The European Checkerboard

Before introducing the speaker, the President, Mr. J. P. Pratt, K.C., called for a motion to nominate a Nominating Committee to select the officers for the coming year.

It was moved by Mr. H. F. Powell, Seconded by Dr. F. A. Gaby,

THAT the following Members form the Nominating Committee for the Officers for the coming season of 1939-40:

Mr. J. H Brace
Mr. R. M. Harcourt
Mr. Dana H. Porter
Mr. Horace Harpham
Mr. George N. Hargraft
Mr. Leonard L. McMurray
Mr. J. P. Pratt, K.C. (President)
Mr. H. C. Bourlier (Hon. Sec.-Treas.)
Members ex officio. CARRIED.

THE PRESIDENT: Gentlemen of The Empire Club of Canada: Before introducing our guest-speaker, I want to read a resolution which has been passed by our Executive for forwarding to His Excellency, the Governor-General. This is the resolution:

"The Empire Club of Canada, looking forward with eager loyalty to the expected visit of the King and Queen to Canada, respectfully requests His Excellency the Governor General to convey to Their Majesties an expression of the devotion of its members to the Crown and Person of the Sovereign, their humble duty and deep affection toward Her Majesty, and their happiness that in present troublous times the British Commonwealth of Nations is looking with unquestioning confidence to their King and Queen as representing all that is finest and most glorious in British history and tradition. The members of The Empire Club of Canada reaffirm their allegiance to Canada and a United Empire, their conviction that the close association, sincere cooperation and mutual loyalty of Canada and the Mother Country are necessary to the freedom and prosperity of both and their earnest desire that Canada with the other peoples of the British Commonwealth of Nations, shall work in harmony and mutual confidence to ensure, at whatever cost, the safety of free institutions."

CARRIED (with applause)

THE PRESIDENT: Our speaker today is one of the best known and leading radio commentators, certainly in Canada, and I would like to suggest in the North American Continent, because so far as I can gather, no other commentator goes himself to the scene of the particular picture that he wants to look at and gets his information at first hand.

Mr. Rex Frost was born in London, England. He graduated from Cambridge University and then took up residence in Belgium and France, working in banking institutions where he had an excellent opportunity for gaining a wider understanding and interest in foreign politics. He has resided in Canada for a number of years but has kept in close touch with the international scene and in fact, I am informed he has made three trips to Europe within the last eighteen months. His last trip was on January 13th, when he left Canada for a comprehensive tour of Europe and during that trip he visited Berlin, Poland, Hungary, Czecho-Slovakia, Austria and, of course, Great Britain. To most of us Mr. Frost is known as the President of the Arm Chair Club and many of us listen each evening to his discussion o world affairs in his wellknown chummy style.

I have much pleasure indeed in introducing Mr. Rex Frost. His subject is "The European Checkerboard."

Mr. Frost. (Applause)

Mr. REX FROST: Mr. President, Guests and Members of The Empire Club: When I was shown to my stateroom in the liner, Queen Mary, at Southampton, homeward 'bound for Canada on March 4th last, and found a cable lying on the dressing table which read, "Empire Club will greatly appreciate address by you Thursday noon, March 30th," I can assure you, Sir, I enjoyed a warm glow of pleasure at the compliment, for I really take it as a compliment that you have asked me to renew our association of thirteen months ago. The name "Empire Club" inspires in me a cordial responsiveness which relates back to the early days of my interest in world affairs, when as a young university student I belonged to an organization known as the "Junior Imperials," whose creed visualized and interpreted the destinies of the British peoples with the broad outlook of a United Empire. In recent years, as we must realize, there has been a trend to replace that central Empire unity of purpose of yesteryears by the more individualistic outlook of a commonwealth of nations. We have passed more recently through a period in which the several dominions which constitute the British Commonwealth of Nations have sought to evolve in many respects a detached viewpoint of their own, and few will deny that, broadly speaking, this modern aspect of progressive freedom in thought and action interprets our understanding of democracy in its most intelligent and liberal form. However, while I am still a relatively young man (you will notice I flatter myself) I am still sufficiently old-fashioned, that is in the eyes of many, to remain firmly convinced that our ultimate destinies as individual dominions, our mutual aspirations and fondest hopes for the future are wrapped up in the evolution of an unqualified unity of purpose which looks far beyond our own personal problems. Many of you, I am sure, will share with me some regret, perhaps an added modicum of apprehension, that there have been occasions of late when that unified outlook has been accepted with some reservation.

It will no doubt interest you to know that when I was in London four weeks ago I again heard discussed the interesting proposal to supplement the present British Cabinet by a Minister from each of the self-governing Dominions. If adopted, this would mean that the governments of each of the Dominions would send one of their duly elected representatives as resident Minister to London, in the capacity of a fully qualified member of the British Cabinet, to represent the Dominion interests and to assist in coordinating and unifying the vision of the Commonwealth as a whole in its relation to the foreign and colonial policies of the Mother of Parliaments. The proposals strike me as having a great deal of merit.

I hope, Sir, that these preliminary comments will convince you that it is a very real pleasure for me to meet again this afternoon the membership of a Club whose name suggests the breadth of vision, the dovetailing of ideals, and what is even more, in the face of today's challenge from without, the responsibilities of the Empire connection. But might I add, while it is a privilege to address The Empire Club, there are also drawbacks. You have made a practice of publishing once a year a very intriguing book in which you place on permanent record the addresses of your guests. From the speaker's point of view that is sometimes embarrassing. I recollect receiving some time ago from one of my radio critics a letter which read as follows: "Dear Sir: Regarding your radio address of last night, one year from now you'll wish you had never made it." With some trepidation, therefore, last week end I opened the covers of the book of Empire Club speeches 193738, to review the comments which I brought to you in February of last year. I might add that I have since replied to my correspondent saying: "Dear Sir: Regarding your recent letter, I wish I had never read it."

To deal first with Czecho-Slovakia. This afternoon I do not propose to discuss the conditions in that country prior to the time of the Munich Agreement. The pros and cons of the situation have been pretty well mulled over from time to time. Suffice it to acknowledge that, whatever the cause, conditions arose which gave birth in the Czecho-Slovak Republic not only to a Sudeten German separatist movement, but to a similar separatist activity among the Slovaks and Ruthenians. At the time the Munich Agreement was signed, all of the individual minority groups within the State were openly at loggerheads with the central government at Prague, and in many respects with each other. Germany, as we know, cashed in on the situation, annexed the Sudeten country, Poland got a slice, Hungary got a slice of the old Republic, and the remainder of the dismembered State was split up into an autonomous Slovakia, an autonomous Carpatho-Ukraine, with a Federal government at Prague to cover the interests of the Czech lands of Bohemia and Moravia and to administer in the joint interests of the Federated State as a whole-much about, I would say, a similar setup to the system of government we have in our own Dominion of Canada, the provinces with legislatures of their own, with local administrative capacity, plus a central Federal Parliament.

Today we face certain facts which, in their postMunich form, must be accepted as they stand, facts which provide some vision for the future in eastern and south-eastern Europe. May I, therefore, largely concern myself first by bringing you a few illustrations of developments in Czecho-Slovakia since Adolf Hitler annexed the Sudeten country into the German Reich.

In the sphere of business I would like to tell you about a series of incidents as they were related to me by a promiment Czech industrialist around a dinner table in one of the fine old homes of Prague seven weeks ago. My host was the General Manager of a paper manufacturing concern whose head executive offices were situated in the Sudetenland zone. He described it to me as one of the most modern, as well as one of the largest paper factories in the old Republic. Immediately upon occupation by the Germans of the Sudeten town in which his plant was located he, as General Manager, was notified at his office in Prague that from that time on all production and management of the plant was under control of the German Commissar of the district, that all correspondence between the Sudeten plant and the Prague head office must be conducted with the approval of the German Commissar, and that communication by mail, telephone or telegraph was subject to complete supervision. Customers of the firm who owed money for merchandise shipped during the six months prior to the annexation were mailed a letter advising that all remittances must be directed to the Sudeten plant. Conversely, the Prague office was advised that it would still be permitted the privilege of settling any debts payable. For the time being, in other words, all incoming moneys to be handled by the German authorities and all outgoing bills to be paid by the Prague owners in Czecho-Slovakia. Should we call it a nice friendly little arrangement?

My host was next informed that coal required for operation of the plant must be purchased from Germany, and not from the Teschen District, as formerly, the Teschen District having been ceded in the meanwhile to Poland. The Prague head office objected on the grounds that their plant had been adapted and long operated on a special type of coal from the Teschen locality and counselled that a change might cause trouble. The objection was overruled, a type of German coal not adapted to the furnaces was put into use, with the result that within a few days the furnace grates burned out. The plant had to be closed for two weeks while the necessary repairs and replacements were made and, a large number of employees were thrown out of work. But the crowning blow was when the German Commissar in the Sudeten town sent the repair bills to Prague for payment! Much as they raised objection, in view of the circumstances, they eventually had to pay them.

That is but one illustration of the difficulties under which the Czech businessman was operating in the postMunich period. I could quote numerous incidents related to me to show convincingly that even in the case of self-contained industrial establishments in the postMunich Czecho-Slovakia, there had .developed a state of affairs whereby Germany had acquired a position of economic partnership in the running of the dismembered state.

Similar control was in evidence in the financial sphere. When Germany assumed control of Sudetenland, the Reich secured the equivalent of 150 million dollars in Czech currency and coin which was in circulation in the locality at the time, and this was approximately one third the total money circulating in the whole of Czecho-Slovakia. As an inducement to the Sudetens to quickly change their Czech crowns for German Reich marks, the Sudeten banks were instructed to convert Czech money into German at a rate of about 20 per cent higher than the normal exchange. This resulted in a rapid conversion of Czech crowns into German marks and the Reich authorities, having accumulated a huge amount in Czech paper money, promptly presented it to the Czech National Bank in Prague for redemption in gold. As it was impossible to redeem the paper money in gold without seriously influencing the status of the currency in the new Czecho-Slovakia, Berlin said, "All right, we'll take it out some other way; in the meanwhile you can regard it as an account payable. We will probably take it out in trade." Germany thus virtually placed itself in the position of the big creditor standing, as it were, on the doorstep holding a large volume of due (bills for collection, a state of affairs which enabled Berlin to practically dictate most questions of policy to the Czech financial institutions. In the six months period between September last year and March of this year, Germany has virtually gained control of all arteries of Czech trade and commerce, both domestic and foreign, and the significance of that foreign trade of Czecho-Slovakia is the more realized by the knowledge that in recent years the export trade of Czecho-Slovakia has been more than twice as large as that of any state in central or southeastern Europe.

What is more, the defenceless position of postMunich Czecho-Slovakia had forced the dismembered Republic into the German political orbit, a government had been precipitated into office in Prague which had little or no alternative but to quickly respond to every demand made upon it by Berlin for political, economic and financial readjustment. You will understand what I mean, therefore, when I declare that the post-Munich Czecho-Slovakia was just as much lock, stock and barrel, a German protectorate in the several months preceding the official German declaration to that effect two weeks ago as it was after the storm troopers, the Gestapo and other symbols of Reich domination took physical possession.

While I was in Czecho-Slovakia just a few weeks ago I had an opportunity of discussing the outlook, as it was apparent at that time, with the Federal Prime Minister in Prague, Monsieur Beran, as well as the Leader of the Official Opposition in the House. I met also members of both of the Slovak parties, the militant Separatists and those of more moderate outlook. From these conversations I became convinced that all groups within the state had accepted the postMunich status with a spirit of remarkable fortitude. I asked Prime Minister Beran in his office in the Kolovrat Palace in Prague for an expression of his outlook for the future, and he made it clear that his government had accepted the situation philosophically, had every wish to work out its new destiny, forgetting the prejudices of the past, and with a hopeful optimism based on a practical common sense understanding of the requirements of tile present and future.

However, there was one point on which the Czechs were very bitter and definitely apprehensive. "Territorial guarantees," they said, "were promised us in return for the sacrifices we made at Munich. We have done Germany's bidding in regard to Sudetenland, we have given autonomy to our two largest minorities, we have returned the Polish and Hungarian areas to their respective countries, we have admitted German economic and financial control in the country, we have done everything of Germany's bidding . . . . but still the promised guarantees of our new borders by Britain, France, Italy and Germany are not forthcoming." While there was no definite suspicion of the impending German coup in Czecho-Slovakia while I was in any of the European capitals, the Czechs, I believe, smelled a rat when, having done everything to qualify for the Four Power guarantee, nothing was done about it and all they got when they pressed for specified performance was a stall, based on the reason that the delimitation of the new frontiers was incomplete in a few minor details.

We all know what happened. Germany walked in.

Before coming to considerations suggested by the train of circumstances which occurred in the Danubian area two weeks ago, I will bring you a few thoughts suggested by the train of circumstances which occurred in the Danubian area two weeks ago, coupled with a few impressions suggested by the circumstances within Germany itself. In official circles in Berlin no attempt is made to deny that the present German economy is conducted under very extenuating circumstances. In the German capital on the night of January 30th last, I heard the Reich Fuehrer make the following statement at the opening of the Reichstag: "Germany has always undoubtedly been in a very difficult position economically . . ." Rather than denying the fact, the Nazis conversely have sought to justify the necessity for a degree of economic privation, on the grounds that by the terms of the Versailles Peace Treaty, Germany was stripped of all its financial and economic resources. The German people have had that view thrust at them so frequently in the past five years that they are mostly willing to accept with a measure of good grace the present inconveniences of daily life in Germany, in the understanding that it is part and parcel of the programme to restore racial, political and every other sort of national prestige. At the same time, I did find during my recent visit a greater willingness on the part of the average German citizen to poke fun at the present difficulties of the household and business life, more so than when I was in the Reich eighteen months ago.

For instance, one German housewife told me, with quite a smirk, of an occasion when she recently purchased what purported to be two pairs of cotton rompers for her youngsters. When the garments were ready for washing, she put them in a boiler to boil out the dirt. Ten minutes later when she went to take them out for rinsing she discovered that the so-called cotton fabric had dissolved away into a sort of glutenous composition, or, as she put it, the rompers returned from whence they came--wood pulp or some sort of synthetic composition.

Then again, the story was going the rounds of Berlin when I was there about a certain lady who sent her husband out to do a little shopping. At the store he asked first for some eggs. "No eggs today," said the storekeeper. "How about oranges?" No oranges. "Any onions?" No onions. "Any butter?" No butter; tomorrow, maybe. So the customer picked up an advertising pamphlet off the counter entitled, "Winter Sports in Happy Germany," and took it home to his wife. "There, my dear," he said, "is the lunch." It was food for thought anyway!

It is true, of course, that there are queues in the German cities, particularly in Berlin, which line up outside the stores to get coffee. I saw them myself. And due to the shortage of paper, the German housewife is expected to take paper bags to the store wherein to bring away her purchases, and she must use these paper bags time and time again. Her purchases of certain dairy products, butter and other fats are restricted to the very minimum of requirements and she is continually faced in many ways by synthetic and other substitutes for many of the normal requirements of the household routine. Certain fresh fruits and fresh vegetables are not always obtainable. The homemaker is obviously put to considerable inconvenience at times to secure the foodstuffs of her personal choice; she may often have to accept something else. She cannot plan in advance, for instance, to have lamb for dinner; there may be no lamb the day she wants it and she may have to take veal, or whatever happens to be in stock.

Circumstances of this type you can read about without going to Germany. When you are staying in the Reich especially in a private household, little endeavour is made to deny an accepted condition. Facts such as these have given rise, however, to an impression in America and other countries that Germany is slowly starving to death. Such in my estimation very definitely is an exaggeration. There is enough food to go round of one sort or another, even although you may not be able to get what you want when you want it. It is quality and variety of food which is lacking in the Reich, rather than quantity. A German citizen who has the price need not go hungry. The inconveniences of the food situation are many, but they point to stress rather than distress, It might in fact be said that the whole German economy of the moment is based on shortage--by that I mean, an economic status in which demand consistently exceeds supply.

To prevent the normal rise in prices which would naturally result from such a condition, the Nazi philosophy has instituted a sweeping scale of price fixation. Most of the prices of essential foodstuffs are arbitrarily fixed by official authority, first to the producer, then through the respective channels of distribution, and finally to the retail trade. The normal laws of supply and demand do not function in Nazi Germany today, except in regard to certain commodities influenced by the import and export trade which might come under the influence of conditions that are governed internationally.

There is in fact, also a shortage of labour in the Reich, to a great extent brought about by the terrific upward surge of industries connected with rearmament and the speeding up of production of goods for home consumption, due to the curtailing of imports under the Four Year Plan. In working out his internal economy, Hitler has naturally been favoured in one respect. He came into power at the very low point of the world depression, and much as the Nazi programme has been planned with a view to dissociating itself from commercial and financial influences of the outside world, these influences have been inescapable. The trend of world business between 1932 and 1937 was vigorously upward and the steadily rising figures of German industrial and agricultural production during that period undoubtedly reflected in part the world trend. I have met economists in Europe who claim that world business conditions had a far greater influence in the upward surge of German production since 1933 than the Nazi leaders would give credit for. In other words, they believe that the expansion in the German economic scene resulted largely in spite of the philosophy of the National Socialist administrators, rather than because of it.

These same economists do not hesitate to express their belief that the German absorption of Austria and Sudetenland, followed by the progressive economic penetration into Czecho-Slovakia and the Danubian zone, has been forced on the Reich not so much by political considerations, but by economic and financial stringencies. Whatever may be the pros and cons of that outlook, and admittedly they are debatable, the fact remains that in Germany they are able to produce a maze of figures designed to convince you that the country's economic background is becoming stronger and stronger every day, and that Nazi finances are fundamentally sound. Moreover, in none of the European capitals can you find close observers of the economic scene of Germany who foresee an economic collapse in the near future. You hear it talked about a lot in North America, I know, but I find the consensus of opinion in Europe concedes the belief that the Nazi economy by various ways and means can sustain itself indefinitely, even admitting that its system refutes all the orthodox laws of economics and finance. The impression I brought from Europe is that anyone who believes Germany's economic collapse imminent is due for disillusionment. With the assistance of some of the recently acquired assets of her neighbours, she can keep going for a long time, perhaps even sufficiently long to get on her feet.

Among the questions uppermost in the minds of every student of international affairs are, first, what will Hitler's next move be? Second, what can be done to stop him? I think I can best deal with the first of those questions by telling you of certain uncanny apprehensions which were conveyed to me in Warsaw. In the Polish capital people were speaking quite glibly of the fear that their country was one of the next on the list. They spoke of the impending German reoccupation of Memel, and were quite concerned about the German penetrative economic thrusts which have been obvious for some period in the Danubian zone.

In considering the situation in Poland it must be borne in mind that Poland and Germany on January 26th, 1934, signed a non-aggresison pact duplicating in many respects a similar pact which Warsaw had concluded with Moscow two years earlier. One recollects also references made by the German Fuehrer not so many months ago, that he had come to quite a complete understanding with Poland, that he respected Polish rights to a Baltic outlet via the present Corridor, and in general indicated that relations between Berlin and Warsaw were quite cordial. They will tell you in Poland today that, in spite of her political and trade treaty with France, signed in the early post-war years, the desperate business conditions in Poland during the recent depression practically, if perhaps unwillingly, have already forced Poland into the economic arms of Germany. While, therefore, Polish friendship with France has been nominally the foundation of foreign policy in the Polish capital, the economic exigencies of bad times, the fact that Germany wanted Polish raw materials and was able to pay for them, resulted in a business relationship which the German Fuehrer now obviously is seeking to turn to political advantage.

While I was in Warsaw there quite naturally cropped up the question of Danzig. In the Polish capital they did not think when I was there that Hitler would make any deliberate aggressive move in regard to Danzig or the Polish corridor whereby to disturb the situation in that country, until such time as he was ready to go ahead and plunge into the accomplishment of his objective for the creation of an autonomous Ukraine, to be carved mostly out of Poland, Russia and Roumania. There are over six million Ukrainians in Southern Poland alone, and they were described to me by a press correspondent who knows that locality very well, as the worst treated minority in Europe. For that reason, Nazi propaganda in the Polish--Ukrainian areas has made considerable headway of late, the German Fuehrer being pictured, as also he was in certain of the Danubian areas, as "the liberator of oppressed minorities." This same form of subtle penetration is being carried into the Soviet Ukraine and there is a strong probability that, if this programme of infiltration of Nazi doctrine can be brought to the point of fruition during the next six months, there will come a day in Poland, they predict possibly August or thereabouts of the present year, when Hitler will declare he is going through Poland to preserve order and rescue the forty-five millions of the Ukrainians from Bolshevist terrorism. At that time Hitler will say to Poland, "Well, boys, are you with us or against us, because, whichever way it is, I'm going through to the Ukraine anyway."

I can assure you, Gentlemen, in Warsaw they take a very sombre view of that outlook. 'They place very scant reliance upon the non-aggression pact with Berlin. With this potential vision in mind, the anxiety of Britain and France to induce Poland and Russia to construct a Four Power Stop Hitler Agreement is the more understandable. But on the other hand, it explains why Poland does not evince any eagerness to be drawn into any movement which may prove offensive to the German Government and draw down immediate retribution on its head until she, Poland, receives a commitment to definite simultaneous military action by the western democracies and Russia, should Germany march.

Enquiries which I made in the British Foreign Office a month ago indicated very conclusively that the British Government at that time was quite unwilling to give concrete military guarantees to Poland for automatic British military action. While there are rumours of a change of heart on the part of the British Government, no definite reversal of that policy has so far been announced. I doubt, personally, from what I learned, that it ever will be. However, in the absence of a definite iron clad joint commitment of military action involving Britain, France, Russia and Poland, there is little possibility that Hitler can be stopped in the east. So Poland now becomes the focal point of eastern Europe and its importance outweighs, in my estimation, any considerations elsewhere on the continent.

You may enquire, well, what about the Franco-Italian situation--isn't that serious? By comparison with the outlook elsewhere, I would say, no. In fact, as a general rule in Europe, everyone seems to feel that the difficulties between France and Italy could have been easily straightened out long ago. According to information given me in London, the British and French governments are pretty well agreed that they should concede Mussolini representation on the Suez Canal board. There is a further willingness to accord him certain privileges in the Red Sea port of Djibouti and some sphere of influence in the Addis Abbaba to Djibouti railway.

May I perhaps put it more explicitly this way: in principle, my conversations in and around the British Foreign Office left me with the impression that neither Britain nor France wish to deny the Italian government a share of influence in those points through which Italian traffic must pass in the line of communication between Italy and Ethiopia. The strategy of the moment is obviously to get Mussolini to specifically outline his demands before they sit around the conference table. While I was in London I learned that British and Italian diplomatic officials were engaged in informal conversations in which the British diplomats were endeavouring to convince the Italian not to exaggerate his demands upon France to the point that they would be completely unacceptable to the Republic.

Now, in yesterday's address by Premier Daladier, you will have noticed that he first laid down the principle that France would not cede one inch of her territory to Mussolini. He proceeded from that point to what is a seeming paradox, but which was obviously a conciliatory gesture, in remarking that France was willing to commence negotiations with the Italian Government on the basis of the Laval-Mussolini Agreement of January, 1935. The pact, as we know, found the French Government conceding territorial readjustments in the Tunisian zone and Djibouti, and provided also for a progressive revision of the status of Italian Nationals in Tunisia.

In Britain I find that they are getting sort of an ironical laugh out of the manner in which that Franco-Italian agreement of 1935 is being nominally made the subject of verbal brickbats between the French President and the Italian Duce. When Foreign Minister Laval went to Italy to negotiate and sign the now prominently-debated document, he was publicly dined and feted with sweeping enthusiasm. On the day of its signature, Mussolini informed the journalists and dignitaries present, "This Franco-Italian agreement will be a kind of continuous creation, in the course of which the friendship of the two countries will be endlessly revived." Monsieur Laval, proposing a toast to Mussolini said, "You have written the finest page in the history of modern Europe." Times certainly change! It is now pointed out that the agreement was never ratified by the Italian Chamber of Deputies, or whoever ratifies agreements in Italy, but the document did bear Mussolini's signature. The assumption is that, when the cordial festivities of the occasion were over and Il Duce had an opportunity to sit down quietly and digest its import, he decided that he should have asked for more. Last December he notified France that the pact was void. While on the surface there is a deadlock, there is little doubt, I find, in diplomatic circles in London, that the pact will eventually form the basis of negotiation and result in an agreement. At the moment both the French Premier and the Italian Duce are dickering for position, but I repeat, in London nobody seriously thinks that the situation offers any direct threat to the peace of the continent.

Among the interesting interviews which I enjoyed in the Empire capital was one with Sir Thomas Inskip Secretary of State for the Dominions. Until recently Sir Thomas occupied the portfolio of Minister for the Coordination of Defence, and in the course of our conversation I raised the point of Britain's so described "unpreparedness" and commented on the numerous inferences made since the time of the Munich agreement that Great Britain was hopelessly unready to defend herself from attacks by air. "I can assure you," remarked Sir Thomas to me, "that Britain now has an air force which could be depended upon to make a much better showing in the defence of this country than the public in general has been led to believe." He then went on to explain that during the past year the organization of aeroplane production in Great Britain had been developed to a very efficient point. "While we have not yet reached in this country the capacity for mass production of bombing aeroplanes which has been achieved in Germany, we are turning out better machines, and of importance, we are turning out now a larger number of ultra high speed fighting planes than Germany. We have access to higher quality raw materials than Germany and we are therefore building not only faster but more durable, more rugged, more efficient machines than our contemporary across the North Sea."

That was the import of Sir Thomas Inskip's comments. I might remark, Gentlemen, that Germany has been losing on an average one hundred pilots a month lately from crashes-seven times greater than Britain's losses.

Continuing, Sir Thomas said, "Even if we have not as large a number of planes as Germany in total, we are now in rapid production of fighters of the Hurricane type, which from all accounts could be depended upon to out-speed any ships which the Reich has now or is building on any mass production scale. In defence against air raid, speed," he added, "is all important."

I must say, Gentlemen, that the evening following my discussion with Sir Thomas Inskip, I went out to one of the airports just outside the London district and watched some of the new British Hurricane fighters in flight. About twenty-five of these tremendously fast machines took off for trial flights just as dusk was approaching, and on the evening in question I can assure you that it was quite an inspiring sight to watch. Their riding lights, which, turned on after dark, gave the impression of the flashing speed of a meteor. It was a colourful and visible illustration of the import of Sir Thomas's remarks-to the tune of 400 miles an hour.

Now, briefly in closing, Gentlemen, to deal with that most-frequently-asked and all-important question-is Europe facing war in the immediate present? Those of you who have been accustomed to follow my Arm Chair Club discussions will know that I have long had complete confidence in the belief that Europe would straighten out its problems without recourse to a major war. I maintained that viewpoint unflinchingly throughout the dangerous days of the crisis of last September. You know that I have always leaned to the side of optimism, I am not a warmonger and I have never subscribed to the belief that war is inevitable. While willingness and capacity to negotiate around the conference table exist, peace is reasonably assured. For twenty years that capacity has existed between the major powers of Europe, particularly between Britain and Germany. Two weeks or so ago, however, occurred an incident which injected disquieting complications--Germany marched into CzechoSlovakia.

Now, six months ago when Mr. Chamberlain and Herr Hitler met in Germany the Fuehrer gave the British Prime Minister two major assurances: First, that once the Sudeten problem was settled, Germany had no more territorial claims to make in Europe. Second, he added that Germany had no desire to include in the Reich people of other races than Germans. These were personal assurances as man to man in private conversation, they were reiterated during Hitler's speech at the Sportspalast in Berlin, and still again repeated before the members of his own Reichstag. The principle laid down in those speeches was abrogated when German troops took possession of the Czech lands of Bohemia. So with every justification Mr. Chamberlain has now declared that henceforth he can place no confidence in the assurances of the German Chancellor. Thereby, today we find in Europe a new situation, a rupture in confidence, a feeling on the part of Mr. Chamberlain that further negotiation is of no avail. That one important pillar of confidence in negotiation which played such a significant part in upholding the structure of peace last September has now been removed. Reluctantly, therefore, must we conclude that the masonry of peace is weaker in its foundations today than it was at the time of the Munich Agreement.

I leave you with this thought, Gentlemen. There is one pillar of confidence which in these difficult days must not become undermined, it is your responsibility and mine to uphold-the pillar of confidence in a United Empire. (Hearty applause)

THE PRESIDENT: Mr. Frost, on behalf of the members of The Empire Club of Canada, I extend a very cordial "Thank you." What you have told us perhaps has not sunk in as deeply as it will after a short period of consideration. You have made statements today which to most of us are perhaps somewhat startling, but we join with you, Sir, in the thought that a United Empire is the answer, so far as Great Britain is concerned. (Applause)