The second reason was that there was a question about strategic positions. If
Britain had have gone to war with Germany straight away they would have had a problem. Their strength was in the navy and Germany did not have a wide border with coast and was far inland. France had put all their money into the Maginot line, which was purely for defence so they also would have been useless in a war with Germany. Britain also had problems worrying about Gandhi in India, Japan in the pacific and Italy and Africa.
The third reason is that there was an economic question. How could Britain afford to pay for a war like this? The only way to pay for a large army would be to print money, which could lead to depression or increase taxes massively which would make the people unhappy.
Britain and France also had trouble interpreting Hitler. He made himself out to be a man of peace and said that he just wanted to restore Germany to its rightful position before the treaty of Versailles. If Britain had have decided to go to war with Germany and all Hitler had wanted to do is restore Germany then it would have been a huge waist of money and lives. Chamberlain could not afford to make this mistake.
The final reason is that there was a problem with the crises in 1938. Chamberlain had a problem with Austria in March and the Sudetenland in September and was not sure whether this was all Hitler would do or if he would go further.
However there are several reasons that show that it was not the best policy to take. R.A.C. Parker, a famous Oxbridge historian, in hindsight had come up with a better policy to follow. This policy was to Beef up France with an alliance to Britain and token force sent to France. This was in return for France changing its high command and changing from a defensive strategy to and offensive one. The second part of the policy was to bring Poland and Czechoslovakia together and the final part was to ally with the Soviet Union. This second policy would have deterred Hitler and may have prevented the Second World War.
Overall I think that the best policy to take in 1938 would have been R.A.C. Parkers because this was more likely to deter Hitler forever rather than just delaying him in his search for power. However this policy was created in hindsight and therefore may not have been possible in the circumstances.
1. R.A.C. Parker, Chamberlain and Appeasement (1993)