In this situation, Malcolm's statements were only briefly paraphrased by his opponent, and the criticism of Malcolm is being presented as a great and commendable example of rational thinking. In such a context, I believe it's only fair and reasonable to give Malcolm's reported statements maximally charitable reading.

In particular, I think it's reasonable to interpret "impossible" in its casual meaning (i.e. merely vastly improbable, not literally disallowed by the laws of logic and physics). Moreover, I also think it's reasonable to interpret "national character" in a way that makes his statements more sensible, i.e. as including all factors that determine what behaviors are a priori more or less likely from a given government and its officials and subjects.