If Xmas was prepared as carefully as El Pip takes care of one of the chapters, we would have Xmas one time each five years.
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For Christ's sake!
Again!!!
If Xmas was prepared as carefully as El Pip takes care of one of the chapters, we would have Xmas one time each five years.
Again!!!
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That looks almost deliberate!
Does anyone have a supply of feathers to go with this tar?
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We could comment spam again...or go read other AARs...while waiting for the next installment of the Encyclopedia 1937/1938 edition...
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It just so happens there was an update on my challenge HOI AAR on 23rd. And there's another one written up, but not posted yet.
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What? Read other, lesser, works and taint our minds?!We could comment spam again...or go read other AARs...while waiting for the next installment of the Encyclopedia 1937/1938 edition...
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Nah. Other genres!
Narrative adventure stories, comedies, fantasy epics...
There is a lot out there.
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I also posted a new chapter in mine, despite my signature being from that of last year's increment!
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I understand waiting for top of the page can be annoying, but reacting to that by advertising other AARs in the thread is a bit weird. It's much easier to just ignore it.
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I take a brief internet break for Christmas with the Pippettes and Senior Pips and what happens? Mostly magnificent posting but also Kurtie being Kurtie and then a regrettable outbreak of advertising. I have scattered reactions suitably across the thread but will not be replying as I assume you would all prefer the next chapter, which you can enjoy below.
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Chapter CLXIV: Danzig or Default
Danzig or Default.
In early July 1937 the Free City of Danzig informed it's creditors it wished to renegotiate it's debts, on the basis that it expected to be entirely unable to make the full required payments. While Danzig status was very deliberately a constitutional and diplomatic fudge certain matters, like what debts it was liable for and to who, were crystal clear. As a result the well practised system for dealing with a sovereign default moved into action and, after a few headlines and brief mentions in cabinet minutes, the matter sunk into the background as the negotiations between debtor and creditors began. That the matter roared back into attention in the late autumn is due to the audacious solutions that a certain non-creditor party proposed, our interest is also in the very secret future discussions that occurred in parallel. British interest in the matter was, initially at least, entirely confined to the financiers of London, Edinburgh and Glasgow. While Danzig was effectively part of the Sterling Area (the Danzig gulden was pegged to Sterling and most of Danzig's gold reserves were stored it the Bank of England) that did not mean anyone outside the immediate creditors had any interest in the loans or any negotiations on them. To be blunt the sums involved were too small to be significant to the banking sector, let alone the wider economy, and it was believed the talks were purely commercial negotiations with no wider political or diplomatic ramifications. Such was also the reasoning of the League of Nations, while the Free City was in theory and in treaty under the protection and oversight of the League Council, in reality the League High Commissioner's were under instructions to be as 'hands off' as possible. The matter was therefore left to the London Loan Committee, a group of City of London grandees empowered by the League Council to resolve issues with League Loans in any way they saw fit, provided that did not involve the League having to make good on their earlier financial guarantees. The Loan Committee itself would therefore take on the tricky task of negotiating quite how bad a loss the bondholders would take, whether in reduction of interest rate (and thus payments), extension of time (the bond holder only making interest payments and not repaying the capital until later) or most commonly, and in the case of Danzig, both.
The striking Holborn Bars building, headquarters of the Prudential Assurance company. The Prudential had an interest in the affair as it was the joint owner of the British Overseas Bank, along with the Royal Bank of Scotland and the Union Bank of Scotland. The British Overseas Bank had been established shortly after the Great War with the stated aim of facilitating foreign trade, it did not make loans itself but specialised in the financial and legal logistics of getting foreign payments into and out of the British Imperial banking system. In the case of Danzig it mean acting as the Sterling receiving bank that transferred the loan repayments from the Bank of Danzig and distributed them to creditors in Britain, the Empire and beyond. With the Bank of England starting to ask difficult questions about the liquidity and solvency of the British Oversea Bank's operations in Spain, Germany and Hungary, the reliable fees from managing "safe" League Loans became even more important to the bank's management.
The reason that Danzig had reached the edge of default is relevant to latter events so is worth briefly exploring. The initial post-war years of the Free City had been a financial mess as many parties, not least local Danzigers, took advantage of no-one knowing quite what a League of Nations Free City was or how it worked, so taxes were generally not paid while many expenses were incurred and left for the League to pay. The League eventually got a grip on matters and a number of loans were floated in the mid 1920s to improve the utilities and infrastructure in the city, crucially this included dredging and expanding the harbour. The League's plan for Danzig was that it became the main port for Poland, this was part of the reason the city was in a customs union with Poland, and that shipping and import/export would be the main pillars of the Free City's economy. Unfortunately for the League, and the city, Poland disagreed with this plan. After the experience of the Polish-Soviet War (when German dock workers in Danzig refused to unload munitions or any other war material) Warsaw realised they did not just need access to the sea but reliable access, which mean a port they fully controlled. This realisation resulted in the near two decade project to develop the small coastal village of Gdynia into the largest and most modern port on the Baltic Sea. Gdynia was a mere 10 miles west of Danzig but that was enough to get safely into the 'Polish Corridor', the narrow strip of land that was, in theory at least, unambiguously Polish. The project would proceed in fits and starts, progress limited by both finances and a lack of indigenous skills and experience, but there was determination to make it work and the difficulties were overcome. By the late 1930s the port of Gdynia was handling twice the cargo of Danzig by volume and nearer ten times as much by value; Warsaw's policy was to push high value and strategic trades through the 'Polish' port and leave the low value bulk goods, such as agricultural exports, to Danzig. This collapse in trade also meant a fall in the various fees and charges that Danzig's docks could charge, with obvious consequences for the city's ability to pay it's debts. With this understanding of the background it should be clearer why the London Loans Committee, when it examined the matter, was concerned if the proposed debt relief was sufficient, it would serve no-one to have to revisit the matter the following year if Danzig continued to decline.
The Coal Trunk-Line in Poland under construction in the early 1930s. The new line linked the coal mines of Polish Silesia with the port of Gdynia and it's equally new bulk coal loading docks. It is somewhat ironic that a project started to free Poland of foreign dependency would end up substantially financed and owned by overseas interest. The French industrial giant Schneider-Creusot had invested heavily in the Silesian mines, the Gdynia project and, through the French-Polish Rail Association, the new railway. At a technical level the projects were a great success and Polish coal exports boomed, however at a financial level the stress of all the borrowing began to tell. The enterprises all depend on exports to earn their way, specifically hard currency exports to repay the overseas creditors, and as we have seen the coal trade was highly competitive.
This brings us to the unexpected counter-solution proposal, to put it simply the Reichsbank (Germany's Central Bank) offered to fully guarantee and under-write all of Danzig's international loans, under the original terms, should certain concessions be made to Germany about Danzig's status. Presented as a tidying up of the uncertain status of the Free City the proposed changes would have pushed Danzig right up to the limit of incorporation into Germany, while still technically leaving it as League protectorate. Danzig's foreign policy would transfer from Poland to Germany, as would control of the city's rail infrastructure, the city would also enter a customs union with Germany, the exact details of how that would work while still being in a customs union with Poland being glossed over. Poland's other rights in the city, mostly around the Westerplatte munitions depot and docking privileges, were to be retained but subject to joint oversight by the League and Berlin. From a purely banking perspective this was a very tempting offer, maintaining the full par value of the debts was of course preferable and even allowing for Germany's own patchy record of debt repayment the debts being jointly and severally guaranteed by the Reichsbank was a better security than just the City of Danzig alone. However, one did not become a City of London grandee by ignoring politics and so the Loans Committee very quickly passed the matter on to the League Council, dryly noting the economic aspect along with a clear statement that this was an entirely political decision. As we have seen previously question of irredentism and minority rights were at the top of the list of things the League Council did not wish to discuss, particularly for nationalities that had quit the League like Germany. Naturally therefore the Council attempted to kick the matter to somewhere it could safely be ignored until, hopefully, everybody lost interest and the matter could once again be forgotten. Their problem was the other bodies kept kicking it back, the Minorities Commission said that as Danzig was basically entirely German it was nothing to do with them, the Delimitation Commissions confirmed everyone agreed on the boundaries of Danzig so they had no jurisdiction and an attempt to pass the matter to the Mandates board was vetoed almost immediately by Britain and France; the Permanent Mandates Commission had safely drifted into irrelevance, resembling more a comfortable home for retired colonial governors than an active oversight group, and the last thing either power wanted was for it to be roused into activity or, worse, become a forum for groups to complain about the disposition of the Mandates. The issue eventually ended up on it's own bespoke sub-committee with the German Ambassador to Switzerland granted "Affected Party Representative" status, this status having been invented by the League Secretariat specifically so the ambassador could actually attend the meetings and address the League Assembly despite Germany not being a member state.
All of this diplomatic wrangling took so long that the actual issue had long since been resolved, the London Loans Committee agreeing a lowering of interest rates and delay to payments into the sinking fund, while Danzig had to provide a bit more security against a future default in the form of charges over more government property in the city. At first glance this may seem like a failure for Germany, but that is to assume the proposal was intended to succeed rather than merely being a diplomatic gambit. From the perspective of the German Foreign Ministry they had forced the League to once again start talking about the rights of German minorities, got a representative into the League Assembly while not having to rejoin and banked another grievance where Germany had tried to be 'reasonable' only to be blocked. More tangibly the distraction had allowed the German administrators of Danzig to accelerate the 'Nazification' of the city, most notably bringing in a local version of the Nuremberg Laws, a complete violation of the charter and constitution of the City but one which the League Commissioner in Danzig had waved through as a goodwill gesture. Even taken together none of these were particularly major successes for German diplomacy but this reflects the distinctly limited horizons of official German diplomacy under von Neurath and the traditionalists in the Reich Foreign Ministry. In their view the bombastic bluffing of von Ribbentrop and the debacle of the Rhineland had severely damaged German diplomatic credibility. Ironically for an ideology that put such value in 'Will' and decisiveness it was German resolve that was most questioned, even when her capabilities were known foreign powers still doubted that Berlin would follow through on her words and not back down if challenged. Therefore German diplomats were under orders to carry out the painstaking work of rebuilding that credibility, never promising anything that they were not certain would be delivered and prioritising regular small wins over risky gambles. From this perspective the Danzig Gambit had been a success, Germany had materially improved her position, gained some small concessions and most importantly been treated as a serious counter-party and got her concerns talked about at the highest level. It should also be noted that this incremental approach only applied to official channels, in secret talks von Neurath was prepared to be far more ambitious, audacious even, and it is likely this as much as internal Nazi politics that kept him in office.
Prudential House in Warsaw, the Eastern European hub for the Prudential Assurance company it was a very different building from it's London counterpart. An 18 story art deco skyscraper it was the tallest building in Poland and the sixth tallest in Europe when completed in 1933. It's size and fashionable appearance made is a popular symbol of 'modern Poland' and the financial industry in the country, a less complimentary comment was that it being foreign owned also made it an appropriate symbol of the 'Polish' financial sector. A popular question was why Poland had not made a counter-proposal about the Danzig loans and the answer was policy and finance. Politically Danzig was seen as already lost, the population was essentially German and Gdynia was an acceptable strategic port, so additional Polish privileges in the city of Danzig were unfeasible and unnecessary. More crucially the Polish state was in the midst of defaulting on it's own debts, while the economy was booming this was through foreign investors like Schneider-Creusot and Prudential. The actual Polish state was weighed down with debts incurred on 'strategic' projects like the armaments focused Central Industrial Area, which had a voracious appetite not just for funds but for scarce foreign currency to pay for imported machines and materials.
This brings us to the previously mentioned private discussions that accompanied the very public debt meeting. These particular secret talks were held between Germany and Poland at the instigation of Berlin and under the cover of consultation between the two powers about the economic situation in Danzig. While a number of matters were discussed the most dramatic was undoubtedly the German proposal about a long term solution to the Polish Corridor issue, an issue that seemed intractable due to the contradictory demands of the two nations. Berlin proposed to bypass all of those issues by getting Poland access to the sea from elsewhere, specifically via Lithuania, so she would no longer need the corridor and could return it to Germany. Having just discussed Germany's relative lack of diplomatic credibility this seems quite a leap, but it should be emphasised it was only a small part of the discussions and a long term aspiration not a short term plan. The German diplomats instead focused on the surprisingly numerous areas of German-Polish agreement, starting with their mutual dissatisfaction with their neighbours and hopes for territorial 'corrections' in the region. Diplomatically the two nations had a number of common adversaries, alongside Lithuania they both had claims on areas of Czechoslovakia and had made very public complaints about the Czech treatment of minority groups. Co-operating and co-ordinating their efforts would be more effective than either working alone, which would increase the pressure on Prague to agree to the proposed adjustments to the borders. Far less dramatically, but of greater immediate interest to Warsaw, the potential for economic co-operation was also discussed. Poland was still officially a member of the Gold Bloc but even after the 'revaluation' of gold by the Bloc the economy was still struggling and only regular support from the Banque de France was keeping the speculators at bay. The revaluation had made Polish exports more competitive on the wider global market, but to some extent that was just catching up with earlier devaluations. It also had no effect on intra-bloc trade as those rates were unchanged, all currencies still being tied to gold. As noted French firms had heavily invested in Poland and it was widely believed that Paris' support for Poland's continued membership of the Bloc was more to do with securing those repayments than any benefit for Poland. While the German negotiators did not propose anything as dramatic as Poland leaving the Bloc, they did suggest that moving some of Poland's trade to the German method of inter-government bartering would entirely avoid the problems of tariffs, quotas and exchange rates that dogged Poland's more conventional trade.
The Polish Foreign Office was quick to notice the common thread of these proposals, they all involved weakening or breaking Warsaw's ties to Poland's New Entente allies, France and Czechoslovakia and most of them would also damage relations with the Little Entente as well. This did not mean they were rejected however, Poland was gravely disappointed in the New Entente as it had not lived up to their somewhat unreasonable expectations. It was a cornerstone of Polish foreign policy that Poland was one of the pre-eminent powers in the region, should be treated as such by her neighbours and should be the prime mover and leader in any regional alliance or block. This was not a view shared by her neighbours who viewed her as a peer at best, with many thinking it was Poland who should look to them for leadership not the other way round. This mismatch accounts for the failure of Poland's many ambitious schemes in the period, from the dream of the Intermarium (an alliance of Eastern European states stretching from the Baltic to the Black Sea) to the more limited 'Third Europe' of just her neighbours, all of Warsaw's schemes assumed and required Polish leadership and every time this was utterly unacceptable to everyone else. It was therefore unsurprising that the New Entente was another disappointment, while Warsaw was not so far gone as to think the French would bow to their leadership, they had expected a strong Warsaw-Paris core with the Czechs and then the Little Entente doing what they were told. It was believed this would be a forum for discussion on vital matters of Franco-Polish interest, like a new set of massive loans to fund the next stage of Polish industrialisation and French support for Poland's various foreign policy plans. Instead the French had treated everyone as equals and worse wasted time discussing unimportant details, such as Poland resolving it's current debt default and starting to repay old loans before it got any new ones, or Poland honouring the terms of existing licence agreements as a prerequisite for discussions on licences for the next generation of equipment. What Warsaw wanted was leverage, but after their aggressive approach to default negotiations both Britain and America had blackballed the country for more credit, leaving Paris as the only option that had both the funds and any interest in offering them at non-commercial rates for 'strategic' reasons. From this perspective closer commercial links with Germany, or even the threat of them, seemed attractive as a way to put pressure on the French. It must also be admitted that much of the Polish political establishment was more comfortable being at odds with the Czechs than trying to be allies, so working with Germany to raise 'minority rights' complaints also appealed. The change should not be overstated, Poland remained in the New Entente and was still committed to the Gold Bloc as a sign of the power and modernity of the Polish economy, but the first Polish-German barter agreement would be signed that autumn as would the first demand for action about the Czechoslovakian government's treatment of non-Czechs and the statement from Berlin affirming it's support for Poland in the Vilnius Dispute and the need for a wider negotiation on Lithuania's minority and border disputes with her neighbours. It is interesting to note one area that was not discussed, despite the ongoing talks between the Japanese embassy in Berlin and the Dienststelle Ribbentrop (Ribbentrop's Special Bureau) about an Anti-Comintern agreement of some kind to include Germany, Japan and Poland the matter was not raised. This is a sign both of von Ribbentrop's continued isolation from foreign affairs after his earlier failings and the compartmentalisation of Nazi government, as the Foreign Ministry did not approve of those talks (due to concerns about it compromising Germany's position in China) they had just refused to do anything about it and, in the absence of a directive from Hitler, could not be forced into action.
A streamlined and still brand new LMS Coronation Scot locomotive with Tsar Boris II of Bulgaria at the controls, the Tsar taking advantage of a royal visit to Britain to indulge his favourite hobby of driving trains as fast as possible. In this case he managed to get the engine up to 88mph, a new personal record but thankfully well short of the 114mph the engine had hit during trials in the summer, the shear novelty of the achievement being enough for the incident to make the news from Australia to America. There was a more serious purpose to the trip beyond locomotive driving, the Tsar and his advisors would be discussing trade, regional diplomacy, investment and re-armament with the British government and the many Imperial and international bodies based in London. Unfortunately for Boris and Bulgaria they would find all those issues linked back to the one thing they did not want to talk about, debt.
The Danzig loans were not the only matter the London Loan Committee had to consider that autumn, Bulgaria has been in default on it's League of Nations organised loan since 1933 and with the Bulgarian state visit to the UK another effort was being made to resolve the matter. Where Danzig represented the mostly conventional approach of negotiation and revised terms, Bulgaria had opted for a very different approach to defaulting on a loan, namely refusing to engage with the creditors and instead only paying as much interest as Sofia felt was fair and affordable at that particular point. Unsurprisingly the 'fair' payments were only a small fraction of what was owed or what the country could actually afford had it made the effort, which was the prime advantage to the approach. The initial disadvantage was being frozen out of the international debt market, but as the country has no further borrowing or foreign currency needs this was not a serious issue, while the diplomatic disapproval from the League and creditor friendly governments was not an especially serious deterrent. The consequence that Bulgaria had not properly anticipated was the impact on all other forms of credit, such as trade finance, shipping and even fuel bunkerage. The key problem was that Bulgaria was seen as being unwilling to pay rather than unable, which was indeed the case, and that was a far greater sin that mere default or financial crisis. A record of an inability to pay could be mitigated through collateral or guarantees, perhaps at a higher rate or less favourable terms but there would always be someone who would facilitate such trades, while new loans on the promise of economic reform were a League staple by this point. A government unwillingness to pay however undermined even collateral, after all a claimant would have to go through the courts and bodies of the state to make claim on the collateral and if the state itself was unreliable then that became a very uncertain proposition. As a result anyone trading with Bulgaria quite reasonably demanded payment up front while paying their own bills only at the end, which was a problem for a nation seriously short of foreign exchange and which lacked working capital even it's own currency. The State Visit to London had been an attempt to break this impasse and convince Britain to re-establish trade links, starting with a resumption of Bulgarian agricultural exports backed by guarantees from both governments. With Bulgaria black listed by the Credit Export Guarantee Department due to it's cavalier attitude to it's past debts, and it's refusal to reconsider it's position on the matter, this would have required Board of Trade intervention and a political-diplomatic decision that Anglo-Bulgarian trade was of such importance it needed quotas and government support. Unsurprisingly this was not forthcoming, Britain already had reliable suppliers from within the Sterling Zone and had no desire to disrupt those carefully balanced trades for the benefit of Bulgaria. To the extent Britain had interests in the region they were concentrated on keeping the Soviet fleet bottled up in the Black Sea and the challenge of trying to keep good relations with Greece and Turkey simultaneously. Bulgaria would be no help with the former and her loud irredentism over Macedonia and Thrace meant she was actively unhelpful for the latter, so there was not even a strategic case for trying to improve relations. It was this rejection, as well as a matching one from Paris for broadly similar reasons, that would see Bulgaria pulled tighter into Germany's economic system as bartering and physical swaps did not rely on credit or finance, or at least not explicitly. The risks and costs still existed in such trades but a government to government deal meant the entire trade had an implicit state guarantee, even if those negotiating it were not consciously aware of it, and much of the transport cost and risk could be dumped onto state railways and lost in the overall national budget. This had been the outcome that Boris' diplomacy had been trying to avoid, Germany already accounted for 40% of Bulgaria's trade but before the end of the decade it would reach 70%, Bulgarian tobacco, wheat and vegetables being trade for fertilizers, manufactured goods and eventually arms. The Bulgarian government was well aware of the risks of such dependency but, while it could identify the need for diverse trade partners, it could not take the steps necessary to allow it. Ultimately being dragged deeper into Berlin's 'Exchange Rate Control Bloc' was an easier option than facing up to their debts and making the necessary reforms. The German government was less interested in why nations joined preferring to focus on the simpler fact that they had and what followed, so the Reich Foreign Ministry saw marked it up as yet another success for the autumn. As with Poland the deals with Bulgaria were seen as just the start of the relationship, Britain may have had little interest in South Eastern Europe but the German government believed that having an irredentist dictatorship economically dependent on Berlin offered all sorts of valuable opportunities.
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Notes:
A Danzig Crisis! Of sorts anyway. Danzig did default in OTL for the reasons stated, but it just got tidied up with an interest rate cut and an extension of the loans. There were certainly plans in the 1920s to give Poland a port in Lithuania, everyone knew the Danzig/Polish Corridor solution was not especially stable so a rebuilt Polish-Lithuanian Commonwealth was considered, however the Lithuanians really weren't keen. German-Poland relationships are interesting at this point. Weimar Germany spent the last years of it's existence in a bitter economic tariff/trade war with Poland to try and pressure them into giving up Danzig and the corridor. Then Hitler comes to power, ends that conflict, signs a 10 year treaty of German-Polish friendship and spends years making speeches about how amazing that deal was and how it proves what two 'strong men' can do without democracy getting in the way, even as late as January 1939 he was boasting about it. I think it is an under-rated reasons why he got away with so much, he had been 'reasonable' about it and appeared to defuse a powder keg issue. All lies and misdirection obviously, but if you were already inclined to appeasement and inaction it was helpful 'proof' that Hitler would negotiate and keep to a deal.
The Polish government knew it was facing a tricky balancing act between the Soviets and Germany, it also knew more allies would aid in that, however they insisted on leading anything and no-one else wanted them to lead. There were many reasons for this; the Polish habit of starting border disputes, the Polish belief that licence agreements were just worthless paper and the fact the Polish economy was not that strong and fairly agricultural. Czechoslovakia was the industrial power of Eastern Europe, Romania had oil and both had far stronger economies that weren't regularly teetering on the brink of default, so neither had any reason to look to Poland for the 'leadership' that Warsaw thought it was due. Poland would OTL at least tacitly co-ordinate with Germany, they used the Anschluss as cover to issue an ultimatum to Lithuania and would participate in the carve up of Czechoslovakia during Munich, so it would not take much to tip them over into a bit closer co-operation, particularly economically where they were struggling.
A brief reminder there is no Anti-Comintern Pact in Butterfly. I've discovered Japan was quite incredibly keen on the idea and probably still are, from their perspective hating Communism is a key strand linking themselves, Poland and Germany so is a good basis for a treaty. Even OTL von Ribbentrop wanted Poland included in the Anti-Comintern Pact and it wasn't that crazy as Hitler was, publicly at least, boasting about German-Polish relations being strong. Here Germany is still trying to balance China and Japan and there is no Sino-Japanese War to force them to pick, so the idea remains just an idea. Italy is not included as Mussolini sees trade links with the Soviets as a way out of his current economic hole and the very different Spanish Civil War means relations remain strong, in addition relations with Germany are far cooler than OTL.
The Bulgarian bit is mostly OTL, they did default and refuse to pay, and Boris did want to expand trade with other nations to avoid being dependent on Germany but just as here he failed. It was included partly for the train anecdote but mostly to show German diplomacy is finding it's feet again. Von Neuarth was a full on Nazi and he only disagreed with Hitler and von Ribbentrop on tactics not on the overall objective, so the German Foreign Ministry is still going to be stirring up border complaints and inciting Germany minorities, but less bombastically and possibly more effectively. Certainly things are looking up for German interests, even if certain economic and financial fundamentals remain and are casting ominous shadows over the future.
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When did this bit become reality? The City has often ignored politics in the past...
Ugh.
Really goes to show how stupid the League was in how it runs things.
Urghm...pretty sure this is against the forum rules on what can be included in AARs...
I.e., no holocaust or ethnic purge type actions...
Neither the City nor Wall Street would have been happy with this kind of approach by the State Department or the Foreign Office...
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I think as long as it stays on that level, it grazes but doesn't violate the rule.
Very true, but back then they would have been much more functions of government policies because generally it was who was confirming if their investments were essentially insured. I can point out how it played just before the Great War.
Yes, I agree the governments would be successful at influencing the City / Street...I'm just wondering what concessions would have been made to deal with the unhappiness.
Always an awkward position. Especially if they really don't have much choice.
How well did that go (for Britain, and their customers)?
Well...they knew how to pick 'em. Or is this just them dealing with everyone who asked for a loan?
Something I've always wondered, after learning Danzig really was supposed to be a sovereign free city. Quite why any power, especially Poland, would rely on a German city state for all their sea access...the League really weren't very good at this sort of thing.
Also a massive issue, and rather like Alsace, always going to be a problem unless East Prussia or the Corridor ceased to exist.
Sensible, though still vulnerable to military force if not economic ones.
At that point, there's not much reason for the city to exist. No one issuing it as a port, it isn't aiding German/Polish relations, the city clearly wants to be German, and it existing at all is a fuse that might trigger war.
Provided it is not German (or Russian) interest, the solution stands quite well. There's a big difference between owing the British and French money compared to the Nazis.
Unexpected only by those not paying attention.
Any reason for anyone to dispute this?
Polite coughs and notes made the world go round in those days.
Hmm! Makes them sound like exiled war criminals...which some of them were but still...
Typical.
Ah yes, the Rhineland flip flop and resulting attitude that matched the initial attitude upon the Nazis' arrival in '33. These people needn't be taken seriously.
Looks nice.
Only real problem now is that if Germany and Poland do work out a deal for the Polish corridor in exchange for bullying Lithuania into sea connections, are the Germans going to pay for all the work the Polish did to make Gdynia viable? Would make it a lot smoother if they did, but both sides would probably at least agree to let it slide if it came to it.
The problem of course being that Poland was relatively weak, isolated, surrounded by two great powers with designs on their lands, un-industrialised and a bit of a regional bully, meaning no one liked them.
The sarcasm is strong in this one.
Just so.
This might be a spell checker thing, but its and it's mean different things.
If there was one balkan power I'd want on my side in a war, it'd probably be Bulgaria. They certainly did very well in both wars in comparison to the others...maybe including Italy, to be honest.
Somewhat irrelevant given Germany was planning on destroying both in the short-term anyway, but Germany certainly could have worked with Poland to get a unified Commonwealth back, or at least bullied Lithuania into a rump state, giving Germany Memel and much of the rest to Poland.
No one would really stop them except maybe the Soviets, and Stalin would probably take a deal that gave him the other two Baltic states...for now anyway.
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I had no idea about Tsar Boris' train driving hobby, how on earth did you stumble over that titbit?
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City Grandee is a specific term, perhaps I should have explained it. As I've mentioned The City was/is far from heterogenous, certainly there are those who ignore politics (or attempt to) but there have always been those who find a niche as the interface between the two worlds. The aim is to keep the trust of your City colleagues while being seen as a 'safe pair of hands' by the politicians, do that and you will become a City Grandee, the 'right short of chap' who will chair committees, be asked to deal with financial scandals discreetly, advise politicians who distrust the Treasury on financial matters and so on. While it may not make you the very richest it is a path to honours and titles, a way to build a reputation within the Establishment and polite society as more than just a financier, which is always appealing to some.
A practice that continues to this day. I was inspired by the UN Secreatariat who invented "Permanent Observer" status despite there being nothing in the UN charter or bylaws to support it, but it was necessary and convenient so no-one objected too loudly. Or at least no-one important.
I agree with the Wraith interpretation obviously. There will never be any more detail than that, but it was such a huge factor in Nazi thinking and how they measured 'success' or not that you have to very cautiously brush up against the issue every now and then.
I don't think so in this case. It is not like Poland was an incredible investment opportunity, it was in default in 1937 and trying to tie repayment to getting even more loans for arms factories. For the City there were many better opportunities elsewhere, this is still the period when there are more decent investment oppportunities than there is capital available. The US position was even more complicated, the US debts were still in negotiation until summer 1938 in OTL and there's no reason to think it will be much faster here, plus of course with a deeper depression Wall St has less capital to deploy, it's notable in OTL that even after resolution they still steered clear of Polish debt.
Indeed. It is not a formal ban on loans to the country, just a warning that the investor is on their own and government will not help with any negotiations or bailing the bank out if/when things go wrong. With plenty of investment opportunities in the Empire, all of which would be under-written by BoE/Treasury, I doubt anyone will complain too loudly.
They had had plenty of pratice by this point. Most of the League Loans were made in the 1920s so there was a lot of default and negotiation after the Crash and start of the depression.
It did not go well for the British Overseas Bank, as is often the case when someone sees an 'opportunity' that their more established rivals have ignored. There were already plenty of banks and bodies that could facilitate overseas trade, but they ignored risky markets or only traded on cautious terms. The BOB was not concerned with such things and so picked up plenty of market share, without WW2 they might have been fine but with so much exposure to 'enemy markets' (Germany, Hungary) or otherwise frozen funds (states the Nazis had annexed, Spain) they ended up being liquidated during the war. Post-war most of their claims got paid in some form, but that dragged on until the 1960s.
As I've mentioend the inter-war was full of strange international anommalies, the Tangiers International Zone and the Saar Basin Territory (which lasted until 1935) spring to mind. Immediately post-WW1 the League had great hope for these sort of international settlements, though as you say it was a terrible idea that never really worked.
Indeed. Everyone knew it but there was no obvious solution that didn't involve someone making massive concessions on vital strategic interests.
A bit more complex, apparently the Danzigers liked their 'in between' status. If they were integrated they would lose the last of the Polish trade but wouldn't gain any German trade, East Prussia already had ports. Of course they didn't want to join Poland, but they felt they would be much worse off economically if they joined Germany. They didn't have much say in the matter but they had some.
Danzig (Gdansk) is still a much better harbour than Gdynia, once post-war Poland had the choice they shifted back there and it remains Poland's biggest port so there is potential there, but as you say at the time it was mostly a fuse.
True enough, however the need to earn hard currency to pay off the French investors was a big factor in much of Polish trade and foreign policy, indeed even domestic economic policy to an extent. A lot of Polish coal 'dumping' was done just to earn hard currency to pay the railway loans, the government then covering the coal companies losses with Polish currency raised via higher taxes.
The foreign policy and rail bits are fine, though the rail part probably accelerates the death of the port as the Poles have even less control over any export going through Danzig. The dual customs union issue is a horrible mess, at one extreme you end up with Poland and Germany effectively being in a customs union together as they harmonise rates (which neither wanted), at the other extreme you end up with Danzig being a hub for customs fraud as items with a high Polish tariff but a low German one are smuggled through and vice-versa, which would cost both states a lot of customs revenue.
Indeed.
It will continue to be an issue for Germany for quite a while, as you say it has reinforced the inital impression many had.
I'd imagine something would be done with payment in equipment and other sorts of barter rather than cash, it suits the Germans and allows a degree of diplomatic fudging over what the 'price' is, it can be as high or low as necessary depending on how you value it.
And had a long history of breaking licence agreements, stealing tech and being unreliable on paying debts, making the other great powers at best distrust them.
As it should be.
It is absolutely a spell check thing.
Indeed, though I think Hungary has a decent claim. At the very least they will fight on until the bitter end, misguided though the cause was.
Memel was actually the main stumbling block. To bring back an earlier point about the League's awful plans, post-WW1 the Memel region was a League of Nations international mandate called Memelland. The idea being to buy some time to sort out all the many claims on the region, but Lithuania just invaded while everyone was distracted by the French occupation of the Ruhr in 1923. The point being Memel was the valuable bit of the region and contained the only decent port - prior to Lithuania invading they had been forced to use a port in Latvia and pay the Latvians for the privilege.
Short term getting Danzig and the corridor back is more valuable to Germany, so the scheme works. But longer-term it just sets up another German-Polish dispute as Germany has a claim on Memel and there are some German speakers there who can be riled up to make a scene.
I was looking up his foreign/economic policy, as he was basically an autocratic dictator after the coup his personal views became policy. It was this article that just dropped the train driving line in, this prompted a more focused google search and up popped articles about his British train driving escapade, it showed up in Australian and American newspaper archives so even at the time people found it an interesting hobby for a Tsar.
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It was also pretty vital to be one if you wanted to get onto the board of the bank of England. And most people did want to get on the board.
There's actually three different types of banker and man of finance at the time (mostly holding true to today): the become obscenely wealthy people, the city grandees who want honours and a ton of retirement boards and Quangos, and the City grandees, meaning City of London hierarchy, who want to get on the various Courts and become Lord Mayor.
Hence the interest in a series of 'leaguless' post war treaties, I suppose. More stuff needs to get resolved now rather than later.
Fascist thinking hasn't covered itself with honours so far TTL. Mussolini ruined Italy for a few decades. Germany has accomplished some internal short term progress and a lot of rearmenant but at the cost of midterm Catastrophe without a massive looting war or bakruptcy.
Outside looking in, the third way doesn't look quite so food for thought as OTL 1937/8.
Problen with Hungary from the Nazi perspective is they want a bit too much land in areas we want, and their other claims are also complicated because there's some Germans there as well.
Compared to Bulgaria which wants majority Bulgar regions, Macedonia (which at the time can be argued to be majority Bulgar) and Istanbul. Even their maximalist claims for the Thracian coastline and an adriatic connection at the expense of southern Albania aren't difficult. And none of it is actually land we want or claim.
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