Many in Britain regarded [the Third Reich] as belonging, first and foremost, to the capitalist system of western Europe. It was hoped, therefore, that a natural congruity of business interests would bridge political differences. So long as the Third Reich wished to continue profitable trading and remain a credit partner, interested circles were willing to overlook the repulsive and criminal practices of [its fascism] as an internal German affair.¹⁴

[…]

In […] June 1934 the issue was raised again when [the Third Reich] appeared to be on the point of defaulting on all her long‐term debts. This time Beaumont Pease, chairman of Lloyds Bank and of the Joint Committee, wrote to Montagu Norman to warn that if a clearing were established bankers might be compelled to look to it for support.

The bankers felt that their actions had been not only in their own interests but also in the interests of all others involved in financial and economic dealings with [the Third Reich], and in accordance with the policy of the British government.

Although all bank credits to [the Third Reich] had a bearing on Anglo‐German trade, only a small part of them were used to finance direct trade between the two countries. Indeed, the English banking system provided a large volume of credit for the financing of international transactions in which [the Third Reich] was concerned, particularly trade with British colonies and Dominions.

Bankers were keen to point out that the maintenance of such credits for the previous three years had been a vital factor in sustaining [the Reich’s] export surplus and consequently [its] ability to pay [its] long‐ and medium‐term debt service.

[…]

On […] 1 November 1934 the Anglo‐German Payments Agreement was concluded. Not only did the terms of the agreement appear to favour [the Third Reich], but the scheme could only begin to operate when Montagu Norman granted Schacht a credit for £750,000. The Bank of England was prepared to go to extraordinary lengths to help bury the danger of a clearing. The Governor, who as always had been most careful to receive written approval for his actions from the Treasury, wrote to Leith‐Ross,

It is bound to become public knowledge that Germany only makes the payments owing to the advance granted to the Reichsbank. On the other hand the conditions which permitted the advance to be arranged are by agreement held in secrecy between the Chancellor and myself. I think these two points are important: the former may be published abroad; the latter must be hidden.⁴⁸

[…]

British creditors were not in a hurry to liquidate because longstanding business connections allowed them to hope that they would benefit, sooner or later, from the revival of [the German Reich’s] international trade. Schacht encouraged the illusion. Although he questioned whether it would be possible to continue the full transfer of Standstill service, he claimed to value the agreement highly.

It was the only international agreement, he told Tiarks, which had been maintained throughout the whole world economic crisis, and he hoped that it would be possible to maintain it until Germany returned to an economy free from Devisen restrictions.⁵⁴ In 1936 British lending to [the Third Reich] began to come under greater parliamentary scrutiny.

The government declared that the only important commercial credit was under the standstill. The Joint Committee released a press statement to explain why it appeared that British bankers had increased their German credits while those in every other country had reduced theirs.

One of the provisions of the agreement obliged creditors to keep open for re‐use credits temporarily repaid in the normal course of business. The statement added: “It is unnecessary to add that the maintenance of these frozen credits is exceedingly unwelcome to the bankers concerned whose constant efforts have been and are devoted to obtaining repayment of them.”⁵⁵

(Emphasis added.)