That's also how I would read it, and I think it's perfectly understandable why someone who was considered a Jew by the Nazis and had to flee from Germany, despite holding a prestigious university chair position, would feel that way about the instincts of the masses in 1939, in the days of mass hysteria leading up to or following right up to (depending on when exactly this was written) an unjustified war of aggression against a neighboring country (even without knowing what that war would turn into later).

Considering these circumstances, I think his assessment is spot on, and the fact that we look down on this idea nowadays (judging from the fact that this is the top-voted comment at the time of writing) may be evidence of the kind of progression he was hoping for in the last paragraph.