Memorandum of conversation a representative had with Mr. X on Feb. 21, 1939., 1939 March 11

Enclosed with No. 1171. Interviewer impressed by health and good spirits of X; X stated firm stand taken by democracies has already made impression on dictators; in view of stiffening attitude of democracies and failure of Nazi attempt to bring Balkan states and Hungary into German orbit, Hitler reluctant to proceed with "bloodless war" against England and France; X says Nazi regime steadily losing popularity among German people; he referred especially to persecution of Jews, which is resented by Jews and Gentiles alike; German people also fear war, which they feel Hitler is leading them into; X said Hitler not capable of admitting mistake; according to X, [Hjalmar] Schacht fired from Reichsbank because he refused to increase notes in circulation; X called [Walther] Funk, new President of Reichsbank dangerous and unscrupulous; [Rudolf] Brinkmann, undersecretary of State in Economics Ministry intelligent and able official, but suffers from megalomania; Germany now ruled by extremists, whose powers and influence were considerably increased by Munich agreement; [Heinrich] Himmler accumulating more and more power; [Joachim von] Ribbentrop's position becoming more important, and [Paul Josef] Goebbels still on job; Hitler cannot do without his skill in spreading propaganda; new wave of radicalism felt in business; private initiative replaced by governmental regimentation and control; X believes Hitler and his system will collapse due to economic breakdown, but doesn't discount possibility of Hitler's embarking on war before economic breakdown.