Hitler and America. Klaus P. Fischer

foreign bonds that had been sold in the United States during the 1920s, but also profiting from these defaults and thereby financing their rearmament program. By defaulting to their American creditors, the Germans caused the value of the bonds to drop steeply in the American money market; the Germans then turned around and purchased the bonds at a fraction of their face value. They permitted their exporters to keep part of the dollars from their exports in America if they used them to purchase the bonds at low prices. The exporters could then sell the bonds to the German government for Reichsmarks, thus financing further exports. Hull estimated that 85–90 percent of these bonds were repurchased in America by Germany at a great loss to American investors. “In devilish fashion,” Hull noted in his diary, “the Germans tied in nonpayment of bond interest, depreciation of bond prices, redemption of bonds at their low prices, and subsidization of German exports and at the same time they were able to continue their enormous purchases of material that went into armaments.”²⁶ The historian Gerhard Weinberg did not exaggerate when he said that this amounted to forcing the American people to subsidize German rearmament.²⁷

       German Rearmament and Aggression

      The early skirmishes between the United States and the new Hitler regime, mostly over economic policies, subsided by the end of 1934. Hitler knew why. By the mid-1930s the United States gave every indication that it would avoid serious entanglements in the affairs of Europe and in the Far East. This isolationist mood manifested itself in 1934 when Congress passed the Johnson Act, which prohibited loans to nations that had defaulted on their financial obligations and set up the Nye Committee charged with investigating munitions makers who had allegedly dragged the country into World War I. There followed three neutrality acts in succession in 1935, 1936, and 1937. These acts prohibited the exports of arms, ammunition, and implements of war to belligerent countries. In cases of war between two or more foreign states, the president was required to proclaim the existence of such a state of war, at which time the exportations of arms became illegal. Violators, the act specified, would receive a fine of no more than $10,000 or imprisonment of no more than five years, or both. The act also contained provisions restricting travel by American citizens on belligerent ships during war.

      When Germany revealed on May 9, 1935, that it had reestablished an air force and also reintroduced conscription, the United States hardly made a peep, choosing to stand on the sidelines. Roosevelt hoped that the allied defenders of Versailles would take more decisive action, but the will to resist Hitler was too feeble. The Western powers were concerned enough, however, to convene a conference on April 11 at Stresa on Lake Maggiore. Mussolini still maintained that he supported an independent Austria, which he saw as a buffer against an expanding Germany. He called for more decisive action against Hitler than empty resolutions by the League of Nations. No real action, however, resulted from the Stresa Conference because the Western powers were too divided in their foreign policy objectives. In June the British negotiated a naval agreement with the Germans that tacitly permitted the Germans to rearm by letting them build up their submarine fleet to be on par with the British, though limiting the German surface fleet to 35 percent of the British. Hitler was pleased with Ribbentrop for negotiating this favorable treaty, but he had no intention of honoring it in the long run because he wanted to build up a large navy that had complete parity with the British navy.²⁸ London signed the Naval Agreement of 1935 in order to stave off the sort of naval race that had poisoned Anglo-German relations in the late 1890s, but the French and the Italians, who had not been consulted, regarded the British action as a breach of the allied unity that they thought had been achieved at Stresa. Both powers would henceforth pursue a more independent path when it came to their own security concerns. In the same month that the British and the Germans negotiated their naval agreement, the United States Senate could not muster a two-thirds majority that would have enabled the United States to join the World Court at The Hague. The measure failed as a result of a furious public relations campaign that had been waged against the internationalist legislation by the Hearst newspapers, Detroit radio priest Charles Coughlin, and isolationist senators such as William E. Borah, Hiram W. Johnson, and Breckinridge Long. It was a bitter defeat for Roosevelt and showed what a vocal and determined minority could do in blocking a more interventionist foreign policy. In October 1935 Mussolini invaded Ethiopia, and by so doing outraged the civilized world except for Nazi Germany. Anxious appeals by the Ethiopians to the League of Nations produced only meaningless resolutions. When the British asked for an embargo, the French balked. Mussolini got what he wanted, and more: an open invitation of Nazi friendship. Thus began Il Duce’s fatal embrace with the German dictator.

      Hitler became increasingly convinced by these events that the Western powers would do almost anything to avoid another war. With America in isolation and the Western powers indecisive and vacillating, he took his first major gamble, violating the Versailles treaty by reoccupying the Rhineland on March 7, 1936, justifying this step by saying that he was merely reoccupying German territory. The reaction by the allied powers was epitomized by Lord Lothian’s matter-of-fact observation that the Germans were “after all only going into their own back garden.”²⁹ The United States did not take a stand and justified its position by saying that it had not been a party to either the Versailles treaty or the Locarno Agreement of 1925.

      In the United States, 1936 was an election year. The Democratic platform echoed the prevailing isolationist sentiment by declaring that, “We shall continue to observe a true neutrality in the disputes of others,” and the president, in one of his few foreign policy statements that year, said on August 14, 1936, in Chautauqua, New York, “We shun political commitments which might entangle us in foreign wars; we avoid connection with the political activities of the League of Nations…. I hate war. I have passed unnumbered hours, I shall pass unnumbered hours, thinking and planning how war may be kept from this Nation.”³⁰ This “I hate war speech” was typical of Roosevelt’s sleight-of-hand approach because, while it roundly condemned war, it did not recommend ostrichlike isolation either, as is evident in the caveat, “We are not isolationists except in so far as we seek to isolate ourselves completely from war. Yet we must remember that so long as war exists on earth there will be some danger that even the Nation which most ardently desires peace may be drawn into war.”³¹

      At the time when Roosevelt was making these remarks about peace, the Germans were hosting the peaceful Olympic Games in Berlin (August 1–16, 1936). The games were a propaganda triumph for the Nazis. Anti-Jewish activities temporarily ceased all over Germany and the international community was impressed by how successfully the games had been managed by the Nazis. Hitler had by then restored economic prosperity and political confidence, and he was about to embark on three years of remarkable diplomatic triumphs. At the very time when the eyes of the world were focused on the Olympic Games in Berlin, Adolf Hitler composed a top secret memorandum in his aerie at Obersalzberg on economic strategy and rearmament. The document, which was greatly at odds with the Olympic spirit of peace and international goodwill, reflected Hitler’s impatience with the slow pace of German rearmament and his insistence that the German economy must be ready for war within four years. Hitler’s memorandum bluntly stated, “We are overpopulated and cannot feed ourselves from our own resources…. The German armed forces must be operational within four years. The German economy must be fit for war within four years.”³²

      While Hitler had war on his mind, Roosevelt thought of peace. In the spring of 1937 he sprang a novel idea on the German ambassador, Hans Luther. Why not establish a new and simple policy for rearmament that specified that no nation should manufacture armaments heavier than a man could carry on his shoulders? If followed, this policy should go a long way in preventing aggression. Luther passed along Roosevelt’s brainstorm, and so did Ambassador Davies, who stopped in Berlin before going back to Moscow. Davies later claimed that he saw Schacht, who allegedly told him that the president’s plan was “so simple as to be the expression of a genius.”³³ It was “absolutely the solution.” The ingenious plan, however, fell on stony ground with the führer.

      While Hitler was composing his readiness for “war in four years” memorandum at Obersalzberg, the spirit of peace prevailing at the Olympic Games could not gloss over the fact that bloody civil war was breaking out in Spain. The United States promptly announced a policy of strict nonintervention, prohibiting arms shipments to any of the warring factions. The Germans,