time of his Ethiopian venture.

In the winter of 1931-1932, representatives of the bankers of thirteen nations were sitting in Berlin extending the Standstill Agreement which they had made at the request of seven governments, namely, Belgium, France, Germany, Great Britain, Italy, Japan, and the United States. The Italian Government gave instructions to the Italian representatives upon that committee to cooperate in every way to bring about a workable settlement, and in particular to cooperate with the British and American bankers in resisting the unreasonable political attitude of the French banking delegation. The French representatives meanwhile, under instructions from their government, were constantly making political difficulties. The American banking group received no help at all from the American Government. The German Government cooperated with great loyalty.

Negative Attitude of France. The seven governments in their communiqué of July 23, 1931, in which they asked the bankers to make the Standstill Agreement, had promised “to cooperate, so far as lies within their power, to restore confidence,” but the promise was an empty promise so far as most of the governments were concerned, while on the part of France there was a negative attitude. In an earlier chapter we have seen the French turning from economic cooperation to political fears early in 1931 at the time of the German-Austrian Customs Union Agreement, and using their great financial power to tear down Austria and Germany instead of helping to save them.

If we could have got from France in the winter of 1931-1932 the concessions regarding reparations which she made at Lausanne in the summer of 1932, we could have saved the democratic government of Germany, and Hitler would not have come in.

Mussolini and Hitler, 1934. After Hitler came in, Mussolini cooperated for a time with the peace-loving countries of the world, notably when he moved the Italian army to the borders of Austria at the Brenner Pass in July, 1934, in a successful warning to Hitler to stay out of Austria. It was not until after the Ethiopian episode began at the very end of 1934 and in early 1935 that Mussolini turned from coöperation with France and England to a closer and closer relation with Hitler.

In the beginning, the relations between Hitler and Mussolini were somewhat comical. Hitler had taken Mussolini as his model, and Hitler meant to repeat in Germany the steps which Mussolini had taken in reaching supreme power in Italy. He was reported at one time as having been very much humiliated and outraged because President Hindenburg would not allow him to do what the King of Italy had allowed Mussolini to do at a similar phase of Mussolini’s career. Mussolini for his part is reported to have had a great contempt and dislike for Hitler, and on the occasion of Hitler’s first visit to Italy, June 14 and 15, 1934, is said to have remarked to one of his associates, after he had listened to a two-hour oration from Hitler, “His face is an insult to the universe.”

Ethiopia—British and French Weakness. After the ineffective resistance of Britain, France, and the League of Nations to Mussolini’s Ethiopian plans—resistance which came after Mussolini had already matured his plans, and had reason to believe that Britain and France would not interfere with them—Mussolini turned against the League, Britain, and France, partly in anger and partly in contempt.

The British had indeed allowed their naval strength to fall very low by the time of the Ethiopian episode. They had inadequate supplies of munitions on their naval vessels. They were not ready to fight. France, torn by political dissension and a growing pacifism, had allowed her military alliances, designed to keep Germany from aggression, to grow very weak. The first decisive symptom of this appeared on January 26, 1934, when Germany made a ten-year nonaggression pact with Poland. There were credible reports at the time that the Polish Government, before signing this Treaty with Germany, asked definite assurances of the French Government of adequate military support from France in the event that Poland failed to sign it, and that Poland did not receive these assurances.

Economic Nationalism: Ottawa, 1932, and London, 1933. On the part of the British Empire, the most significant move made in 1932, breaching international unity and coöperation, was the Ottawa Imperial Economic Conference of August, under which trade preferences were given within the British Empire to the detriment of outside countries. This had been preceded in February of 1932 by protective tariff acts in England, with the abandonment of England’s historical policy of Free Trade.

Our own Government, as we have seen, turned decisively away from international coöperation in 1933, when President Roosevelt wrecked the London Conference.

Baldwin, Mussolini, Ethiopia, and the League of Nations, 1935-1936. On June 7, 1935, Stanley Baldwin became Prime Minister of Great Britain and Sir Samuel Hoare Foreign Secretary. Immediately thereafter, on June 18, 1935, the British made an Anglo-German Naval Agreement under which Germany was to have not more than 35% of British naval tonnage. This gave up important provisions of the Versailles Treaty, and was very much resented in France. Tentative resistance by Britain to Italy on the Ethiopian matter continued through 1935. Anthony Eden visited Rome on June 23 and 24 of 1935, offering Mussolini concessions which were refused as inadequate. Italian-Ethiopian arbitration negotiations at The Hague (June 25 to July 9) produced nothing. The League of Nations Council on June 25 set September 4 as the date when it would itself begin to investigate the situation.

On October 3 Italian forces began the invasion of Ethiopia. On October 7 the League of Nations Council called Italy the aggressor. On November 18 the League of Nations voted the application of economic sanctions against Italy. On May 5, 1936, the Italian forces occupied Addis Ababa and the resistance of Ethiopia ceased. On May 9, 1936, the Italian Government formally proclaimed the annexation of all Ethiopia. On June 4, 1936, the League Council voted to discontinue sanctions. There was a complete collapse of international opposition to Italy’s defiance of the League.

Baldwin and Edward VIII. England meanwhile had preoccupations. Stanley Baldwin apparently forgot that he had the duty of rearming England, and that England had undergone an immense humiliation in her dealings with Italy. He was busy with the problem of Edward VIII.

Edward became King January 20, 1936. He was a very troublesome King. It was not merely that he wished to marry a woman regarded by the British Empire as an unsuitable Queen. He also undertook to interfere in minor ways in affairs of state. He failed to give the English people the ceremonies which they expected from the King. One distinguished British statesman said privately that he had told the King, “The British people are paying you to give them a good show, and you are not giving them a good show.” The King of England has no power. He is a figurehead. He must sign the documents his ministers present. He must go through laborious ceremonies. He must be a figurehead and a front.

From January 20, 1936, to his abdication on December 10, 1936, Edward was the central concern of the British Government, and especially of Stanley Baldwin. Meanwhile Britain did not rearm, though on April 30, 1936, plans for constructing thirty-eight warships were announced.

Hitler Reoccupies the Rhineland Without Opposition, 1936. Meanwhile Britain and France allowed Hitler, pursuing his systematic plans for undoing the Treaty of Versailles, to reoccupy the Rhineland with military force in March of 1936. At the same time the German Government denounced the Locarno Pacts of 1925.

Rome-Berlin-Tokyo, 1936. On October 27, 1936, moreover, the Berlin-Rome Axis was formed. In November of 1936 Hitler denounced the clauses of the Versailles Treaty providing for international control of Germany’s rivers, and announced also the conclusion of the German-Japanese Pact.

Hitler Begins Mass Production of Military Planes, 1936. On January 2, 1937, an Anglo-Italian Mediterranean Agreement was signed, but it led to nothing. The situation became speedily worse with the development of the Spanish Civil War and with the open flouting of nonintervention agreements by the Italian Government. Meanwhile, in 1936, Germany had begun the mass production of military aircraft. The British were experimenting with aircraft, were dissatisfied with the models, and continued for the next two years (down to the time of Munich) to improve the models rather than to produce aircraft.

Spanish Civil War. The Spanish Civil War broke out on July 18, 1936. One speaks with diffidence of the political forces in Spain, but it seems fantastic to describe the conflict as one between communism and fascism. There had, indeed, been a powerful anarchist movement in Barcelona even before the first World War, but the democratic government which had thrown out Alphonso and which was in control of the country at the time of the outbreak of the Spanish Civil War in 1936, was neither communist nor anarchist. It was rather democracy of the French Revolution type, and the issues of the Spanish Civil War were much more the issues of the French Revolution than they were issues of the twentieth century. General Franco represented a counteraction of nobles and an eighteenth century church and religious peasants against the anticlerical democracy of the cities. But it pleased Germany and Italy to look upon Franco as a fascist and Franco was very glad to have their aid. And it pleased Russia to look upon the Loyalists in Madrid as communists, and they were very glad to have Russia’s aid. They were glad, also, to get such aid as the Blum Government in France was willing to give.

In November of 1936 Germany and Italy recognized the government of Franco. Great Britain and France tried to pursue a policy of nonintervention, putting a ban on supplies to the legitimate government and attempting to bring about an international policy of nonintervention. This culminated in the Italian-British Mediterranean Pact, already referred to, of January 2, 1937, but led to nothing.

Democracy Dangerously Pacifist—England, France, and United States, 1936-1937. Democracy is pacifist, dangerously pacifist, in a world where there are powerful, aggressive, and ruthless autocracies. Young men in the British universities in 1936 were passing resolutions that they would not fight for King and country. Pacifism was rampant among young men in American universities. Pacifism was so widespread among the French people that there was doubt in the minds of the government as to whether the army would march if called upon to go into the Rhineland to drive Hitler out. The governments of England, France, and the United States preferred to close their eyes to the dangers threatening from the Berlin-Rome-Tokyo Axis created in 1936. In the United States in May of 1937 we passed the Neutrality Act, enlarging the statutes of August, 1935, and February, 1936, so that our law provided that when the President proclaimed a state of war outside the United States, the export of arms to belligerents was prohibited. Certain other materials designated by the President could be taken by belligerents only on a “cash and carry” basis, and all other exports to belligerents must be paid for with cash, even though they could be carried in American bottoms. No American loans were permitted to warring powers, and American citizens were forbidden to travel on ships of belligerent registry. This was a deliberate surrender of our neutral rights, and of the “freedom of the seas,” for which we had fought in 1812, and for which we had gone to war in 1917 under Woodrow Wilson. We vainly thought we could insulate ourselves from the troubles of Europe and Asia by expedients like these.

Our legislation put a premium upon the construction of plants for building munitions, naval vessels, aircraft, and so on, in every foreign country. If foreign countries could not count on purchasing munitions abroad when war came, then they must either make themselves into arsenals or go under. Germany, Japan, and Italy did move rapidly in making themselves into arsenals, but the democracies did not.

Secretary Hull Alert to the Danger. Not all of us were blind. Secretary of State Cordell Hull knew early, almost as soon as the Berlin-Rome-Tokyo Axis was formed, that anything which he said to the German, Japanese, or Italian Ambassador was known to the other two governments immediately. The Secretary of State was gravely concerned long before the country was aroused from its fantastic dream. President Roosevelt came to share these fears. He ought, of course, to have vetoed the neutrality legislation. He did ask for modification of the Neutrality Act in June, 1939, but the Congress failed to act.

Russia. Russia’s course in the international picture in the 1930’s, viewed in retrospect, shows probably more consistency of purpose than was apparent at the time. To the outside world Russia was a dark country, keeping her secrets well, and arousing continual apprehension, partly by her secretiveness, and partly by her propaganda for communism in other countries through the Third International. English opinion vacillated between fear of Germany and fear of communism.

Early Bolshevik Policy Uses Up Russia’s Physical Capital. The early efforts of the Bolsheviki in managing Russian economic life were farcically tragic. They deliberately ruined the money of the country and they precipitated an economic collapse in 1921. Then Lenin turned to the “New Economic Policy” with the effort to give Russia a good money to operate with again, and with a large place for private trading. Revival came, but by late 1926 and early 1927 it became apparent that Russia was using up the capital which she had inherited from the Czarist regime without replacing it.1

Lenin died in January, 1924. The two or three years that followed represented a struggle between Stalin and Trotsky for control, ending with Stalin’s decisive victory in December, 1927.

Russia’s “Five-year Plan,” 1928. Stalin was much more interested in developing Russia internally than he was in spreading communism throughout the world. In October, 1928, Stalin announced the first five-year plan. Russia needed capital, in the sense of physical instruments of production, of plants and equipment, dams and turbines, of products of the heavy industries. Russian industry was producing less than was needed for the consumption of the people. The five-year plan curtailed production of consumers’ goods still more, diverting Russia’s industry from producing hats and shoes to producing machines. The people suffered, but the physical capital was created. Agriculture was turned toward collective agriculture and state farms, with the elimination and “liquidation” of the kulaks, the peasant farmers who had some capital of their own. The cost was high, the waste was great, the human suffering was immense; but Russia built up her capital equipment. The first five-year plan of 1928 was followed by other vast plans, carried out with greater efficiency.

Russia Turns toward Western Powers, 1932. Russia had seemingly cared little, in the period of the 1920’s, about outside public opinion, but in 1932 she had become alarmed about the activity of Japan on her eastern borders and she turned toward consultation with the Western powers. In July of 1932 she made nonaggression pacts with Esthonia, Latvia, and Finland. She took part, also, in the Disarmament Conference, February to July, 1932, and she made a nonaggression pact with France in November of that year.

In November of 1933 the Government of the United States gave recognition to the Soviet Government of Russia, and the Russians promised to abstain from propaganda in the United States. In September of 1934 Russia joined the League of Nations, which previously had been very much hated in Russia.

Russia and Hitler. While the rest of the world vacillated over the international significance of Hitler’s coming to power, Russia had no illusions, and she immediately began to direct both her political and economic activities toward preparation for a war with Germany which she feared was inevitable. The Russians had read Mein Kampf and took very seriously Hitler’s threats of expansion to the East and his hostility to communism. Trade relations with Germany continued and even expanded, but Moscow armed.

Russian Alliances: France and Chechoslovakia, 1935. In June of 1934 Moscow made agreements with Czechoslovakia and with Rumania. On May 2, 1935, Russia and France made an alliance, and on May 16 Russia made an alliance with Czechoslovakia which obliged Russia to come to the assistance of Czechoslovakia, provided France decided to act. This agreement created great anger in Germany.

At the meeting of the Third International, in July and August of 1935, it was decided that Soviet Russia, in view of the growing tension between the democratic and fascist states, should throw its weight on the side of the democracies against the common enemy. At the outbreak of the Spanish Civil War, in July of 1936, the Russian Government at once took the side of the Madrid Government.

Russian “Purge” of 1937. Moving toward the democratic governments against the common enemy, Russia none the less used measures which shocked and outraged the democratic governments. The purges of January, 1937, were very shocking. On June 12, Marshal Tukhachevski and several other generals of the highest rank were executed after a secret court-martial. They were accused of conspiracy with the Germans and Japanese. There followed further purges, in the course of which Trotskyites and others objectionable to Stalin were liquidated. The outside world was shocked, and the opinion prevailed for a time that Russia was undermining her own military organization and military strength by killing her high ranking generals.

Divided Opinion in England—Germany vs. Communism. There were important elements in Britain which looked upon Germany as a safeguard against Bolshevism. There was, moreover, in England a good deal of sympathy with certain phases of Hitler’s so-called social reforms, notably the “youth movement.” The head of a college of one of the great English universities was enthusiastic about what Hitler was doing for the youth of Germany as late as May of 1937. The head of the college had just returned from an extended trip to Germany. He had been taken around. He had been shown the scenes. He had seen the physical health and enthusiasm of the young people in the youth movement. He did not know the sinister character of the German youth movement. He had swallowed whole what the Nazi had told him. He thought that Hitler was a great man.

There was, too, in 1936, when Hitler went into the Rhineland, no inconsiderable sentiment both in England and France that, after all, you could not keep Germany down forever, that a nation had a right to its own territory, and had a right to move its army wherever it pleased within its own territory. Democracies are dangerously pacifist.

Progressive Disintegration in France. Meanwhile there had been a progressive disintegration in France. The appalling parliamentary system of France meant short-lived ministries. Scandals arose. In December, 1933, the Stavisky affair shocked France and in February of 1934 there were serious riots in Paris and other cities resulting from it, and a general strike. Foreign Minister Barthou made a grand tour of European capitals, April to June of 1934, in the hope of building up a strong alliance against Nazi Germany, but on October 9 he was assassinated at Marseilles, along with King Alexander of Jugoslavia. France did, however, conclude an alliance in May of 1935 with Soviet Russia, as we have seen.

Meanwhile financial difficulties multiplied. The inveterate French habit of fiscal deficits, which Poincaré had brought to an end in 1926, was resumed. There was immense discord among the French people. Bitterness between the extreme reactionaries and the extreme radicals was probably more intense in France than in almost any other country. Moderate men in France could form ministries, but without dependable majorities behind them.

The Blum “New Deal.” The various radical groups in parliament united to form the so-called “Popular Front” in November of 1935. In May of 1936 parliamentary elections gave the Popular Front a majority and the first Popular Front ministry was formed on June 5, 1936, under Leon Blum. Then came appalling disorders. There was a great wave of sit-down strikes. On June 12 the 40 hour week was established. The Bank of France was nationalized. There was a suppression of Fascist groups (June 30). There was a nationalization of the munitions industry (July 17). Compulsory arbitration of labor disputes was provided for, and workmen were to be given vacations with pay.

The 40-hour week brought a catastrophic rise in production costs in France. It led in one case to a 30% increase in personnel in a building. In a second case, where profits were already too low, it led to a 22 1/2% increase in total costs, and in a third case, a factory, it led to a 60% increase in labor costs, which meant a 30% increase in total costs. A violent business reaction came.

The financial difficulties of the government grew, the franc weakened in the foreign exchanges, and on October 2, 1936, a bill devaluing the franc but not definitely fixing its gold content was passed. In March of 1937 Blum was obliged to announce a “breathing spell” in the French New Deal, and from then on government policy moved toward undoing and relaxing the rigor of the sudden drastic legislation. But the damage was done. France was decisively weakened. Military aircraft production, which had been nationalized by the Blum legislation, fell virtually to zero, and it was reported that the French Government had established aircraft plants in Switzerland in order to get away from the restraints of the French labor laws. The French franc, which had been so strong from the autumn of 1926 through 1934, had lost its prestige, and the flight of capital from France had been resumed.

Hull Keeps Up Tariff Reduction Efforts. Hope remained that even Germany and Italy might be brought back into the concert of nations and into the current of world trade and world finance. Secretary Hull believed, correctly, that if nations could work for their raw materials, producing goods and sending them out to get foreign products they needed in the free markets of the world, they would not need to fight for them, and that by turning Germany and Italy toward the free exchange of goods with the world again, and toward the interchange of products in fair multilateral trade, much could be accomplished.

Neville Chamberlain and the “City” of London. Hull’s most serious obstacle in bringing about reciprocal trade agreements in Europe in early 1937 was England rather than Italy or even, for that matter, Germany. Neville Chamberlain was Chancellor of the Exchequer in early 1937, and on May 28, 1937, became Prime Minister. Chamberlain was the inadequate son of a strong father. His father, Joseph Chamberlain, had led the fight in 1906 for protective tariffs in England and had been defeated. Neville Chamberlain sought to continue his father’s tradition. It was possible, however, to arouse the “City” of London, namely, the financial district, to put vigorous pressure on Chamberlain in the direction of freer trade, and in November of 1938 Hull was able to bring about a trade agreement involving Great Britain, Canada, and the United States. In early 1937, however, England’s delay on this point was a factor in keeping both Italy and Germany from making the necessary moves toward reëntering the world trade picture.

Hitler’s Decision to Make No Compromise Probably Came in June, 1937. In retrospect, it seems probable that Hitler’s decision to resist all efforts at conciliation and to move definitely toward domination, by bluff if possible, by war if necessary, came in June of 1937. England still looked very strong then. Her prestige was great and she herself had little apprehension of the German danger. Dr. Schacht in Germany, who was both head of the Reichsbank and Minister of Economics, was extremely anxious to turn Germany from her isolationist economic course, and from controlled exchanges, back to the current of world trade. He was extremely anxious, also, to have Germany at peace with the world instead of multiplying antagonisms. He had worked for a good many weeks to secure from the British Government an invitation to Baron Constantin von Neurath, the German Foreign Minister, to visit London to bring about an understanding with England regarding various matters, including the Spanish Civil War, and to pave the way for better economic relations. The British were not anxious to extend the invitation, but it was extended and accepted. Schacht’s hopes were high.

On June 21, 1937, Hitler suddenly cancelled Neurath’s visit to London.2 The excuse given was that other powers would not act against Loyalist Spain over the alleged submarine attack on the cruiser Leipzig.

Why did Hitler cancel this visit? The probable explanation is that Hitler had suddenly concluded that neither Russia nor France need any longer be feared. It was on June 12 that the Russians had executed Marshal Tukhachevski and the other seven Generals of the highest rank. There had been, moreover, in late May and early June renewed weakness of the French franc in the foreign exchange market. Hitler was no longer afraid. His cancellation of the visit of von Neurath on June 21 seems, in retrospect, to have been the decisive turning point.

Hitler’s judgment was good. He met no effective resistance from then on until the war itself came.

Schacht’s influence in German affairs waned. In November, 1937, Walther Funk replaced Schacht as Minister of Economics, though Schacht remained President of the Reichsbank. By early 1939 he was out of the Reichsbank also, though Hitler had refused to release him from the Cabinet, where he remained a minister without portfolio.

The German Annexation of Austria. In March of 1938 Hitler invaded and annexed Austria with the acquiescence of Italy, and with no show of resistance by any other power. Mussolini had visited Hitler in Berlin in September of 1937, and in May of 1938, Hitler had visited Mussolini in Rome.

Munich, September, 1938. In May of 1938 the first Czechoslovakian crisis came. In September of 1938 came the great Czechoslovakian crisis. Chamberlain and Daladier, the Prime Minister of France, visited Hitler and Mussolini in Munich to surrender meekly. Roosevelt made appeals to Hitler and Mussolini. War was averted. Chamberlain brought home Hitler’s signed agreement that England and Germany would not fight. A great gloom fell over the world.3

European Opinion after Munich. The question was asked in several European capitals shortly after Munich, “Is it a peace or is it a truce?” In London the explanation was that Britain was not ready in the air but was determined speedily to be ready, and there would be peace because England would be strong enough to assure peace. One cynic, however, said, “It is a peace because when Hitler makes a new demand it will be yielded to, and when he makes yet another demand, it will be yielded to.” A high official in Paris said, “It is a truce. In 1936 governmental opinion was ahead of public opinion. We should have struck then, of course, but the people were not ready. This time public opinion was in advance of governmental opinion. The people are ashamed of what the governments have done. Next time public opinion will force the governments to stand their ground.”

There was little appreciation on the Continent of the immense military power of Hitler, even after Munich. Swiss and Dutch opinion both held that England had been unduly afraid of Hitler’s aircraft. One distinguished Dutch statesman said that the Spanish Civil War had proved that cities could not be conquered by aircraft, that it took an army and artillery to capture cities. He felt that England had yielded unnecessarily. He was sure that Holland could be defended in the event of a German attack. On a great map of Holland he showed where he would cut his dikes, if necessary, to flood the country to stop the German army. France felt quite serene behind the Maginot Line, though there were French workingmen who said that France could not afford a forty-hour week when the Germans were working sixty hours. There appeared to be more concern and more courage among the humbler people, both in France and in England, than in high places, after Munich.

Russian Reaction to Munich. Russia’s role in 1938 was not a conspicuous one. Russia was not included in the Munich Conference. Distrust had arisen again. It was said in London that when the Russians were asked, before Munich, what they would do if Czechoslovakia were attacked and England and France moved to her aid, the Russians had said, “We will do our bit.”

But when they were asked for specific information as to how many divisions, how much aircraft, and so on, they would have available, they were uncommunicative. The British excused leaving Russia out of the picture on this ground. The Russians deeply resented being left out. Benes of Czechoslovakia said at the time that the Russians had been entirely loyal. The Russian-Czechoslovakian agreement was predicated on action by France. The great bitterness of the Czechs was directed toward France, though they were very bitter toward Britain also.

The Munich crisis of September, 1938, gave Hitler three million Germans of the Sudeten region of Czechoslovakia. On March 15, 1939, Germany occupied Bohemia and Moravia. In March of 1939 Hitler made demands on Poland with special reference to Danzig. The firmness of the Poles and the alarm of Britain and France made the Germans hold back. German demands on Poland continued.

Litvinov Dropped, May 3, 1939. On May 3 Maxim Litvinov was dismissed from the Russian Ministry of Foreign Affairs after eighteen years of service. Litvinov had tried hard to bring Russia into the concert of the democratic powers. At Geneva and the League of Nations he fought valiantly for vigorous League action toward suppressing aggression. As Russia came again to distrust the Western powers, Litvinov came into disfavor. He was too much an internationalist and too little a Russian in the minds of men who knew only Russia, and he was replaced by Molotov, who was said not to have traveled in foreign countries. Distrusting the democratic Western powers, Russia turned to playing her own game.

German-Russian Nonaggression Pact, August, 1939. On August 20 and 21 of 1939 a trade pact was concluded between Russia and Germany and an announcement was made of a forthcoming nonaggression pact, concluded August 23. Stalin’s later explanation of this was that he knew war between Russia and Germany was inevitable and that he wished to purchase time.

War Begins, September 1, 1939. With this elimination of Russia from all alliances with France and England, Hitler felt free and all-powerful, and war between Germany and Poland began on September 1 without formal declaration, while on September 3 England and France declared war on Germany.

• 1This point will be discussed at length in Chap. 34.
• 2I have not been able to find that this article was ever published. However, the reader will find much of it in two books by Veblen: Imperial Germany and the Industrial Revolution, New York, 1915; and The Nature of Peace and the Terms of Its Perpetuation, New York, 1917.
• 3See my book The Effects of the War on Money, Credit and Banking in France and the United States, published by the Carnegie Endowment for International Peace, Oxford University Press, New York, 1919. For London, see the interesting articles by Mr. J. M. Keynes in the British Economic Journal in late 1914.