1 September 1938
1. It is stated in the Dominions Office telegram of 30th August, 1938 , that the British Government has been forced to the conclusion that a critical point in the situation has been reached. The view of the British Government is that Herr Hitler wants a solution of the Sudeten problem this autumn; that he will use force if necessary; that the army is unable to restrain him, and that if, as is probable, action is taken by Germany it will be taken during the second half of September.
2. The crisis will, of course, have passed if the Sudeten question is peacefully solved in the immediate future, but it seems necessary that the Commonwealth Government should now consider all the relevant factors in the situation, for otherwise a decision involving the vital interests of Australia might have to be taken at a moment's notice.
3. In his speech of 24th March, 1938, Mr Chamberlain  declined to give an assurance to France that, in the event of her being called upon by reason of German aggression on Czechoslovakia to implement her obligations under the Franco-Czechoslovak Treaty, Great Britain would immediately come to her assistance. He also stated that the British Government was not prepared to commit herself in advance to take military action in resistance to any forcible interference with the independence and integrity of Czechoslovakia. He added, however, that where peace and war were concerned, legal obligations were not alone involved, and if war broke out, it would be unlikely to be confined to those who had assumed such obligations. It would be quite impossible to say where it might end and what Governments might become involved. The inexorable pressure of facts might well prove more powerful than formal pronouncements, and in that event it would be well within the bounds of probability that other countries, besides those which were parties to the original dispute, would almost immediately be involved. This was especially true in case of two countries like Great Britain and France, with long associations of friendship, with interests closely interwoven, devoted to the same ideals of democratic liberty, and determined to uphold them. Sir John Simon  in his speech at Lanark on 27th August, observed that the British attitude in this respect remained unchanged.
4. The Secretary of State for Foreign Affairs  in the course of a conversation with the French Charge d'Affaires in London  on 25th August, reminded him of the position of the British Government as defined by the Prime Minister on 24th March, and said that any attempt to accept on behalf of Great Britain any more specific commitments would lead to violent opposition which would have an effect exactly contrary to that which a stronger statement might hope to achieve. The policy for both the British and French Governments was therefore to do everything in their power to keep Germany guessing and to prevent her from thinking that the danger of the expansion of hostilities as a result of the use of force by her against Czechoslovakia was negligible.
5. The Secretary of State also drew the attention of the Charge d'Affaires to the communication of the British Government to the French Government of 22nd May, 1938. (In this communication the French Government was warned that any assumption that Great Britain would at once take joint military action with France to preserve Czechoslovakia against German aggression was unwarranted.
The British Government also intimated that in its view the military position was such that France and England, even with such assistance as might be expected from Russia, would not be in a position to prevent Germany from over-running Czechoslovakia. The British Government hoped that it might be given an opportunity of expressing its views before any action was taken by the French Government which might demoralise the position more acutely or have the result of exposing France to German attacks. In its reply to this communication the French Government undertook that it would take no such action without ample consultation with the British Government.) 6. In the event of a German attack on Czechoslovakia, the attitude of the French Government would necessarily largely depend on that of Great Britain. The attitude of Great Britain during the last few months as outlined above, strongly indicates that Great Britain would, in present circumstances, do her utmost to restrain France from intervention, and accept the over-running of Czechoslovakia by Germany rather than become involved in a European war on account of Czechoslovakia. It does not follow should Great Britain decide for the time being to stand aside, that France would refuse to implement her treaty obligations, though it is quite possible that she would do so, for, if the Czechs were to put up a fight as seems certain, public opinion might force the French Government to intervene on behalf of Czechoslovakia. If this were to occur Great Britain might find it impossible to keep out of war, however reluctant she might be to become involved, since she could not view with indifference a possible defeat of France by Germany.
7. A German attack on Czechoslovakia also raises the question whether Soviet Russia would come to Czechoslovakia's assistance.
Reliable reports have been received to the effect that the Soviet Government recently warned the German Government that it would fulfil its treaty obligations to the letter, but, however this may be, it is exceedingly unlikely that Soviet Russia would intervene on Czechoslovakia's side unless she were at least assured of French support.
8. It now becomes necessary to consider the policy which should, in these circumstances, be pursued by the Commonwealth Government.
There seem to be two main possibilities:-
(a) The Commonwealth Government might consider that if Herr Hitler were categorically informed that an attack on Czechoslovakia by Germany would lead to the intervention of France, Great Britain and Soviet Russia on the side of Czechoslovakia this might cause him to hold his hand provided that he was convinced that these three Powers were not bluffing. It could be argued in support of this view that the time has now come when a definite stand must be made against the use of force to settle international differences.
It is true that there is a grave risk that this course of action might lead to the British Commonwealth becoming involved in war but, if Germany is to be permitted to continue her present career of violence unchecked, the day of reckoning will only be deferred and Great Britain might in the future have to face a far more powerful Germany without those allies on whose support she can now count. If this view were taken, the Commonwealth Government might envisage making representations in this sense to the British Government.
(b) On the other hand, there is the point of view that it would not be in the best interests of Australia to pursue a policy which might very possibly involve the British Commonwealth in war in the immediate future to maintain the territorial status quo in a part of the world where vital British interests are not involved. At the present stage it is doubtful whether such a policy has the support of public opinion in Australia. But apart from this aspect of the situation there are other factors which must be considered.
If the British Commonwealth were to intervene on behalf of Czechoslovakia it would, in all probability, with France and Soviet Russia as allies, have to face a hostile combination consisting of Germany, Italy and Japan. In this event, the strategic position would be exceedingly unfavourable. London would be open to an attack by the German air fleet, which might well paralyse this vital nerve centre of the Empire; the British Navy would necessarily be concentrated in the North Sea and the Mediterranean and this means that no adequate naval forces would be available for the defence of Australia. It may therefore be in the best interests of Australia to urge on Great Britain that in no circumstances should the risk be run of involving the British Commonwealth of Nations in war on account of Czechoslovakia.
This second course of action is also attended by great risk, for the neutralisation or disintegration of Czechoslovakia as a result of violent German action would remove the last obstacle to the complete military and economic domination of Central and South- Eastern Europe by Germany, and would place Germany in a far more favourable position to attain ultimate world domination. As against this it may be argued that Germany genuinely desires an understanding with Great Britain, that Great Britain cannot effectively, and should not legitimately, block what Germany regards as a natural process of evolution in Europe and that as soon as this fact is recognised it should be possible for both countries to lead their own lives without plunging European civilisation into a disastrous war. 9. The Commonwealth Government might feel that it would not be desirable, at this stage, to communicate any conclusions which it has reached to the British Government. In this event, it is suggested that the Commonwealth Government might consider the issue of a public statement generally outlining the present position and intimating that the Commonwealth Government is entirely in accord with the steps taken by the British Government to obtain a peaceful and equitable solution of the Sudeten problem. It might also be indicated in the statement that the Commonwealth Government fully associates itself with the declaration of Mr Chamberlain on 24th March, 1938, and that of Sir John Simon on 27th August, 1938, in regard to the consequences which might result from any attempt to solve the Sudeten question by force. Such a statement might serve a useful purpose in informing public opinion in Australia as to the present position and would at the same time be in accord with the present policy of the British Government of keeping Germany guessing as to British intentions.