123 Mr S. M. Bruce, High Commissioner in London, to Mr J. A. Lyons, Prime Minister

Letter LONDON, 16 December 1937

PERSONAL MOST SECRET

I enclose herewith a record of a long conversation which I had with, the, Prime Minister [2] on Tuesday last [3] with regard to the rearmament position in Great Britain. Attached to the record are the notes I made before my interview. [4] While I did not use these notes in my conversation they were so clearly in my head that I more or less followed them. I did not give to the Prime Minister all the figures which appear in the Notes I gave him rather more of them than appears from the record of the conversation, and in every case even if I did not give him the exact figures I gave him percentages or the proportional relationship to other countries. This point is of importance because the Prime Minister in no way challenged any of the figures which I had used. This, of course, does not mean that he accepted them all, as no doubt they were not all in his head but I am quite clear that the position was broadly known to him and that he was aware that it was approximately as I indicated even if not absolutely.

I have no doubt that the facts will be a considerable shock to you. They are certainly not known outside a very limited circle in this country. The general public is under the impression that now we have set our hand to rearmament we are rapidly making up our deficiencies and overtaking other countries. They have, I fear, a comfortable feeling that if the trouble can only be staved off for another year or so that we shall then be in a position to cope with any trouble that might arise.

The question which must inevitably arise in your mind after reading the enclosures is what step should the Australian Government take in the matter. My own view is that for the moment you should do nothing. As I say in the comment at the end of the record of my conversation with the Prime Minister, I am fairly clear that he does now grasp the seriousness of the position and he will probably immediately go into the matter himself. If he does I think we may anticipate immediate results.

The position here is a very different one since the change over from Baldwin. [5] In Baldwin's day everything was allowed to drift and there was no directing mind with regard to the Government's policy. With the advent of the new Prime Minister all this has been changed and he is personally playing a very active part with regard to all major questions. He has already taken a firm grip with regard to Foreign policy and our relations with other countries and it is the Prime Minister himself who is behind the moves which have recently taken place in the International sphere.

Up to date with the many other preoccupations which he has had, I do not think he has had time to take a hold of the rearmament question. I also feel that he had not realised the seriousness of the situation and the necessity for some accelerated action. I think he now quite clearly appreciates the position and I anticipate he will immediately take a hold of the problem himself.

If he does so I feel fairly happy that we shall see a very marked improvement in the situation so far as Air Defence is concerned, by which I mean the more rapid production of the necessary A.A.

guns and other defence requirements. This is a problem that his practical mind is well fitted to deal with and provided I am right in my impression that he is now alive to the necessity for action, I would regard the Prime Minister as probably the best conceivable person to deal with the situation.

With regard to the other equally necessary action, namely in connection with Air Protection, I am doubtful whether the Prime Minister is the right man to deal with the situation. To bring about a great acceleration here will need drive, imagination and a power of public appeal. These qualities are not the ones with which the Prime Minister is preeminently endowed. I feel here, however, we must wait to see what happens.

The Minister mainly responsible would be Sam Hoare, as Home Secretary. He is tremendously ambitious and is working strenuously to obtain for himself the succession to the Prime Ministership.

Action in connection with Air Raid precautions would afford him a great opportunity and possibly he may take advantage of it, but again, he has hardly the qualities which are necessary for the task.

The answer to the question I have put above, namely what should the Commonwealth Government do, is, I suggest for the moment, nothing. It is necessary to wait and see what results from my conversation with the Prime Minister. if, however, by the time you have received this letter, which will not be until the later part of January owing to the necessity of my sending it by sea, there appears to me that any useful action could be taken, either by a direct communication from yourself, or by my seeing the Prime Minister on your behalf, I will cable to you.

There is no need for me to stress to you how confidential and even explosive the information is which I am sending in this letter. I would strongly urge that you should not disclose it save to perhaps one or two of your colleagues such as Menzies and Casey.

[6] In regard to the latter it is desirable that he should know the facts as I indicated to him in one of my telephone conversations that it appeared to me possible that Australia might have to go even further than she has with regard to her Defence expenditures but when telling him this I indicated that the reasons for my view were of such a confidential character that I could not communicate them to him over the telephone.

S. M. BRUCE

1 On 10 February 1938 Prime Minister Lyons acknowledged receipt of this letter in a letter to Bruce saying that he proposed 'to go very fully into the matter' with H.V. C. Thorby (Minister for Defence) and F. Shedden (Secretary of Defence Department). See AA : AA1976/556, item 6(1). On 11 February copies of Bruce's letter, with the enclosure, were sent to Thorby, Sir Earle Page (Minister for Commerce) and R. G. Menzies (Attomey-General).

2 Neville Chamberlain.

3 14 December 1937.

4 Not printed; see AA : A463, 57/1535.

5 U.K. Prime Minister June 1935-May 1937.

6 R. G. Casey, Treasurer and Minister in charge of Development.

Enclosure

Note by Mr S. M. Bruce, High Commissioner in London, of Conversation with Mr N. Chamberlain, U.K. Prime Minister

LONDON, 14 December 1937

Saw the Prime Minister [1] and told him that I was very disturbed at what, I had been able to gather as to the progress of rearmament in this country. That while the matter had been in my mind for some time I had waited to approach him until the Elections in Australia were over. That obviously how far Australia could stress its point of view was dependent upon whether the Australian Government was prepared to co-operate with the British Government to the maximum extent or not.

Now that the Election was over, however, it seemed to me imperative that I should put the position to him as I saw it, as the time had now arrived when I must communicate with my Government and place the facts before them as I saw them.

Before doing this I naturally wished to be either reassured that the position was better than I saw it, or if not, to be in a position to give to my Government some indication of what steps were being taken by the British Government to remedy the situation.

I told him that I of course appreciated that the matter was one for the determination of the British Government but that at the same time recognising as we do that our safety is wrapped up with the safety of these islands, we had a very definite interest in what happened here. I added that I further felt we were entitled to express our views as if my understanding was correct, the Australian Government were prepared to co-operate in regard to Defence to the maximum extent within its power. That it would be quite prepared to sit down and discuss with the British Government whether what Australia was doing was a reasonable and proper contribution to the problem of mutual defence, having regard to the financial and economic position of the two countries, and in particular to the great accumulated wealth of the United Kingdom.

I told him that I had deliberately not discussed the question with his Service Ministers or any other Member of his Government until I had placed my views before him.

I also stressed to him that the information which I proposed to put before him might not be in all respects correct as I had taken no special steps to obtain information, but what I would put to him was merely the result of my observations through attending some C.I.D. meetings, and from perusing the various papers that had come before me and from enquiries I had made and facts I had gleaned outside official sources.

I warned him I was afraid I would have to talk to him at great length but it seemed essential that I should put the position to him as I saw it.

He acquiesced in my doing this and I talked at him for about half an hour without any interruption from him at all, save when I was dealing with the pledge that Baldwin gave about the Air. [2] He pointed out that Baldwin's statement had been equality with any other Power and not a combination of Powers. The story as I put it to him was as follows. That there were three angles from which the Defence problem could be regarded.

The first was the defence of the Empire.

With regard to this my view was that the Navy was probably in as strong a position as it had ever been. It was true that none of us knew at the present moment exactly what was the potential danger from the Air to surface ships. That I anticipated in the next war we should get some rude shocks as to the possibilities of air offence against ships but that that would probably be confined to the narrow waters in which I would include the Mediterranean. I felt, however, that this menace was not a serious one in the wide oceans and in view of that fact and the strength of the Navy I thought we could look with considerable equanimity at the position so far as the protection of the territories of the Empire and the trade routes of the world were concerned.

With regard to the Army, I felt that if we could ignore the problem of the defence of the British Isles we either were or very soon could place ourselves in a position where the Army could meet all the obligations which would fall upon it for the defence of the Empire. I added that I thought similar conditions applied to the Air Force as applied to the Army.

In the summing up of the first of the problems of Defence, namely defence of the Empire, I indicated that in my view the position was satisfactory.

The second problem I put to him was our obligations outside the Empire, in particular in the Near East and I stressed the problem that Egypt, Palestine and the neighbouring Arab countries presented.

With regard to this problem I said that in my view the naval position was satisfactory although there was something of a problem with regard to a base at the eastern end of the Mediterranean and in the Red Sea, now that Italy was established in Northern Africa.

With regard to the Army and the Air in connection with these obligations outside the Empire I felt that if we could ignore the problem of defence of the British Isles we could without great difficulty take all the steps necessary to place us in a position of meeting any obligations that were likely to fall upon us.

I then dealt with the third problem, namely the defence of the United Kingdom.

I told him that that seemed to me to be serious and that it would not be exaggerating to say that it was alarming. It seemed to me to be a problem of the Air, and that the story of what had happened during the last three years was certainly a very sorry one.

Baldwin, when Prime Minister, in March 1934 [3] had made an unqualified statement that if Britain's suggestion with regard to disarmament were not accepted then any Government in this country, above all a National Government, had the obligation to ensure that Britain was as strong in the Air as any country within striking distance of her. Notwithstanding this specific undertaking, however, and many statements that had been made during the currency of the past three years the position in January 1938 would be one that must cause the most extreme anxiety.

I said that the problem had to be divided into two halves, one, the actual Air Force which we have and which we could put in the air, and two-the steps that we had taken to safeguard our communications, supplies, and vital services internally.

With regard to 1.-I said that we were in a position of marked inferiority to Germany and of appalling inferiority if we took Germany and Italy together and added to our figures those of the French.

I then dealt with the different types of Aircraft.

With regard to long range bombers, I said that our position was appalling and that taking Germany and Italy together their figures were nearly three times ours. In this particular case I quoted the actual figures. I also gave the figures with regard to the Bomb lifting powers of ourselves plus France as against Germany and Italy.

At this stage the Prime Minister made his only interruption, which was to say that Baldwin's undertaking was not in respect of two Powers but in respect of our position as against any individual Power.

I said I quite agreed and that I had not been quoting the figures with regard to long range bombers as evidence that Baldwin's promise had not been lived up to, but to show the actual seriousness of the position.

With regard to short range bombers, I told him that this was the one place where we had a superiority of something like three to one over Germany and Italy.

With regard to fighting planes I pointed out that the position was relatively satisfactory in that France and ourselves could muster within a hundred of the numbers that Germany and Italy would have at their disposal.

With regard to general purposes and Army co-operation planes, I pointed out that Germany and Italy had a superiority of something like two to one.

In the Near East, I indicated that the position was most unsatisfactory in that Italy was the only country which had any long range bombers or fighting machines. That neither France nor Britain had any in these categories.

I then dealt with the productive capacity in January 1938 and gave him the actual figures of the estimated monthly production of the United Kingdom, France, Germany and Italy. I told him that I was inclined to think that this last factor was the most serious of all. That while I had never considered, having regard to her industrial capacity and to the fact that Germany was quite ruthlessly dislocating her industrial position in order to strengthen her armaments, that it would be possible for us to keep pace with her production even if we adopted drastic steps to accelerate the defence production at the expense of our industrial and economic needs. It was, however somewhat appalling to see the position that Italy had reached, having regard to the latest statistics in connection with production capacity of the countries concerned as in the latest figures they were shown on the basis of Germany 120 United Kingdom 100 Italy 35 With regard to France I said that my figure which I had given him of production capacity was very uncertain but it was well known that the position there was unsatisfactory owing to the industrial turmoil that had followed upon the actions of the Front Populaire Government, I then summarised the position with regard to strength in planes and our offensive power as being nothing less than appalling.

I then dealt with the question of Air Defence. I pointed out that there were three principal types of guns which were used for this purpose: 3 inch; 3.7 and 4.5. That the efficiency of these guns was estimated in the ratio:-

1 to the 3 inch 3 3.7 4.5 4.5.

Of the 3.7 and 4.5's at the moment we had none. I had heard a figure given that Germany had 1500 of these guns, but I had no certainty as to this figure at all.

With regard to the prospects of production of 3.7 and 4.5 guns in this country it was anticipated that it would commence on a small scale early in 1938. By the end of 1938 it would possibly be a reasonable estimate to say that we might have 400. The number that were required I was not quite certain of, but I would be inclined to put it at not less than 1,000. I felt that if we took into account the needs abroad for bases such as Singapore etc. that the figure of 1,000 would be a modest one. I then went on to deal with the present position.

I said that I understood that we were dependent upon new or converted 3 inch guns. That the Regulars had 96 of these guns but that it was necessary to send 24 of the 96 to Egypt immediately. I added that I understood that the personnel position was so unsatisfactory that the Members of the Unit that were going to Egypt would have to be withdrawn and replaced by Egyptians who would have been trained in the interval so that the permanent personnel could return to this country in the Spring to man the new type of A.A. guns as they came to hand.

With regard to guns for Units other than the Regulars I understood that a limited number of converted 3 inch A.A. guns would be available in January and that these would be slowly supplemented up to the end of 1939, but that the figure even by that date was a relatively small one. I also understood that the Admiralty were making available a certain number of guns of this calibre, but even with these reinforcements the position was quite unsatisfactory.

I said that I also understood that there were a certain number of 2 pounders being obtained, some of them from Sweden, but that the numbers were small and the deliveries unsatisfactory. I emphasised that the position with regard to Anti-Aircraft guns was deplorable and in my view this was probably the most unsatisfactory feature of the whole situation.

I then dealt with the question of Air precautions in this country, and said that I had no doubt the Prime Minister had considered Ogilvie-Forbes's despatch [4] and the comparison which he gave between the situation in Germany and the position here. I gave him one or two figures but not the full details. I told him that I had heard it suggested that we could rely upon the character of the British people to face any damage that might be done by air raids.

I indicated I had some doubts as to whether the British character could be relied upon with what modern bombing might mean, but I stressed that even if it could be relied upon surely that could not be the basis of our defence, namely, the powers of endurance and the fortitude of the people of this country. I strongly urged that the most definite steps had to be taken immediately to accelerate the air raid precaution machine organisation.

I then put it to the Prime Minister that it was obvious there were great dangers in the situation, that it was impossible for anyone to predict when those dangers would have to be met. I made it clear to him that in my view it was impossible to take any action which would enable us by ourselves to meet what might be ahead of us as for instance a combination of Germany, Italy and Japan. At the same time we had to consider what was the maximum that we could do and in which direction our efforts should be concentrated. I said that in my opinion the imperative outstanding and overwhelming need was the strengthening of our Air Defences.

I then said I would try and show why I took that view.

I suggested that if the danger from the Air could be eliminated in the sense of removing the vulnerability of the United Kingdom our position at the moment would be a relatively happy one, notwithstanding all the turmoil that was going on in the world.

With regard to the Navy our position was probably better than it had ever been before. That even if there was a danger from the Air against our food supplies and raw material supplies in the narrow seas that could be met by a convoy system and by air protection, I, of course, having visualised a very strong Air Arm which would be available for patrol and convoy purposes, its task with regard to protection of. the vulnerable British Isles having been removed.

With regard to the Army the position would also be relatively satisfactory, particularly in view of the modern trend of thought that in the first instance it would not be essential that we should send an expeditionary force to Europe. I stressed that the point I wanted to make in putting the position in this way was that if through a new and effective ray it was not possible to screen against, or by some other means, we could remove the air menace from Britain, our position would be a comparatively happy one. If the achievement of the apparently impossible, namely, the complete elimination of the air danger would have so great an effect, did not this point to our task being to concentrate upon air defence in priority to any other requirements of the Services.

I had deliberately used the expression Air Defence and by it I meant our power to deal with any offensive action against us by the provision of fighting planes, A.A. guns, and a complete and efficiently organised system of air precautions.

I pointed out that our objective in the Air had been equality with any Power within striking distance and our strategy had been that this equal air force should have such a power of retaliation as to deter any country we were at war with from bombing Great Britain out of fear of retaliation. I suggested that that basis of strategy had gone because there was no hope of our over-taking Germany in numbers and because Germany in addition to being less vulnerable to attack from the air had by her complete organisation of air defence minimised the danger of any retaliatory action against her. I said I doubted the wisdom of attempting to chase Germany in mere numbers. But that we should concentrate upon a large Air Force and I stressed the fact of the largeness, but that its whole basis should be efficient equipment and personnel and not mere numbers. In support of this argument I put the point that it seemed to me we had to recognise that retaliatory measures by way of bombing would not be effective in preventing the Germans continuing Air raids over Britain. Our object must be to so strengthen our defences as to bring about a position where the damage that could be done would be so limited that it would become clear air raids did not pay.

I suggested to the Prime Minister that possibly in the end the present position might turn out to our advantage. Germany during the last three years, that is the years 1935-38 had, it appeared quite clear, expended upon her armaments programme and public works which were linked up with that programme something like 3,000 million pounds, or 1,000 million pounds a year. While I recognised that experience had shown us that the monetary factor was not the potent one we all imagined it would be in modern warfare, there must be some limit to this sort of thing and that Germany would find the burden she had created for herself an impossible one to bear. On the other hand we who had incomparably superior resources had hardly started upon our armament expenditures. Was it not possible that if we could get over the danger period that lay just ahead of us that in the end we should find ourselves in the position of being able to sustain the strain of maintaining a large and efficient air force with the terrific expenditures involved in the ruthless and immediate scrapping of types as and when science rendered them obsolete.

I then reverted to the immediate position and said I wanted to put to the Prime Minister what I had in mind should be the course that should be pursued.

I told him that my view was that there should be an immediate concentration upon and acceleration in regard to the Air. I reminded him that Inskip [5] had at the moment issued no formal priority lists between the different Services and that he had not even gone into the question of compulsory priority for Government orders. I said that I thought there should be an immediate formal priority given to the Air particularly in respect of Air Defence and that that should be ruthlessly carried through notwithstanding the howls of rage which would go up from the Navy. That wherever necessary and wherever it could be done advantageously, compulsory priority for air requirements should be given over private orders.

I said if necessary I would go to the point of applying compulsion with regard to skilled labour to ensure the requirements of the factories dealing with orders for the Air could be met.

With regard to Air precautions, I said that I thought it was essential that an intensive nation wide campaign should now be undertaken. I told him that I had read very carefully Phillip Swinton's [6] speech on behalf of the Government in the House of Lords. I pointed out that in that speech he had claimed that a great deal had been done but that anyone with a knowledge of the subject knew that while a great deal had been done, in the way of experimenting, the result of those experiments had not yet been put into practice. That the actual position was that we had done practically nothing with regard to Air precautions and that it was imperative that we should now make a tremendous effort. I said that it seemed to me that the present moment was a heaven-given opportunity for the Government. Their Bill dealing with the financial costs of Air Raid precautions was just through Parliament. If the Government now came out with a great campaign it need not be on any basis of alarm but on the basis that the Bill now being through the Government was going ahead to put into operation all the plans that they had been maturing over the last few years.

I stressed that in my view such action was absolutely imperative not only in the interests of the country but also of the Government.

To the whole of this somewhat interminable dissertation the Prime Minister listened with only the one interruption. When I had finished he said that he had never agreed with Baldwin's statement-that he had not been consulted about it but that if he had he would certainly have suggested that it should have been modified. He said that he entirely agreed that to attempt to compete in numbers with Germany was probably an impossible task but that in any case it would be a futile one and he entirely agreed with my view as to what our objective in regard to an Air Force should be. He then dealt with the general position that I had put up. He said that the conclusions which I had arrived at he also had arrived at and he said that steps were now being taken to give effect to them. He said that the Air had now been given an absolute priority over the other Services.

(I did not challenge this statement but it is somewhat difficult to reconcile it with the C.I.D. Paper 271 A. [7] which is being considered by the C.I.D. tomorrow in which Inskip says dealing with this very question-'It is I think undesirable to issue formal priority lists' and also says 'I have gone into the question of giving Government orders compulsory priority over commercial orders'. This, however, does not very much matter. The main point is that whether or not the priority has yet actually been given, I am quite certain, as a result of my conversation with the Prime Minister it will be given immediately.) He went on to say that he shared my view as to the impossibility of continuing a strategy based upon the prevention of Air Raids over Britain by the fear of retaliatory raids by the British Air Force. He indicated that we had to concentrate upon Defence and so strengthen it as to ensure that air raids would not pay and in that way eliminate them as a serious factor from the war problem.

He admitted, without definitely saying so, that the A.A. gun position was not satisfactory, but that it was necessary to make the best use of what you had and that that was being done. He indicated that he thought that as that was being done it met the position as he said all the information he had showed that there was no probability of anyone starting trouble immediately.

Broadly his attitude was that the position at the moment was not satisfactory, but that while he was not satisfied he was not alarmed because he considered we were progressively improving the position and that it probably would be satisfactory before the trouble arose. He did not in so many words admit that the necessity for speeding up was essential but by implication he did, particularly by telling me of the Government's decision to give priority to Air requirements.

He agreed as to the importance of Air Precautions but in no way committed himself as to the urgency which I had stressed so strongly.

I equally when he was talking did not interrupt in any way but was proposing to press him with regard to certain points when he had finished. Unfortunately this was not possible as the Foreign Office and Navy people were waiting to see him with regard to the Japanese last outburst against British and American ships. [8] I therefore confined myself to saying before I left that I was relieved to learn the views he held with regard to the situation and the line that should be taken. I, however, indicated that I felt the matter was far more urgent than what the Prime Minister had said led me to believe he thought it was. That in my view it was not safe to rely upon any period to get ready, as while I agreed nobody at the moment wanted to precipitate trouble, something might occur which would bring it about.

I said that with regard to both aspects of Air Defence, I was so convinced of the necessity for the utmost acceleration of our efforts that I would again urge on him the 'necessity for every step being taken to accelerate the guns and other defence material and that I would also again stress the vital necessity of a great campaign to get on with the air precaution provisions.

My view of the position is that everything I said sank into the Prime Minister's mind and that he will take quite definite steps to find out exactly what is being done by Inskip and Whitehall Gardens. The position for the moment had better be left to see exactly what develops. I am fairly satisfied on the question of Air defence guns etc. the Prime Minister's mind will probably move in the right direction. On the question of a National campaign and real acceleration with regard to Air precautions I have some doubts, but this also will have to be left for the moment to see what develops over the next month or so. In talking to the Prime Minister I did not give him all the figures that are included in the Notes attached. [9] In some cases I gave him percentages.

S. M. B[RUCE]

[AA : A463, 57/1535]

1 Neville Chamberlain.

2 Stanley Baldwin, then Lord President and Lord Privy Seat, made a statement in the House of Commons on 8 March 1934 that if air armaments were not equalised by agreement the U.K. Government would 'see to it that in air strength and air power this country shall no longer be in a position inferior to any country within striking distance of our shores' (House of Commons, Parliamentary Debates, fifth series, vol. 286, Col. 2078).

3 Baldwin was not Prime Minister in 1934. See note 2.

4 Not printed. Sir George Ogilvie-Forbes was Counsellor and Charge d'Affaires, U.K. Embassy in Berlin.

5 Sir Thomas Inskip, U.K. Minister for Co-ordination of Defence.

6 Viscount Swinton, U.K. Secretary of State for Air.

7 Not printed.

8 On 12 December 1937 Japanese attacks were made on British and American warships on the Yangtse River, resulting in a considerable number of casualties, damage to several British vessels and the loss of the U.S. vessel Panay.

9 Not printed.

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