General^mits was sent a copy of the
Aide Memoire presented to the State Department on
July 12th setting forth the anxiety of His Maj esty's
proposal
Government as to possible economic peace Jmuhhc to be
proposal
launched "by Hitler.     The essence of this £fttexXffingtgg
was that the world would enter a new and unparalleled
era of prosperity if it accented the totalitarian
that
management of Europe "by Germany and/the only obstacle
in the way of this era of prosperity was the resistance
of Great Britain,     To this General Smuts has replied
sayin-: that he thinks that it is provable t:;at Hitler
will start a peace offensive at an early date with
either suggestions for a c0nfere2.ce or of peace proposals
launched "before or after an attack on Britain. General
Smuts has doubts a"bout a blitzkrieg on Britain for the
present "because he thinks that British iiaval supremacy
and the efficiency of the Royal Air Force are two
formidable obstacles.
General Smuts thinks therefore that an alter-
native plan may be in contemplation, that would consist
of further encirclement of Great Britain by attempts
to seize the Faroe Islands and Iceland on the right
flank and Spain, Portugal and Gibraltar on the left.
Hitler would then have isolated Britain from Europe,
especially if the surrender of Gibraltar entailed the
withdrawal of the British fleet from the mediterranean
and the loss of the middle Kast.     With practically
the whole of Europe in his hands and with liussia
and/
and the Balkans in his pocket Hitler might think
that the auspicious time to launch his peace offensive
would "be Just "before winter comes. ¦   He would then
pose as the regenerator of an effete European system
and Would propose a U:iited States of ]£urope composed
of so-called free states, "between whom tariff walls
and economic barriers would have "been abolished and
some currency plan of Dr. Schacht's devising would have
been instituted.     Being in fact master of Kurope
Hitler could afford to restore a semblance of freedom
to his victims,     America wo.Id then be plausibly
reminded of the Monroe doctrine end the Continent would
\7ell have become a closed German market from which
Britain and Africa would be largely excluded.
A scheme of this kind could be dressed up
in such a plausible appearance   as to make a formidable
appeal to world public opinion sickened by the horrible
destruction of war and the spectre of threatened famine
in "urope,-     If, in addition, Hitler were big enough
to renounce annexations and indemnities the appeal
might become irresistible and might induce Europe to
accept a peace which would be a moral and political
disaster of the first magnitude.     General amuts thinks
consultation and agreement with the United States on
a positive alternative plan will be essential.- Mean-
while a warning note could be sounded in the press and
in speeches in both countries to help prepare public
opinion against Hitler's manoeuvres.    Advance ridicule,
Smuts thinks, might well take much of the strength out
of it.
August 5th, 1910*