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IN their memorandum of the 27th April last the German Government state that, in making their offer in 1935 to limit themselves to a percentage of the British naval forces, they did so "on a basis of the firm conviction that for all time the recurrence of a warlike conflict between Germany and Great Britain was excluded."
2. The German Government justify their action in terminating the Anglo-German Naval Agreement of 1935, the Supplementary Declaration of 1937, and Part III of the Naval Agreement of 1937, on the ground that the attitude of His Majesty's Government in the United Kingdom showed that they now held the view that, in whatever part of Europe Germany might be involved in warlike conflict, Great Britain must always be hostile to Germany even in cases where English interests were not touched by such a conflict.
3. The question whether the attitude of His Majesty's Government can in any case justify the German Government in terminating these instruments without, at least, previous consultation between the two Governments is dealt with hereafter. It is not the case that in whatever part of Europe Germany might be involved in warlike conflict Great Britain must always take up an attitude hostile to Germany. Great Britain could only be hostile to Germany if Germany were to commit an act of aggression against another country; and the political decision, to which it is understood the German Government refer in their memorandum involving guarantees by Great Britain to certain countries, could only operate if the countries concerned were to be attacked by Germany.
4. In the memorandum from the German Government the claim is made to describe British policy as a policy of encirclement. This description is without any justification, and indicates a misunderstanding and misreading of British purposes which must be corrected.
5. The action recently taken by the German Government to incorporate certain territories in the Reich, whatever may have been held by them to be the justifying reasons, has undoubtedly resulted in a great increase of anxiety in many quarters. The actions subsequently taken by the United Kingdom Government have no other purpose than to contribute to the removal of this anxiety, by assisting smaller nations to feel secure in the enjoyment of their independence, to which they have the same right as Great Britain or Germany herself. The commitments which Great Britain has recently undertaken in pursuance of this purpose are limited, and as stated above could only become effective if the countries concerned were the victims of aggression.
6. Nor have His Majesty's Government either the intention or the desire to restrict the development of German trade. On the contrary, under the Anglo-German Payments Agreement a considerable supply of free exchange has been made available to Germany for the acquisition of raw materials. This agreement is as favourable to Germany as any which has been concluded, and His Majesty's Government would look forward to further discussion of measures for the improvement of Germany's economic position, if only the essential pre-condition could be secured, namely, the establishment of mutual confidence and goodwill which is the necessary preliminary to calm and unprejudiced negotiation.
7. The consistent desire of His Majesty's Government, far from being the promotion of a war with Germany, has been and is to establish Anglo-German relations on the basis of the mutual recognition of the needs of both countries, consistently with due regard for the rights of other nations.
8. But, while for these reasons His Majesty's Government cannot agree that there has been any change in their policy or attitude which would justify the recent action of the German Government, they must add that in their view the main object of the Anglo-German Naval Agreement was to introduce an element of stability into the naval situation and to avoid unnecessary competition in armaments.
9. For this reason the Agreements contained no provision for unilateral denunciation at the instance of one of the parties alone, but clearly contemplated termination or modification only by mutual consultation-a procedure which His Majesty's Government regret that the German Government have not seen their way to adopt in the present case. The Agreement of 1935, indeed, was expressly stated to be permanent in character, and His Majesty's Government would draw the attention of the German Government to the actual terms of the Exchange of Notes of the 18th June, 1935, which constituted the Anglo-German Naval Agreement of that year, from which both the character of the Agreement and the circumstances in which its modification was contemplated are made absolutely clear.
10. In the opening Note, Sir Samuel Hoare referred to the conversations which had taken place "the primary purpose of which has been to prepare the way for the holding of a general conference on the subject of the limitation of naval armaments." He then referred to the German proposal for a ratio of 100:35 between the fleets of the British Commonwealth and Germany and said that "His Majesty's Government regard this proposal as a contribution of the greatest importance to future naval limitation." He expressed the belief that the Agreement would "facilitate the conclusion of a general agreement on the subject of naval limitation between all the naval Powers of the world."
11. In his reply of the same date, Herr von Ribbentrop recapitulated the terms of Sir Samuel Hoare's Note and confirmed that it correctly set forth the proposal of the German Government. He expressed the opinion that the Agreement "will facilitate the conclusion of a general agreement on this question between all the naval Powers of the world."
12. The wording of the notes thus shows clearly that the Agreement was regarded as a contribution to the solution of the problem of naval limitation. If the German Government now allege that the Agreement has a different meaning, His Majesty's Government must observe that such an allegation finds no warrant in the terms of the Agreement itself, comprehensive and detailed though they were.
13. The Agreement was equally clear on the subject of its duration. In Sir Samuel Hoare's Note it is stated to be "a permanent and definite Agreement as from to-day." Herr von Ribbentrop in his reply stated that the German Government also regarded it "as a permanent and definite agreement with effect from to-day."
14. In paragraph 2 (a) of the Notes it is stated that "the ratio of 35:100 is to be a permanent relationship, i.e., the total tonnage of the German Fleet shall never exceed a percentage of 35 of the aggregate tonnage of the naval forces of the members of the British Commonwealth."
15. In paragraph 2 (c) of the Notes it is stated that "Germany will adhere to the 35:100 in all circumstances, e.g., the ratio will not be affected by the construction of other Powers. If the general equilibrium of naval armaments, as normally maintained in the past, should be violently upset by any abnormal and exceptional construction by other Powers, the German Government reserve the right to invite His Majesty's Government in the United Kingdom to examine the new situation thus created." This was the only provision which contemplated any general modification (i.e., apart from the special case of submarines) of the terms of the Agreement; and it will be observed that the only condition foreseen that might entail modification was a violent disturbance of the general equilibrium of naval armaments. Moreover, under the terms of the Agreement modification could even then only take place after the situation had been examined in consultation with His Majesty's Government.
16. The German Government, however, do not maintain that such a condition in fact exists. Still less have they invited His Majesty's Government to examine the situation before taking their action. That such consultation was essential is further clear from paragraph 3 of the Notes, which states that His Majesty's Government recognised Germany's right to depart from the 35 per cent. ratio in the circumstances contemplated by paragraph 2 (c) "on the understanding that the 35:100 ratio will be maintained in default of agreement to the contrary between the two Governments."
17. Even if the memorandum which the German Government have now addressed to His Majesty's Government is intended to be read, not as a denunciation, but as a statement of the opinion of the German Government that His Majesty's Government have so acted as to cause the Agreement to lose its force, His Majesty's Government cannot admit that such a plea could properly be advanced without any prior consultation between the two Governments as a reason for non-compliance with the express terms of the Agreement.
18. Considerations of a similar character apply to the German action regarding Part III of the Anglo-German Naval Agreement of the 17th July, 1937. This Agreement also makes no provision for unilateral denunciation or modification apart from the special cases contemplated by the so-called "escalator clauses" which are not here relevant. Apart from these, the Agreement is expressed to "remain in force until the 31st December, 1942."
19. This Agreement is, moreover, complementary to the London Naval Treaty of 1936, to which France, Italy and the United States are also parties, and to similar agreements between His Majesty's Government and other naval Powers. All these instruments have as their object the avoidance of a useless and expensive competition in naval armaments. This may arise by one country producing special types of ships to which others feel they must reply; or by uncertainty as to the actions and intentions of others and the suspicion that large numbers of ships are being built which must then be matched by competitive building on the part of those affected. The qualitative limits of these agreements are therefore designed to prevent useless competition in types, and the provisions for exchange of information are designed to destroy unfounded suspicions of excessive building. Even if the relations between two countries were not good, this would not appear to His Majesty's Government to afford ground for terminating an agreement which eliminates unprofitable competition, and prevents a wasteful race in armaments which can benefit neither party.
20. It is in the light of these considerations, presumably, that the German Government desire the "qualitative provisions of the Anglo-German Agreement of the 17th July, 1937, to remain unaffected." In principle, His Majesty's Government would share this desire: but they are bound to point out that the retention of the qualitative provisions alone will not suffice to create that feeling of mutual security, to which it was the purpose of the Anglo-German Agreement to contribute, and of which the provisions for the exchange of information were the expression. His Majesty's Government would, however, at all times be ready to consider with the German Government the possibility in the words of their Note of reaching "a clear and categorical understanding" on a sure basis.
21. From the terms in which the German Government announced their decision to retain the qualitative limits of the 1937 Agreement, it is not clear what are the exact limitations by which they consider themselves to be bound in the matter of cruisers. The qualitative limits of cruisers are fixed by Article 6 (1) of the Anglo-German Agreement of 1937 as 8,000 tons displacement with guns not exceeding 6.1-inch calibre, and it is by this limit that all signatory Powers of the London Naval Treaty of 1936 are also bound. Although Article 6 (2) of the Anglo-German Agreement of 1937 permitted Germany under certain circumstances to increase her 8-inch gun cruiser tonnage, she was in practice precluded from building more than five such cruisers by the limits of her quota under the 1935 Agreement. Now that the German Government have terminated the latter Agreement, the position with regard to cruiser limits is no longer clear, but it is presumed that the limit to which the German Government intend to adhere is that of 8,000 tons and 6.1-inch guns. The German Government are requested to confirm this assumption.
22. The past forecasts of strength at the end of 1942 and 1943 that His Majesty's Government have made to the German Government have been given solely for the purpose of implementing the provisions of the 1935 Agreement. It is clear that no further forecasts will be necessary since they were designed merely to allow Germany to make full use of her 1935 quota. But if Germany is to be no longer bound to the limit of 35 per cent. specified in the Agreement, it should be clearly understood that His Majesty's Government can no longer be bound by their past forecasts of strength, which must therefore be considered to be cancelled.
23. In the last paragraph of their memorandum the German Government declare that they are ready to enter into negotiations in regard to future problems, if His Majesty's Government desire to do so. As indicated above, there results from the recent German action a situation which is in some respects uncertain, and an exchange of views would help to clarify it. For instance, besides the question of tonnage and gun limits for cruisers, it is desirable to know whether the German Government intend to regard themselves as bound by all the articles of the Agreement of 1937 other than those in Part III.
24. If, however, what the German Government contemplate is the negotiation of another Agreement to replace those provisions which they have now terminated, His Majesty's Government would be glad to receive some indication of the scope and purpose which the German Government would consider appropriate to such an Agreement.
25. In particular His Majesty's Government desire to know, first, when, in the German view, discussions for the conclusion of such an Agreement should take place. Secondly, His Majesty's Government desire to know how the German Government would propose to ensure that any action in the shape of denunciation or modification of the new Agreement during the terms of its validity should carry the consent of both parties.