EP 05 - Trading with the Enemy

Trading with the Nazis

- Episode 07-

‘It haunts me’

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'It haunts me'

14 February 2024

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NEW SERIES Trading with the Nazis

[photo] Kristallnacht, shop damage in Magdeburg, between Berlin and Frankfurt

Kristallnacht - the night of the long knives

Historian Simon Ball has shown that there were British and American companies, like the British Metal Corporation (BMC) for example, that made serious attempts to get out of Germany as the 1930s went on. They were horrified at the moral implications of being drawn into German rearmament. BMC was part of a sprawling network of 21 mining and metallurgical companies, connecting Britain to Australia, the Congo, Malaysia, Mexico, Canada and to the Metallgesellschaft conglomerate in Germany.

When in 1938 the Nazis forced the German head of BMC’s German operation Richard Merton to resign because he was Jewish, Managing Director of BMC, Oliver Lyttleton, flew to Frankfurt to try to disentangle his company from Germany altogether.

He arrived on the morning of 10 November 1938, the morning after Kristallnacht – when wild and vicious Nazi mobs were unleashed by Goebbels and attacked Jewish businesses.

‘It haunts me today,’ Lyttleton said in 1963. ‘The shops were attacked by these thugs, who threw the stock from the shops into the gutter, and added to them all the small household possessions … of the owner.’

As soon as he could, Lyttleton bribed the local Nazi chief and got Merton and two other Jewish people out to safety in Britain. He now did everything he could to extricate his business completely from Germany – though, as others discovered, the Nazis made it almost impossible to break the link completely.

[photo] German tank factory using raw materials supplied by British Empire

Hitler’s rearmament could all so easily have been halted in its tracks

From at least 1934 the British Committee for Imperial defence’s new Industrial Intelligence Centre was completely aware of the Germans’ desperate need for raw materials. So, as we’ve seen before, were the Americans.

But it was the British Empire that led the world in supplying the materials the Nazis wanted. Cut off the supply and there would be no war. In fact, there might within a short space be no Hitler either, whatever his bluster.

And here’s the thing. The Nazis needed to borrow money… so that they could finance industry… which could then export to Britain… so that they could obtain pounds sterling… which they needed if they wanted to buy raw materials from the British Empire. [Are you following?] They also needed pounds sterling to service their British debts.

So the British government either needed to ban raw material exports to Germany or ban lending to German industry. But it did neither.

#88 'It still haunts me' - Ep 7 Trading with the Nazis

Even in 1939, with war weeks away, the British banks were still offering new loans to the Germans

[photo] Benito (Duce from October 1922 ) and Adolf (Führer Aug 1934) - both died April 1945

Hitler and Mussolini were to be trusted like English ‘businessmen or country gentlemen’

This is what Etonian Tory Foreign Secretary Anthony Eden once explained to Ivan Maisky, the Russian Ambassador in London. It was Russians - Communists in other words - one couldn’t do business with.

To change a Communist, you would have to engage in an intellectual argument, which was a frightfully ungentlemanly thing to have to do. The British Establishment fondly believed, instead, that you could talk a Nazi round with a bit of manly banter.

The world’s economy might be in a mess. Hitler was seizing more and more of Eastern Europe. But everything could surely be sorted out if ‘reasonable men’ talked about it sensibly, over a cup of tea. [Or a glass of port – though Hitler was tee-total]

It was as if the whole threat of Nazism would be averted once Mr Hitler got around to accepting his invitation to the vicar’s fête.

After meeting Hitler in September 1938, Neville Chamberlain notoriously told his sisters that ‘here was a man who could be relied upon when he had given his word.’

#88 'It still haunts me' - Ep 7 Trading with the Nazis

[photo] 'Miss Threadneedle Street is wearing a permanent wave and not a great deal else...[she] appears in the act of removing her bath-robe' Evening Standard on new Lady of the Bank [of England] by Charles Wheeler 1930

British banking loans, protected by the Bank of England, did the most damage

Historians like Scott Newton and Neil Forbes have gone to significant lengths to prove the extent of British loans to Nazi Germany. Even in 1939, with war weeks away, the British banks were still offering new loans to the Germans.

At the outbreak of the war the Germans owed British banks £34m. About £2.7bn now. It’s a subject that’s been tricky to research since a great deal of evidence disappeared down the rabbit holes of ‘cloaking’ – that practice we discovered in an earlier discussion in which businesses hide behind each other, and behind fake companies, often in other countries, to dodge the regulations.

The British Bankers Association also insisted that resolutions regarding Germany were secret. The Bank of England did the same.

Many businessmen and industrialists were members of the new Anglo-German Fellowship which first met on 11 March 1935. It became a conduit to connect Reichsminister of Economics, Hjalmar Schacht in Germany directly with industrialists and financiers in Britain.

One prominent member of the Fellowship was Lord Lothian, who met Hitler in 1935. The American Ambassador in Berlin reported in January 1937, during yet another of Lothian’s visits to Germany, that he ‘is convinced that Hitler will not accept peace except at the price of domination of Eastern and Central Europe and the Balkans…. [Lothian] personally would like to see Germany get that domination.’ Well, not much room for doubt there.

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