THE HISTORY OF THE 2nd REICH ( 1871 - 1918 )

I. Introduction.

The 2nd Reich, which was proclaimed by Bismarck in the Hall of Mirrors of Versailles, realized German aspirations for unity. This unity had, however, not been achieved by a spontaneous movement of the people but through the careful manipulations of Bismarck. It is important to understand developments during the 2nd Reich, because they laid the basis, psychological and political, for developments in the Weimer Republic. And the Weimer Republic produced Hitler.

II. The Constitution of the 2nd Reich.

The Constitution of the 2nd Reich was designed to achieve two aims:

(1) to insure the supremacy of Prussia within Germany,

(2) to insure the supremacy of dynastic rulers, particularly the Prussian kings, over the elective bodies.

To accomplish this a delicate system of balances was set up.

The constitution provided for a head of state, the Kaiser (or Emperor), whose position was hereditary, a Chancellor (Prime Minister), who carried out the policies of the Emperor, an upper house representing the 25 member states called Bundesrat or Federal Council and a lower house (house of representatives) representing the people, called Reichstag. Let us examine the powers of the various parts:

The Kaiser was the head of the state. He was Supreme Commander of the armed forces in time of war. He appointed the Chancellor. He could declare war

- 2 -

with the consent of the Federal Council. The Kaiser's most important power lay in the fact that he was at the same time King of Prussia. As King of Prussia he controlled 17 votes in the Federal Council or Bundesrat.

The Federal Council or Bundesrat represented the states and in that
respect corresponded to the U S Senate. Its members, however, were not elected
but appointed by the States. All legislation had to be approved by the Federal
Council. 14 negative votes were enough to block any bill. Since the Emperor as
King of Prussia controlled 17 votes he could block any legislation.

The Lower House or Reichstag represented the people. It was elected by
universal manhood suffrage. It participated in all legislation. The main power
of the Reichstag was its controlling over the budget. The executive, however,
represented by the Emperor and the Chancellor, was not responsible to the Reichs-
tag.

The Chancellor was the executor of the Emperor's policies. He was
appointed by the Emperor and responsible only to him. Just as the Emperor was
at the same time King of Prussia, so the Chancellor, at the time of Bismarck,
was Minister President of Prussia.

Summary: Because of the fact that Prussia controlled 17 votes in the Federal Council she could block all legislation and therefore enjoyed an absolute veto. - The Emperor as King of Prussia could exercise that veto. Despite the fact that the Reichstag was popularly elected, the people had little chance to translate their desires into action, because of the independence of the executive from the legislative branch.

Results: Since the political parties in the 2nd Reich had no responsibility they degenerated into pressure groups rather than into organizations on a broad basis. The political parties could not control the Chancellor and conse-

-3-

quently saw their main interest in attempting to influence him to voluntarily
carry out their policies. As a result political parties such as we know in the
U.S., comprising many different shades of political belief united by a common
denominator became impossible. Political parties in Germany became narrow, into-
lerant, unwilling to compromise. When these political parties with no tradition
of responsible government were suddenly forced to assume government in 1918
the consequences were disastrous for the Weimer Republic.

The leaders of these parties never developed into statesmen but rather
political tacticians. These were the men into whose hands in 1918 the task of
governing a defeated Germany was thrust.

POLITICAL PARTIES.

The main political parties of the 2nd Reich were;

Conservatives - representing the Prussian Aristocracy, the Junkers,
the landed gentry;

National Liberals - representing the Industrialists and the Upper
Middle Classes;

Progressives - representing the intellectuals and moderate reformers;

Centre - representing the Catholics;

S.P.D. or Social Democrats - representing the working class.

During the period of the 2nd Reich, government was usually in the hands of a
coalition of the Conservatives and National Liberals.

## Historical Developments.

The history of the 2nd Reich can be divided into 3 phases:

(1) The period of Bismarck (1871 - 1890)

(2) The period of Emperor William II (1890 - 1914)

(3) The period of Ludendorff (1914 - 1918).

### The Era of Bismarck, (1871 - 1890)

Bismarck was the first Chancellor of the 2nd Reich. He had made himself indispensable to Emperor Wilhelm I whom he could always bring to heel by threats of resignation. In the field of domestic policy Bismarck's main concern was the maintenance and consolidation of the unity he had fought so hard to attain.

This unity seemed to him threatened by a political party based on a religious faith, receiving what he claimed direction from the outside, viz the Pope in Rome. This party was the Catholic Zentrum (Center) party. Bismarck consequently engaged in a series of repressive measures against the Catholics and against the Zentrum party. This policy failed, partly because of the staunch resistance of the Catholic priests and partly because even the Protestants, fearing that their turn would come next, opposed Bismarck. Although the policy failed its effects lingered on. Henceforth the Catholics represented by the Zentrum party became very distrustful of a strong central government. To-day the C.D.U. (Christian Democratic Union - to-day's successors of the Zentrum) is the only major party in Germany advocating Federalism.

After the failure of his repressive measures against the Catholics Bismarck saw a new danger to German unity and the existing order: the Socialists, represented by the Social Democratic Party or S.P.D. A series of repressive

laws were consequently introduced. The S.P.D. was dissolved and the Socialist press was banned. In this policy Bismarck was supported by his erstwhile enemies: the Zentrum. Eventually this policy, too, failed and election after election saw the Socialists gain in numbers. Here is the basis for the distrust between Zentrum and Socialists, lasting to this day.

As a concession to the workers, however, Bismarck embarked on a system of Social Security that became a model for many states to follow. National Health Insurance, Accident Insurance and Old Age Insurance Acts were passed, so that by 1911 13,600,000 Germans were state insured. Although this legislation constituted a great advance in its field, it served to confirm the already growing German behalf in the omnipotence of the state. It supported the idea that the state would take care of its citizens.

In the field of foreign policy Bismarck believed in moderation. He felt that having achieved unity Germany should now be satisfied to consolidate her gains and not embark on a program of expansion. Bismarck consequently opposed Colonial expansion or the building of a large Navy, fearing a conflict with England. Bismarck believed that France would probably always remain hostile towards Germany because of her defeat in 1871 and consequently attempted to isolate France. Treaties were concluded between Germany and Russia, Germany, the Austro-Hungaryan Empire, Italy and Romania, making Germany's position in Europe very secure and isolating France.

It is highly possible that had Bismarck's policy of moderation been followed by his successors the constellations leading to World War I could have been avoided.

In 1888 Emperor William I died and his grandson Emperor William II succeeded to the throne. Emperor William II had very definite ideas of his own.

- 6 -

and his relations with Bismarck soon became strained. In 1890 Bismarck resigned. An era in German history had come to an end.

Summary: In Bismarck's influence has been summarized by an important German historian thus:

* He left behind a nation without any political education, much below

* the level which it had reached twenty years earlier, above all, a

* nation without any political will, accustomed that a great states-

* man at the top should manage politics on its behalf. Further it was

* a nation . . . accustomed to acquiescence, under the sigaboard of a

* 'monarchic government', with fatalism in whatever had been decided

* for it, without any criticism of the political qualifications of

* those who now took Bismarck's empty seat, and who took the reins of

* government into their hands with astonishing informality. . . . The

* great statesman did not leave behind a political tradition at all,

* He had asked no independent minds, and particularly no independent

* characters, to co-operate with him, nor had he even tolerated them.

* . . . As a purely negative result of his immense prestige, there rose

* a mixed an entirely powerless parliament." It was the tragedy of Germany, and a calamity for other actions, that parliament remained powerless up to the very end of the Second German Empire.

## The Era of Emperor William II. (1890 - 1914).

Under Emperor William II the relationship between Emperor and Chancellor became the reverse of what it had been under William I. Under the latter Bismarck had been the autocrat and the Kaiser merely a kind of figurehead. Now the roles were reversed. During William's II reign the political system hardly changed. William II was neither able nor willing to diminish the aristocratic Prussian

-7-

- 7 -

influence in the Government and the middle classes represented by the National & Liberals had to conciliate themselves with their growing economic prosperity.

## The Corps Student and the Officer Class.

German politics and administration during this period cannot be properly understood without taking into account the immense prestige enjoyed by two social groups, i.e., Corps student and officers. The idea of the military machine and the code of military "honour" permeated every aspect of the upper and middle classes. In society, the officer took precedence over the civilian. The regular officers, like the officials, were badly paid and needed private means to keep up their positions; but they were compensated by the "honour" and "prestige" bestowed on them. It was the anxious desire of most middle class parents that their sons should participate in this prestige by qualifying at least as reserve officers. In connection with this desire, a special certificate was introduced in the secondary schools, the so-called "Einjahrig-Freiwillige", which was granted after the pupil had visited a secondary school for six years. It not only en titled him to serve in the army for one year instead of for three, but it opened the way to his becoming a reserve officer and thus a member of the ruling class. Even greater was the prestige of the Corps students, mainly comprised of the sons of Prussian Junkers, of the higher bureaucracy and of the wealthy. Their code stressed the importance of duelling, and before 1914, admission into the ruling class depended in the right to be recognised as a possible duellist. This military attitude to life bound the upper classes together.

The internal policies of William II hardly differed from those of Bismarck. After a brief period of conciliation, some of the anti-Socialist measures

-8-

- 8 -

were again enforced and the Conservativ policies of Bismark continued.

The Kaiser's Foreign policy differed radically from the policy of moderation carried out by Bismark. William II believed that Germany should pursue a Weltpolitik, that she should by diplomacy or veiled threats of force acquire territory in all parts of the globe. To carry out this program Emperor William II needed a huge navy. The building of a large navy by Germany contributed to bringing England into French camp. The treaty between Germany and Russia was not renewed and in 1893 a French-Russian rapprochement took place. Although William's II poling was partly motivated by economic pressures, heartily supported by such segments of the population as the Naval League, or the League for Colonial Expansion, and had been begun already under Bismark by a Colonial program, its net result was the breaking of Europe into 2 camps: on the one hand England, France and Russia, and on the other Germany and Austria-Hungary. A series of international crises occurred, that only tended to increase Germany's isolation and culminated in the outbreak of World War I.

## Economic Development under the Second Reich.

In England the "Industrial Revolution" of the late 18th and early 19th century transformed a predominantly agrarian into an industrial economy. The Revolution of 1789 produced the same results in France. In Germany, however, this process was held up, until 1871, in spite of technical inventions and engineering advances, because the existence of internal customs barriers (only partly abolished by the Customs Union of the German Confederation) and lack of a common tariff policy prevented the creation of markets large enough for a national industry and because the Prussian agrarians, the Junkers, used their political influence to prevent industrial expansion in order to safeguard their agricultural interests.

-9-

Political unification and the annexation of Alsace-Lorraine with its
large iron ore and potash deposits brought about a radical change. The founded
tions for the heavy industries of the Ruhr and the communication system (rail-
roads and inland waterways) had already been laid before 1871. But now German
industry and trade could and did freely expand and the population grew by leaps
and bounds; so that the eve of World War I Germany had surpassed France and
caught up with England and the U.S. as a manufacturing country, in spite of
her late start.

Although the agrarian interests of the Junkers of the East were by no
means neglected the influence of the Industrialists of the West became stronger
and stronger. Their interests were the same at least in the issue of protectio-
nist tariffs. Bismarck and, later on, William II, actively favored the creation
of a new German ruling class from these two elements. Constant social contacts
and frequent intermarriage confirmed the alliance. Practically all higher posts
in the Armed Forces and the Civil Administration, particularly the Economic
Administration, were reserved for members of the families of either Junkers or
Industrialists.

Government interference in private enterprise became ever stronger. Yet,
in most instances, such interference profited industry and commerce and there-
fore was welcomed. Since economic policies were planned and formulated by indi-
viduals who had primarily the interests of industry at heart and who were most
strongly influenced in their education by the Industrialists, the latter in
actual fact dictated the economic policies of the Reich. This state of affairs,
incidentally, largely continued under the Weimar Republic and under the Nazi
Regime.

The World War and the Era of Ludendorff. (1914 - 1918).

In August 1914 World War I broke out. England, France and Russia were arraigned on one side, Germany and Austria-Hungary on the other. After stunning early successes, which included the occupation of Belgium and Northern France, Germany was stopped at the Battle of the Marne and the war settled down to a long drawn-out stalemate. During this stalemate, General Ludendorff, whose official position after 1915 was only Chief of Staff of the German High Command, appeared as the victual dictator of Germany.

In July 1917, a majority of the Reichstag voted for a peace restoring all 1914 frontiers. To demonstrate the complete impotence of the Reichstag at even this late stage, General Ludendorff and the German Government, imposed on Russia, which surrendered to Germany in March 1918, one of the harshest peace treaties in history. It is well to point this out to Germans who complain about the "harsh" Treaty of Versailles.

By 8 August 1918, the "Black Day of the German Army", it became clear to General Ludendorff that Germany could no longer resist even on the defensive. He therefore recommended to the German Government to institute peace negotiations immediately. It is well to remember that General Ludendorff was the driving force asking for an armistice, in order to co-treat German arguments of a "stab in the back". In order to make the peace offer more palatable to the Allies, democratic reforms were granted Germany in October 1918. It is clear that such a democracy, having been created from the top, could not mean as much to the Germans as it does to the people who fought for their freedom. Moreover, democracy, coming as it did at the end of a lost war, was forever after associated in the German mind with military defeat, making its future very difficult. In November 1918 isolated revolutions broke out, the Kaiser abdicated and on 11 November 1918 an armistice was signed. The 2nd Reich had come to an end.

I. Introduction.

The 2nd Reich, which was proclaimed by Bismarck in the Hall of Mirrors of Versailles, realized German aspirations for unity. This unity had, however, not been achieved by a spontaneous movement of the people but through the careful manipulations of Bismarck. It is important to understand developments during the 2nd Reich, because they laid the basis for psychological and political, -for developments in the Weimer Republic. And the Weimer Republic produced Hitler.

The constitution provided for a head of state, the Kaiser (or Emperor), whose position was hereditary; a Chancellor (Prime Minister), who carried out the policies of the Emperor; an upper house representing the 25 member states called Bundesrat or Federal Council; and a lower house (house of representatives) representing the people, called Reichstag. Let us examine the powers of the various parts:

-3-

quently saw their main interest in attempting to influence him to voluntarily
carry out their policies. As a result political parties such as we know in the
U.S., comprising many different shades of political belief united by a common
denominator, became impossible. Political parties in Germany became narrow, into-
larant, unwilling to compromise. When these political parties, with no tradition
of responsible government, were suddenly forced to assume government in 1918
the consequences were disastrous for the Weimer Republic.

POLITICAL PARTIES.

The main political parties of the 2nd Reich were:

-4-

## Historical Developments.

- 5 -

laws were consequently introduced. The S.P.D. was dissolved and the Socialist press was banned. In this policy Bismarck was supported by his erstwhile enemies, the Zentrum. Eventually this policy, too, failed and election after election saw the Socialists gain in numbers. Here is the basis for the distrust between Zentrum and Socialists, lasting to this day.

As a concession to the workers, however, Bismarck embarked on a system of Social Security that became a model for many states to follow. National Health Insurance, Accident Insurance and Old Age Insurance Acts were passed, so that by 1911 13,600,000 Germans were state insured. Although this legislation constituted a great advance in its field, it served to confirm the already growing German *belief* in the omnipotence of the state. It supported the idea that *the state* would take care of its citizens.

In the field of foreign policy Bismarck believed in moderation. He felt that having achieved unity, Germany should now be satisfied to consolidate her gains and not embark on a program of expansion. Bismarck consequently opposed Colonial expansion or the building of a large Navy, fearing a conflict with England. Bismarck believed that France would probably always remain hostile towards Germany because of her defeat in 1871 and consequently attempted to isolate France. Treaties were concluded between Germany and Russia, Germany, the Austro-Hungaryan Empire, Italy and Rumania, making Germany's position in Europe very secure and isolating France.

In 1888 Emperor William I died and his grandson Emperor William II succeeded to the throne. Emperor William II had very defaite ideas of his own

-6-

influence in the Government and the middle classes represented by the Nationalist and Liberals had to coalesce themselves with their growing economic prosperity.

German politics and administration during this period cannot be properly understood without taking into account the immense prestige enjoyed by two social groups, i.e., Corps student and officers. The idea of the military machine and the code of military "honour" permeated every aspect of the upper and middle classes. In society, the officer took precedence over the civilian. The regular officers, like the officials, were badly paid and needed private means to keep up their position; but they were compensated by the "honour" and "prestige" bestowed on them. It was the anxious desire of most middle class parents that their sons should participate in this prestige by qualifying at least as reserve officers. In connection with this desire, a special certificate was introduced in the secondary schools, the so-called "Einzugsfrig-Freiwillige", which was created after the pupil had visited a secondary school for six years. It not only entitled him to serve in the army for one year instead of for three, but it opened the way to his becoming a reserve officer and thus a member of the ruling class. Even greater was the prestige of the Corps students, mainly comprised of the sons of Prussian Junkers, of the higher bureaucracy and of the wealthy. Their code stressed the importance of duelling, and before 1914, admission into the ruling class depended in the right to be recognised as a possible duellist. This military attitude to life bound the upper classes together.

Political unification and the annexation of Alsace-Lorraine with its
large iron ore and potash deposits brought about a radical change. The founded
tions for the heavy industries of the Ruhr and the communication system (rail-
roads and inland waterways) had already been laid before 1871. But new German
industry and trade could and did freely expand and the population grew by leaps
and bounds [SEE ANNEX 1] so that the eve of World War I Germany had surpassed France and
caught up with England and the U.S. as a manufacturing country, in spite of
her late start. [SEE ANNEX II]

Although the agrarian interests of the Junkers of the East were by no
means neglected the influence of the Industrialists of the West became stronger
and stronger. Their interests were the same at least in the issue of protectio-
nist tariffs. Bismarck, and, later on, Willian II, actively favored the creation
of a new German ruling class from these two elements. Constant social contacts
and frequent intermarriage confirmed the alliance. Practically all higher posts
in the Armed Forces and the Civil Administration, particularly the Economic
Administration, were reserved for members of the families of either Junkers or
Industrialists.

- 10 -

Occupational Orientation

1. List all the Reichs in German History by name and number and their duration.

2. The history of Germany during the Holy Roman Empire is characterized by:

A. A process of ever closer centralization of government.

B. An increasing feeling of national unity

C. A gradual disintegration of Germany into small, almost independent states.

3. Which of the following historical events during the 1st Reich is chiefly responsible for the development of the Junker class in Germany.

A. The growth of towns

B. The colonization of East Prussia by Germans

C. The warfare between the Holy Roman Emperor and the Pope

D. The Crusades

4. The growth of towns in Germany, just as in England and France, contributed to national unity. (True-false)

5. The league of North German seacoast cities, with a certain tradition of republican self-government was called ______.

1.

A. 1st Reich - Holy Roman Empire - 800-1600

B. 2nd Reich - German Empire - 1671-1918

C. 3rd Reich - Nazia 1919-1948

2.

A. ______

B. ______

C. X

3.

A. ______

B. X

C. ______

D. ______

4. T (F)

5. Hensa

Occupational Orientation

6. The period that split the Catholic Church in Germany was called the (A) ______, and its first and most important leader was (B) ______.

6. A. Reformation
B. Martin Luther

7. The Peace of Augsburg

A. Suppressed the Peasant's Revolution

B. Laid down the doctrine of "whoever owns the land owns the religion"

C. Ended the Thirty Years War

D. Contributed to the German idea of supremacy of the state

7. A. ______
B. X
C. ______
D. X

8. The end of the Thirty Year's War marked the disintegration of the central authority of the Holy Roman Emperor. (True-false)

8. (T) F

9. Which of the following ideas are concepts brought into Germany by Prussia?

A. Liberalism

B. Supremacy of the State

C. Facial intolerance

D. Separatism

E. Expansionist ideas

F. Junker concept

9. A. ______
B. X
C. X
D. ______
E. X
F. X

10. The Seven Year's War (1756-1763) was significant because

A. It marked the appearance of Prussia as a major power in Europe

B. It started the French Revolution

C. Prussia fought all the major powers of Europe and emerged with a stalemate.

D. Ended the Napoleonic period

10. A. X
B. ______
C. X
D. ______

Occupational Orientation

11. Name the three most important trends appearing in Germany during the Napoleonic period.

A. Consolidation of states

B. Liberalism

11.
A. Consolidation of states
B. Liberalism
C. Nationalism

12. The period after the Congress of Vienna was a period of frustration both for German nationalists and German liberals. (True-false)

(T) F

13. The Revolution of 1848 (Check all correct answers)

A. Marked an unsuccessful attempt to create a united, democratic Germany

B. Failed because of lack of support by Martin Luther

C. Established the supremacy of Prussia within Germany

D. Gave impetus to the teaching that the German people is politically naive and incapable of governing itself

12.
A. X
B. __________
C. __________
D. X

14. The man who finally succeeded in Germany was (A) ______ and his official position was (B) ______.

13.
A. Bismarck
B. Minister President of Prussia

15. In column A list the three countries that Prussia fought to attain German unity. In column B, list the date.

14.
A B
1. Denmark 1864
2. Austria 1866
3. France 1870

16. The 2nd Reich was created in (A) ______ (date) at (B) ______ (city).

16.
A. 1871
B. Versailles

Occupational Orientation

17. The Constitution of the 2nd Reich (check all correct answers)

A. Provided for a democratic, liberal government.

B. Was contrived to insure the supremacy of Prussia within Germany.

C. Enabled political parties to organize on a wide, enlightened basis.

D. Led to a condition whereby political parties became merely pressure groups.

18. Bismarck was

A. German Chancellor

B. German Emperor

C. Prussian Minister President

D. German Foreign Minister

19. Bismarck's anti-Catholic legislation

A. Effectively reduced the importance of the Catholic Church in Germany.

B. Resulted in a close cooperation between the centrum and SFO.

C. Is one of the reasons why the CDU today advocates a federal Germany.

20. Bismarck believed in a foreign policy of moderation. (True-false)

21. ______ became virtual dictator of Germany during World War I.

22.

17.

A. ______

B. X

C. ______

D. X

18.

A. X

B. ______

C. X

D. ______

19.

A. ______

B. ______

C. X

20. (T) F

21. General Ludendorff

25 Nov 46

FRANCE

Largest and most influential country in Western European Continent. But at present weak in comparison to Big Three. in military power, in internal structure and economy. Fear of inner failing -- uncompromising

Internal

Hectic political life of elections in little over a year.

Communist 168 gain of 20 - 28.2%
MRP 160 loss of 2 - 26%

Socialists 93 loss of 27
RDE 59 gain of 19
PRL 42 Gain of 7
Rightest 52 gain of 9

Left and right about even

Provisional government and President

3 party coalition MRP (Bidault)

Constitution, compromise of 3 parties, backed by all three, accepted in referendum 13 Oct of 53% (1/3 abstentions)

Elections for Assembly (house of representatives) 10 November being fought on revisionist platform.

Structure of the 4th Republic very weak

Economic

Ravages of war extensive in France and colonies

Recovery slow and far from complete

Danger of inflation

Greatest obstacle to recovery, lack of coal determines French approach to problem Germany

Lack of confidence - Fear of Communism

26 Nov 46

## BELGIUM

### Internal political instability

Seven different governments since liberty Sep 44

But foreign policy stable as same Foreign Minister in all seven
Cabinets. Paul Spaak (President of ON Assembly)

Economically Belgium recovered most quickly of all liberated countries. Has reached about 75% of pre-war prosperity.

Reasons: 1. Industry relatively undamaged by German occupation.

2. Possession of Congo with over 50% of world's uranium and resources developed by British and U.S, during war.

### Internal

Instability due to near equilibrium between right and left.

Chamber of Deputies (House of Representatives)

<table><tr><td>Christian Socials (right)</td><td>92</td></tr><tr><td>Liberals (center)</td><td>16</td></tr><tr><td>Socialists (left)</td><td>70</td></tr><tr><td>Communists (left)</td><td>23</td></tr></table>

Present government: coalition of Socialists, Communists, and liberals split over collaborationism of King.

### Economic and Foreign

War brought about closer ties between more similar internal developments in Belgium and Holland than existed before 1940.

Customs, Unions and eventual full economic union on model of Belgium-Luxembourg Unions (since 1923) planned for 1947/48.

Economic Bloc of Lowlands, (I.E.) Holland, Belgium, Luxembourg would probably take third place in international trade. (Fol-

-2-

lowing U. S. and England)

Coal: Stumbling bloc on road to full recovery of Belgium. Dependent on Ruhr production. Consequently Belgium follows French lead in approach to Germany.

Belgium has more than academic stake in Germany. Belgium troops occupy part of British Zone, namely North Rhine Province, Cologne, Aachen, and Godesberg.

26 November 46

HOLLAND

Economically less fortunate than Belgium. German destruction ex-
tremely through. Colonies were occupied by the Japanese and
now fight for independence, so that at present they are no
asset to the Netherlands.

Internal

More stability than in Belgium. Government composed of
Catholics, Laborites and Independents.

Economic

Intensive efforts at reconstruction, and hopes for Union with
Belgium.

External

Close alignment with England (British military help in
Indonesia)

Approach to Germany also follows British rather than French
lead.

Governed by contradictory factors:

1. Security which means a powerless system

2. Need for market and German goods traffic thru R'dann
which means a prosperous Germany.

26 Nov 46

England

The Task

1. Rebuilding the war devastated country.

2. Defend the British Empire against the forces of expansion.

3. Transform the British economy into a socialist one
consequently must export.

Internal

Labor victory in summer '45 brought in Attlee government
(Vice Churchill coalition)

Committed to Socialization of key industries.

Committed also to freedom of individual and democratic principles of government.

A new concept to many in Europe and US which may give inspiration to the various socialist movements in Europe and have repercussions in the U.S.

Enterprises socialized so far:

Bank of England

Coal industry

Public utilities

Social medicine

Under consideration:

Railroads

Rejected for time being:

Steel industry

Rehabilitation requires large imports. British foreign investments used up during war consequently exports necessary. Implying: going hungry and without luxuries for the sake of future stability.

- 2 -

Progress of Export Drive

1945: 22% volume of 38

today: about 100% volume of 38

Goal: 175% volume of 38

Realizing that British economic stability is a vital US interest,
economically and politically.

US Loan: 3 3/4 billions

In view of inflationary rise in prices Great Britain careful in
making purchases now.

External

Tasks:

1. Prevent dismemberment of Empire thru nationalism.

2. Defend Empire and communist lines against Soviet
expansion.

Ad 1. Colonies need not be self-supporting (already during
war)

TVA projects in Middle East.

Encourage self-government (India, Egypt) but build
non-military ties that will last.

Ad 2. Pressure in Germany, Iran, Iraq, Greece

Tacit alliance with US

Bi-partisan foreign policy rather under fire from the
left than from conservatives.

Greece - Iran

Germany

Preview of communism

Against international control of Ruhr

Backing of Socialist Democrats