5 - The financing of the eastern front

Summary

The assertion that, in spite of granting wide-ranging guarantees to Poland and Rumania in the spring of 1939, Britain did not alter her foreign policy towards German expansion eastwards is further substantiated by the study of British financial dealings with her new allies during the subsequent months. In the spring of 1938 an Inter-Departmental Committee addressed itself to the question of the desirability of stemming German economic expansion into Central and South Eastern Europe. Reporting in the autumn the committee admitted that British political influence in that part of Europe could not be maintained without making available grants, credits and loans which, while they could not be justified on commercial grounds, would prevent Germany claiming a monopoly over those markets. As the government was unwilling to sanction the granting of finance on political, as distinct from commercial, grounds so the British government knowingly abandoned any attempt to retain a modicum of influence in Rumania, Bulgaria, Hungary and Yugoslavia.

The events of March 1939 brought the question of the countries of Central and South Eastern Europe once more into the forefront of British Cabinet considerations. The result of these hasty deliberations, which were subsequently modified to accommodate the shifting of the political focal points, was confusing.