In September 1938, British Prime Minister Neville Chamberlain signed a pact with Adolf Hitler. Britain (and France) would allow Germany to occupy parts of Czechoslovakia (the Sudetenland) inhabited by ethnic Germans in exchange for a promise not to expand further into Czechoslovakia. Upon his return, he declared that he had guaranteed “peace in our time.” A few months later, Hitler took control of all of Czechoslovakia.
In my book entitled midas paradoxCited a NYT report on market reaction to the Munich agreement.
“From a strictly market point of view, the news of the Czech government’s decision to cede the Sudetenland to Germany was positive. Naturally, as the threat of war appeared to have receded, Prices have improved. But this was “good news” with a difference. It’s hardly the kind of good news that captures the imagination and evokes the bullish spirit of individual traders. Even Wall Street, whose mental processes are supposed to be highly realistic, was acutely aware of the tragedy involved in Czechoslovakia’s capitulation and the unfortunate role that Britain and France played in it to dampen their normal speculative impulses. I was doing it. ” (new york times38/9/22, p. 33)
This happened a long time ago, and I suspect that few Americans now understand the consequences of appeasing a tyrant who promises he only wants a piece of his neighbor.
Reading this article reminded me of this market reaction. next tweet:
