Vienna, August 1?, 1934.

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1 Vienna, August 1?, Dear Mr. Phillips: We are sending a pouoh today and I have read over my last letter to you dated august 14, There is not much in the way of positive facta to add and while Z think it is clear froa my letter that 1 have no faith in Papon's mission or la his good Intentions, nor in those of the German Government with respect to Austria, this is so important that X want to take this opportunity to write you further. It Is strange that in spite of his own declarations and in spits cf his actions there are those who persist In giving to Hitler the oredit for better Intentions and for greater honesty of purpose and for ilder views that he really holds. This I consider one of the most danger* ous factors of the European situation. Zt took Italy and England, acre particularly the latter, a long time to got rid of oertaln illusions, but I think in most responsible quarters in those countries and, of course, In Franss these illusions have disappeared In the last few months* Of course Hitler wants to steer a more moderate course because hs has ast defeat on every side. 1 He had to make the arrangement with Poland to get thoss questions out of the way. Hs Is faced by an embarrassing and for him dangerous situation in the oaar. His Austrian adventure has rsoelvod a serious set back. The economic and financial situation In Germany io becoming constantly more desperate. He is faced by a population which will have increasingly serious burdens and disappointments to bear* He has definitely isolated Germany. He is faced by the absolute necessity of making a decision of very far reaching importance and which involves grave dangers for him. He has reached the hsights of power by Dgeans and polisies whioh have brought his country to the brink of ruin and which he knows he cannot sontinue to employ. Ho talks peace when he has not the least intention of following a peaceful policy. The rearmament program is going sa in Germany at a tremendous rats and there is no longer any use in talking ibout allowing an increase in the German anay. The military effectives are in fact / The Honorable William Phillips, Under Secretary of State, Washington, D. C.

2 - 2 - already vtll above the maximum of what she asks to be given. She is no longer confining herself to the expansion of the air forces which goes on feverishly, bat Is engaging in rearmament actively in industry which up to a few months ago It was their intention aot to push for some time longer. What Hitler has to have is an opportunity to consolidate his position and to break through the wall which he himself has built around the country. Ia wonder then that he is considering a conciliatory policy which may bring about credits, trade, and a better opialon, but behind it all will continue that which he has started and tht solicits in which he really believes, and I think ws must realize that irrespective of what he says and of what gestures hs may make SJtt even of some reassuring astions which he may take, he will not have in any sense swerved from his original polioiss and intentions. One sf the principles of National Socialist action is that as Batter how untrue or insincere a statement nay be if you say it often enough and keep hammering at it, not only the masses, but even the more informed classes will end by accepting it. This is understood by people who have used the method for less sinister ends than thoss which national Socialist Germany has in mint. While I still do not believe that they will succeed in deceiving the outside world with protestations whlsh have as meaning, their success within the country leads them to continue this policy and it seems to haws succeeded ia certain quarters* 0ns sf the most dangerous things is that some very well meaning people, especially from our own country, go to Germany now and they some away with a pistars whioh ia entirely incorrect and whioh is exceedingly dangerous for us. I had a talk with Senator il obinson this morning. Hs has just been in Germany had had a talk with Hitler. Senator Robinson, I am 3ure, has no sympathy with National Socialistic Germany. I think he is fully aware of the Sanger of what is going on in Germany, sat his twenty minute talk with Hitler seems to have convinced him that Hitler is sincere ia his deaire to follow a more moderate course, not because hs stay wish to, but because hs thinks ho has to. ' A 'he dangerous part, however, is that ths Senator seems to believe that Hitler really believes that a more moderate policy and a more conciliatory one must hs followed. There is no question hat that there will he gestures and even some aots, hut it would be dangerous to think or to aot on the assumption that there has been a real ohange sf attitude. A s t have so fre uently poiatsd oat. this is iapossible for Hitler and his associates and srsn if they felt a more moderate course J were necessary, they are temperamentally unable to follow it.mu*

3 - 3 To understand the German situation and to realise the sinister possibilities which exist and the sinister realities which we have to face aiul-uio Amiguraau'Tijullintog- which we h«aeiifco=jsee>, one must base his opinion not on a brief eta/ in the country, not on the impressions one has from a few short conversations, but on the realities of experience gathered by long dontact and a real knowledge of their daily actions. I thought the Senator had a good picture of the Situation as a whole, but that kin assumption that Hitler wan really determined upon and could be depended upon to follow a aore moderate oourse was one which is open to the gravest doubt and whioh one van entertain only after a series of actless whioh really show a definitely new orientation. I as confident that we can expect plenty of gestures eat that we aust still continue to bass our own actions on the facts. I think that they are contemplating certain declarations and ssrtain actions to try to gst out of the economic and financial impasse. They must have credits and they must have trade or they cannot pull through. X had a letter from a friend who is a prominent Jew at horns and who has been la Germany in the last weeks. He went there, I thins, representing a certain group of very influential and moderate Jews at home who believe that it would be worth while and that the time nan arrived to make some liaison with the German Government. X saw him before he left for Germany and told him I thought his mission was sseless for I felt that while it was true that he might get soas fair words new and some fine promises, that he would net gst any real action. From his letter I gather that he had some contact with various people in the entourage of Hitler who gave him encouragement. I gather that he was told that the German Government would change its attitude radically on the Jewish question and my friend seemed much encouraged. Here again I think is a great mistake. I think Hitler himself knows that they have made a mistake in the Jewish question. X think it aas been brought to him enough now that he even knows that it may have been a fatal mistake. He may even be contemplating permitting some declaration to he male and even some minor aotlon to he taken whioh would indicate a change of attitude on the part of the Government. To hope, however, that this is sincere and that. It means that this National Socialist Government is going to remove the disabilities of the Jews is to entirely mistake the situation. There are, X know, several very fins and very important Jews in Germany who believe that a change of policy is is the offing, but here again the wish la father of the thought. On the questions of Austria and of the Jews Hitler and the Hat* ional Socialists know no compromise, hut in accord with their lasl aotlons, if they cannot accomplish their end in one way they will seek another. Direct aotlon against «uatria

4 - 4 and the Jews has failed. How indirect action will he used but this ohtnge cannot be mistaken to be a change of policy. What do we need more clearly than the illustration of Austria. Germany has really been carrying on war formonths against this little country. She even harbored and has maintained an army on the Austrian frontier which has only one purpose and that is to destroy the independence of a friendly country. Her Government has plotted the direct destructioifv of a friendly Government and connived at the murder of itsv Chancellor. Their action so far has failed to accomplish its end and has only resulted la further solidifying world opinion against Germany. low what is to be done? Hitler writes a letter to Papen full of friendly protestations and sends him as Minister to Vienna, hut is frank enough to say later to the question of the Anschluss that it is not an actual one, hut that the Austrian people will eventually find a way to satisfy their desire for union with Germany. The Austrian legion, however, remains undissolved. It is pushed back from the frontier and its aotivitles nay be for the time being mors restricted, but it remains, A responsible Minister of the German Government just two days ago said that the Austrian people must be permitted to follow out their natural desire for union with Germany and that Germany will not abandon Austria. Papen comes here supposedly on a friendly mission and to oarry on a conciliatory policy, hut ws knew that he has not the slightest intention to do anything except carry out a more insidious program which aims to bring Austria into the lap of Germany. It is a program whlsh Hitler can not abandon and whlsh he will not abandon, and I sua sure that events will show that this is so. Sven if there Is conciliatory action and gestures which may he made in the near future to make Papen's mission here easier and to throw dust into the eyes of Europe and sf the Austrian people, anyone who knows must realise that these are only means to an end and that the ultimate purposss have in no sense been changed. The situation whlsh has developed In Germany through the death of President Hindenburg is a serious one and one whlsh* I think, greatly complicates the situation* As long as Hindenburg was alive the army's oath sf allegience was directly to him and in taking action against the National Socialist Party the army was In no sense violating its oath* Mow they have been placed In the position of swearing allegiance to Hitler and this in my opinion greatly complicates the situation. It prsrsnts the freedom of action of the army, for now aotlon is equivalent to a breaoh of their oath. When I was In the Argentins during the last yssrs of Irygoyen's power, the situation hecame intolerable during the last ysar# The army fslt that it was the only weans through whloh a new Government

5 - 5 - oould be brought la and the country rid sf Irygoyen and some of his corrupt Ministers and the corrupt governments in the provinces* For them, however, it wat a serious question as leading offiters often told me. They said, "How can we be expeotsd to put out the Government and Irygoyen when we have sworn allegiance to him. He is our Commander ia Chief. By taking action agaiast the Government ws are doing something not compatible with our honor and duty as soldiers. We are placing ourselves sad our country in the samt category as some of ths other South Ameritan eountritt, which we oannot do". I understand this thoroughly, for officers in the Argentiat army were for the stoat part men of real sense of honor and of responsibility. They realised that thsy had to bring in a now Government, but felt that it MIS an impossible situation for them. it was a whole year before they could make up their minds and even then a convenient opportunity was awaited which would give the army ths excuse to act. I think the same situation has been created in Germany. The fteichswehr as a whole still may feel it is ths instrument through which the new 0#vernment will have to be brought in, but its task and partitularly ths position of ths superior officers has been made vsry much more diffioultj Just what factor this will be la the ultimate development I am unable to foretell. There is increasingly a feeling that now an endeavor will bs Bade to maintaia the regime through following a mors moderate polity aad yst retain Hitler, as was the case in Italy. The idea seems to bt that the army and ths industrist retaining Hitler and following a moderate policy will gradually force out ths radical elements from the Government, I still bolievs that Hitler alone is too heavy a burden for a moderatt Government in Germany to carry. I do not see any development along that line whith spells tafety and peace for Europe. I still believe that a united front of the Powers as now maintained and a maintenance of our attitude and a common deterrainatioa of no moral or material support are the only means of bringing about a Govtrnment which does not present a menace to the world. The recent developments in Germany have made the transition more difficult and have, I think, delayed the change somewhat, but I am not ytt prepared to btlieve that Germany is in a position to force the rtst of the world to help her with credits and trade ia order to perpetuate a Government and a system definitely oriented as a threat to all that we stand for and believe ia. If she succeeds ia Ating this, then indeed she will have won the war, but only to use her victory to impose herself on Europe.

6 6 - By being wise and firm X think we can still save ourselves from this catastrophe, by simply doing nothing except to oontinue the negative attitude we now maintain towards her. If we do that the system will craok and a prostrated Germany may learn humility and try to begin to lift as a good neighbor. Any weakening on the part of Europe would, I believe, be fatal. X try always to keep ray perspective and not to allow any factors to assume a greater respective importance than they have, but I am convinced that we are passing through one of the periods of grave decisions. I think ours have been very wise so far and it has given me great comfort and great hope. I trust that you do not mind ay putting so much of my personal opinion and my personal reactions into my letters. I assure you that I express them with the greatest reserve for X realise we must all be very careful about what we say. I do feel, however, that I have had such intimate contact with some of these men who are unfortunately in such important positions in Germany today that it would not be right if I do not say in a very clear way what ay considered judgment with regard to some of these things may be. I know you will understand that I express, these opinions with honesty and ait the same time with proper humility. Cordially and faithfully yours,

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