In this connection I must mention yet another, far more malicious legend, namely, the slander widely spread in America last year, that the funds collected in America for the German Red Cross were used to finance German propaganda. It is a fact that every dollar that went to the German Red Cross Delegation in New York was remitted to the home organization for which it was intended. Of course these funds were in the first place paid into the various New York banking accounts from which Dr. Dernburg drew the funds for the Press Bureau. But, as Captain Hecker has most definitely stated, their equivalent was remitted to Germany through the bank, regardless of the changes in the exchange.

Dr. Dernburg, in organizing the Press Bureau, availed himself of the assistance he found in New York. The suggestion, widely current in America and repeated by a member of the American Secret Service before the Senatorial inquiry, that this Press Bureau had formed, as it were, a part of the German mobilization, and that, therefore, the most skilled propaganda experts from Europe and the Far East had been gathered together in New York in order that, after a preliminary run there, they might be let loose on the American world, is a ridiculous invention. Just as Dr. Dernburg himself became a propagandist without any premeditation, so it was also the case with his colleagues. At first his only assistants were the New York Press Agent of the Hamburg-Amerika line, Herr M. B. Claussen, and after the entry of Japan into the war a Government official from that country who was unable to continue his journey to Germany, because the passport across the Atlantic granted him through the instrumentality of the State Department was rejected by the British authorities. This official, Dr. Alexander Fuehr, the interpreter of the Consulate-General in Yokohama, who had great experience in Press matters and possessed an intimate knowledge of American affairs, assisted by quite a small staff of assistants engaged in New York, issued the daily bulletins of the "German Information Service," which appeared for a year and consisted of translations of the substance of the German newspapers, comments on daily events and occasional interviews with people who had returned from Europe. It was Herr Claussens's duty to circulate the bulletins, the arrival of which was in no way kept secret, among the American Press, and to see to it that they should be reproduced as fully as possible, which was done, especially in the provincial Press.

Later, when the propaganda movement had developed to the extent of publishing and circulating leaflets, brochures and longer pamphlets, Dr. Dernburg decided to employ in the Press Bureau a well-known American publicist in the person of Mr. William Bayard Hale, who had already done good work, by speaking and writing, towards an unbiassed appreciation of the German point of view, and he was assisted by two younger New York journalists. Later, when the bureau took up war-picture and war-film propaganda, these were joined by two more young German Government officials, Dr. Mechlenburg and Herr Plage, who also were held up in America on their way from Japan. More than a dozen persons, including messengers, have never been employed by the Press Bureau at a time. Of the thirty-one trained propagandists imported from Germany who, according to Captain Lester's evidence before the Senatorial Commission, were supposed to have worked in the Press Bureau, in so far as their names were given in the protocols of the inquiry, we are assured by Herr Fuehr that not one was employed there!

In addition to his direction of the Press Bureau Dr. Dernburg, who continued with inexhaustible energy to write articles for the periodicals and instructive letters for the daily Press, was responsible for keeping in touch with the directors of the American Press. He also availed himself of invitations to speak in American and German circles, and sometimes in other places than New York. As far as I know he never founded any societies for propaganda purposes. On the other hand, when such societies which had arisen, without his influence turned to him, he of course supported them by word and deed.

For all questions of propaganda Dr. Dernburg had the assistance of a small committee nominated by himself and consisting, in addition to Herren Albert, Meyer Gerhardt and Fuehr, of a few American journalists and business men. It was his custom to confer with this committee once or twice a month, when the general situation, the prevailing fluctuations of public opinion and the probable influence of the propaganda material about to be published, were discussed in detail.

With this entirely improvised and, as will be seen, very modest machinery, Dr. Dernburg began his campaign. The enemy statement that the German propaganda in the United States had been actually organized many years before the war, so that in 1914 we might have ready at our disposal an organization with branches in every part of the country, is unfortunately devoid of any foundation. It is a regrettable fact that, in spite of my repeated warnings to the authorities, nothing was ever done on the German side before the war. It is well known that at that time the power of public opinion in democratic countries was very little understood in Germany. It was thought at home—which is typical of the objective, matter-of-fact German national character—that it was much more important that the right should be done than that it should be recognized as right by the public. Added to this was the under-estimation of the influence of the United States on the development of world politics.

Before the war no one in Germany had thought it possible that the Union would have to be reckoned with as a factor, much less a decisive factor, in a European war. This was a mistake, the effect of which unfortunately was felt until well into 1917—the result was that there was never enough money available to keep in touch and co-operate with the American Press. As a matter of fact I had, in the course of my activities in Washington, personally entered into certain social relations with the proprietors of a few great American newspapers. But from Berlin no advances were made. Even with the German-American papers there was no organized connection, and they themselves did not work together in any way. It is true that for years there had been a business connection between the greatest American news-agency, the Associated Press, and the Wolff Telegraphic Bureau; as, however, the agency was not served direct with Berlin Wolff-telegrams, but by its own representatives there, this did not amount to much. England, on the other hand—quite apart from the close relationship resulting from a common language—had for years maintained and systematically cultivated the closest contact with the American Press. It followed, then, that on the outbreak of war the English influence on the American daily Press was enormous. It did not rest as exclusively as has been assumed in Germany on direct proprietary rights. I do not think that, with the exception of a single newspaper in one of the smaller cities any great American paper was directly bought by England. Here and there considerable blocks of American newspaper shares may have been in English hands and influenced the tendency of certain papers. If, however, it is true—as was credibly stated in Irish-American quarters during the first year of the war—that Lord Northcliffe boasted a year or two before the war of "controlling" seventeen American papers, it is difficult to believe that this influence of the English press-magnates was based on hard cash. Rather is it the case that certain newspapers received their otherwise very costly private news-service from England on very advantageous terms. To others, English writers of leading articles are said to have been attached, without cost to the newspaper—a scheme of which I have often heard in America, but which is difficult to prove, as all American newspapers maintain the strictest secrecy as to the origin of their leading articles. It is, however, common knowledge that with regard to European affairs the American news service was swayed by this entirely English organization. Until the outbreak of the war the American news agencies drew exclusively from English sources. Moreover, those newspapers which in the United States play a very important part, inasmuch as they are the fount of most of the new ideas by which the tone of the Press in influenced, were in a very considerable degree served from England. On the other hand, the wide field of cinematographic production was strongly influenced by the French film. In this way our enemies in the United States had, at the outbreak of war, a boundless and excellently prepared field for the propagation of their news, and the representation of their point of view, but more particularly for their attack on the German cause. In spite of this, however, they immediately inundated the Union with propagandist literature, particularly through the agents of the English shipping lines, who were scattered all over the country, and the well-known author and politician, Sir Gilbert Parker, sent from London tons of this matter to well-known American business men, professors and politicians.

On our side, it is true, and I should like to emphasize this to their credit, that on the outbreak of war the German-American newspapers took up our cause unhesitatingly and as one man. Further, they have, until America's entry into the war, honestly striven to win full justice for the American point of view, and to combat the unneutral leanings of the majority of the Americans and the slanderous attacks of our enemies. As, however, they are not accessible to the general public, who do not know German, and in particular scarcely ever come into the hands of the authoritative American political circles, their support remained more or less academic. Very valuable services were rendered to the German cause by the already-mentioned weekly paper Fatherland, which was printed in English; in view, however, of its reputation as a partisan journal, it naturally could not exert so deep an influence as the local daily papers, which carried on the English propaganda without allowing it to become too conspicuous. For telegraphic communication from Germany to America we had to rely solely on the two German wireless stations at Sayville and Tuckerton, erected shortly before the outbreak of war, and we soon succeeded, subject to American censorship, in getting a regular Press-service, which was spread, not only over the whole of the United States, but was also passed on to South America and East Asia. But in the first place, in spite of repeated extension and strengthening, these two stations were quite inadequate; in the second place, the Press-service never succeeded in adapting itself thoroughly to American requirements. The same may be said of most of the German propaganda literature which reached America in fairly large quantities since the third month of the war, partly in German and partly in not always irreproachable English. This, like the Press telegrams, showed a complete lack of understanding of American national psychology. The American character, I should like to repeat here, is by no means so dry and calculating as the German picture of an American business man usually represents. The outstanding characteristic of the average American is rather a great, even though superficial, sentimentality. There is no news for which a way cannot be guaranteed through the whole country, if clothed in a sentimental form. Our enemies have exploited this circumstance with the greatest refinement in the case of the German invasion of "poor little Belgium," the shooting of the "heroic nurse," Edith Cavell, and other incidents. Those who had charge of the Berlin propaganda, on the other hand, made very little of such occurrences on the enemy side, e.g., the violation of Greece, the bombing of the Corpus Christi procession in Karlsruhe, etc. One thing that would have exerted a tremendous influence in America, if its publicity had been handled with only average skill, was the sufferings of our children, women and old people as a result of the British hunger blockade—that they have made no attempt to bring to the notice of the world.

On the other hand they put themselves to the greatest possible trouble to lay "The Truth About the War" before American public opinion. This, however, fell on unfavorable ground, for the American does not care to be instructed. He had no interest in learning the "truth" which the German Press communications and explanatory pamphlets were so anxious to impress upon him. The American likes to form his own opinions and so only requires facts. The possibility of exerting influence therefore lies rather in the choice of the facts and the way in which they are presented, than in logical and convincing argument. It is all the easier to influence him by the well-timed transmission of skilfully disposed facts, since his usually very limited general knowledge and his complete ignorance of European affairs deprive him of the simplest premises for a critical judgment of the facts presented to him from the enemy side. It is quite incredible what the American public will swallow in the way of lies if they are only repeated often enough and properly served up. It all turns on which side gets the news in first; for the first impression sticks. Corrections are generally vain, especially as they appear as a rule in small print and in inconspicuous places. When, for example, the American Press got the first news of the "destruction" of Rheims cathedral from London and in the English version, no German correction, however well-founded, would succeed in removing the first impression.

Particularly ineffective in their influence on American public opinion—as may be said here in anticipation—have been the majority of our official Notes. In view of the subsequent ever-increasing interruption of the news service from Germany, they were the last and only means by which the German standpoint could be brought before the American people. Their effectiveness depended entirely on the impression that they made on American public opinion and not on the Washington Government; yet they were nearly always drawn up in Berlin in the form of juristic precis, propagandist but quite futile.

All these factors must be taken into consideration in attempting to estimate the success of our propaganda in the United States. They show that on the one hand the prevailing conditions of American public opinion were extraordinarily unfavorable to our propaganda, and that the support it received from home, with a few exceptions, was misguided.

Dr. Dernburg, then, had not a chance during the eight months of his activity in America of transforming her into a pro-German country, and it is certain that no one else could have done it in his place. But he succeeded to a great extent, and within a comparatively short time, in more or less crippling the enemy propaganda, and at least in gradually rendering ineffective the grossest misrepresentations of our enemies. By his own writings and other methods of spreading the truth, and particularly by the numerous brochures and books, which at his suggestion were written by American supporters of the German cause and distributed in thousands directly or indirectly by the Press Bureau with the help of a skilfully compiled address-book, he succeeded in exerting very considerable influence. By keeping in touch with American journalists and other influential persons he did much good work, particularly in the first months of the war. His connection with Irish leaders laid the foundation for a co-operation which in the following year was of great importance to our position in the United States, and which, with a somewhat more intelligent backing by our Government departments at home, might have been more fruitful still.

One branch of our propaganda which was also initiated under Dr. Dernburg, but was chiefly developed after his departure, was the moving-picture propaganda, for which a very efficient company was floated by Privy Councillor Albert. At first it was intended to be an agency for the circulation of films from Germany. As, however, suitable material for the American market could not be obtained there, the "American Correspondent Film Co." decided to send its own agents to Germany and Austria with a view to making suitable films for their purpose. In this way several important film-dramas were produced which have had great success in hundreds of American cinemas. In spite of this the company had finally to be liquidated, chiefly owing to lack of support from the military authorities at home.

With the sinking of the Lusitania our propaganda of enlightenment in the United States substantially came to an end. Henceforward the principal aim of its activity, which, after Dr. Dernburg's departure, came under the direction of Privy Councillor Albert, was to keep the United States out of the war. Side by side with this, an attempt was made to influence public feeling against the export of arms and ammunition and against the Anglo-French loan, and to demonstrate the increasingly prejudiced effect wrought by England on American economic interests. In November, 1915, I urged, as I cabled at the time to Chancellor Bethmann-Hollweg, the complete suppression of propaganda. The Press Bureau in New York continued under the direction of Dr. Fuehr, until the breaking off of relations between America and Germany. It concerned itself, however, apart from certain regular literary contributions to certain journals, less with propaganda work than with keeping an eye on the American Press and the development of the news service to and from Germany as well as to South America and Eastern Asia.



CHAPTER III

POLITICAL EVENTS PRECEDING THE "LUSITANIA" INCIDENT

As I mentioned in the first chapter, it was to be expected that public opinion in America would range itself overwhelmingly on the side of the Entente. As a result of the violation of Belgian neutrality, this happened far in excess of expectation. The violence of the statements of the anti-German party called forth strong replies from those who desired a strict neutrality on the part of the United States. The adherents of the latter party were always stigmatized as pro-Germans, although even the German-Americans never called for anything more than an unconditional neutrality. This also was the aim for which the German policy was working through its representatives in America. We never hoped for anything further.

The waves of excitement ran so high that even the private relations of the adherents of both parties contending suffered. President Wilson, therefore, on the 18th August, 1914, issued a proclamation to the American people which is of special interest because it lays down in a definite form the policy to which he logically and unwaveringly adhered until the rupture.

In this proclamation the following sentences occur: "Every man who really loves America will act and speak in the true spirit of neutrality, which is the spirit of impartiality and fairness and friendliness to all concerned." And further: "The people of the United States ... may be divided in camps of hostile opinion.... Such divisions among us would be fatal to our peace of mind and might seriously stand in the way of the proper performance of our duty as the one great nation at peace, the one people holding itself ready to play a part of impartial mediation and speak the counsels of peace and accommodation, not as a partisan, but as a friend."

The policy outlined in these quotations from Mr. Wilson's proclamation won the approval of an overwhelming majority of the American people, for even among the supporters of the Entente there was only a small minority who desired an active participation in the war by the United States. Apart from the fact that the traditional American policy seemed to preclude any such intervention in European affairs, it was to the interest of the United States to play with unimpaired power the role of Arbiter mundi, when the States of ancient Europe, tired of tearing one another to pieces, at last longed for peace again. America could not but hope that neither of the two warring parties would come out of the war in a dominating position. There is, therefore, a certain modicum of truth in the view frequently expressed in Germany that the United States would in any case finally have entered the war to prevent the so-called "German Peace." But the question is whether such a peace was possible in face of the superior strength of our enemies. If we had won the first battle of the Marne and had then been prepared to restore Belgium and conclude a moderate peace, it is conceivable that we might have come to terms with England on the basis of a kind of Treaty of Amiens. After the loss of the battle of the Marne a "German Peace" was out of the question. The possibility of such a peace has never recurred. It was therefore necessary for the German policy to strive for a peace by understanding on the basis of the status quo. Just as Frederick the Great defended Prussia's newly won position as a great Power against overwhelming odds, so we were fighting under similar conditions for the maintenance of Germany's position in the world.

Our Government had declared urbi et orbi that they were waging a defensive war, and were therefore obliged to regulate their policy accordingly. If we had desired a peace like that of Hubertusburg we should have won. It is often contended in Germany to-day that it would still have been possible to attain this end. I have struggled for it in America for two and a half years and am as convinced to-day as I was then, that by acquiescing in the policy of the United States we should have obtained a peace which would have met the needs of the German people, if only those who desired the same thing at home had been in a position to carry their wishes through.

In Germany it is also alleged, contrary to my own opinion, that the German people could not have held out if they had not been driven on by the "Will to conquer." I regard this view as an injustice to the German nation. If our home propaganda, instead of continually awakening vain hopes, had insisted on telling the real truth, the German people would have faced danger to the last. We ought to have repeated constantly that our situation was very serious, but that we must clench our teeth, and our Government must be ready to seize the first opportunity to end the defensive war by a corresponding peace.

The controversy about the "German peace" or "peace by negotiation" must be touched on here because it formed the nucleus of the diplomatic struggle in Washington. At the beginning of the war these catchwords had not yet been invented, but their substance even then controlled the situation. The attitude of the American Government and public opinion towards us depended in the first place on whether they thought that we were striving for world-mastery or were waging a defensive war.

Immediately after my return from Europe I called on President Wilson, who had taken the opportunity of the war and the death of his first wife, to withdraw even more than ever from the outer world. He was generally known as the recluse of the White House. He only received people with whom he had political business to settle. Particularly from diplomats and other foreigners Mr. Wilson kept very aloof, because he was anxious to avoid the appearance of preference or partiality.

After the disillusionment of Versailles it is difficult for a German to form an unbiassed judgment of Mr. Wilson. We must not forget, however, that no serious attempt has ever been made in Germany to get an unprejudiced estimate of Mr. Wilson's personality. In the course of the war he has come to be regarded more and more as unneutral and anti-German, whereas, to the average American public opinion, he appeared in quite a different light. Later, after the defeat of our arms, we hailed Mr. Wilson as the Messiah who was to save Germany and the whole world from dire distress. When, therefore, at Versailles, the President, instead of unfolding and carrying through a far-reaching programme for the general reconstruction of the world, approved all the ultra-chauvinistic and nationalistic mistakes of the European statesmen and proclaimed as the aim of the peace the punishment of Germany, Mr. Wilson was set down in Germany without more ado as a hypocrite.

I think that through all the phases of the war the German opinion of Mr. Wilson has suffered from sheer exaggeration. The chief mistake lay in separating Wilson's personality from public opinion in the United States. In spite of his strong will and his autocratic leanings, Mr. Wilson is still, in the first place, a perfect type of the American politician. In his speeches he always tries to voice public opinion, and in his policy to follow its wishes.

He certainly tries to direct and influence public opinion. But he changes his front at once if he notices that he has strayed from the way that the aura popularis would have him follow. In order to form a correct judgment of Mr. Wilson's actions and speeches it is always necessary to ask oneself, in the first place, what end he has in view for his own political position and that of his party in America. He proclaims in a most dazzling way the ideals of the American people. But their realization always depends on his own actual political interests and those of the Democratic party. Mr. Wilson's attitude has always been synonymous with that of his party, because the latter can produce no other personality capable of competing with the President. Therefore, Mr. Wilson always met with little or no opposition within the Democratic party, and he was able to follow for a long time his own inclination to adopt a quite independent policy.

Socially the President is very congenial when once he has made up his mind to emerge from his narrow circle. He has not the reputation of being a loyal friend, and is accused of ingratitude by many of his former colleagues and enthusiastic adherents. In any case, however, Mr. Wilson is an implacable enemy when once he feels himself personally attacked or slighted. As a result of his sensitiveness he has a strong tendency to make the mistake of regarding political differences of opinion as personal antipathy. The President has never forgiven the German Government for having caused the failure of his peace-policy of 1916-17, which was supported by public opinion in America. In Germany his later speeches, in which he drew a distinction between the German people and the Imperial Government, were regarded as hypocrisy. Such a differentiation was at that time based on American public feeling, which held autocracy and militarism responsible for the disasters which had been brought upon the world. The question has, however, never been answered why this distinction was abandoned by Mr. Wilson at Versailles. Without wishing in any way either to accuse or defend him I consider the answer to this riddle to be that the President allowed himself to be convinced of the complicity of the German people by the statesmen of the Entente. He was at the time in a mood with regard to us which predisposed him to such influences. Mr. Wilson was by origin, up-bringing and training a pacifist. When it is remembered that with us and in neutral countries it was the pacifists themselves who were the most indignant at the Peace of Versailles, that they were the very people who for the most part advised against the signature of this peace, one can imagine the feelings aroused in a disillusioned pacifist like Wilson by those whom he regards as responsible for having thwarted the possibility of an ideal pacifist peace.

Apart from this, Mr. Wilson at Versailles no longer dominated American public opinion, and his political power consequently collapsed. In the United States the old indifference to European affairs regained the upper hand. Men were satisfied with having brought about a victory over autocracy and militarism. They wanted nothing further. The American troops were crowding home, and, finally, feeling in the United States was still so strongly against us that no one would have understood the President if he had caused a rupture with his Allies on our behalf.

At Versailles, too, an outstanding peculiarity of Mr. Wilson's may have played a part which even during the earlier negotiations had been of great importance. He is a man who is slow to make up his mind, and likes to postpone decisions until they are inevitable. He is always ready to wait and see whether the situation may not improve or some unexpected event occur. How often during the Washington negotiations did, first I and then our enemies, believe that we had set President Wilson on a definite course. But again and again the requisite decision would be postponed. In Washington it was generally taken under the strong pressure of public opinion. In Versailles the Entente statesmen may well have forced a decision by displaying a stronger will and a wider knowledge of European affairs. Mr. Wilson was at Versailles in the position of the giant Antaeus, who drew his strength from his native soil. Once away from American ground Hercules (Clemenceau) was able to crush him.

At the time I am now describing the circumstances were quite different, because at that time Mr. Wilson had a reliable support for his policy in American public opinion. In Germany, at the very beginning of the war, great resentment was felt against Mr. Wilson for the cold negative in his reply to the Emperor's telegram in which Mr. Wilson was asked to condemn the atrocities perpetrated by the Belgian population and francs-tireurs. It was not, however, noticed in Germany that the President at the same time likewise refused to receive a Belgian deputation which came to America to beg for his help.

During my conversation with the President already mentioned, he made a statement on the lines of his proclamation of neutrality of which I have already given the substance. My reply that the American neutrality seemed to us to be tinged with sympathy for our enemies Mr. Wilson contradicted emphatically. He thought that this appearance was the result of England's naval power, which he could do nothing to alter. In this connection the President made the following remark, which struck me very forcibly at the time:

"The United States must remain neutral, because otherwise the fact that her population is drawn from so many European countries would give rise to serious domestic difficulties."

My remark about the benevolence of the United States' neutrality towards our enemies was at the time chiefly prompted by the differences that had arisen with regard to the wireless stations.

The fact that this question arose gives yet another proof of how little we were prepared for war. By German enterprise two wireless stations had been erected on the east coast of the United States as a means of direct communication with Europe, one at Sayville (Long Island), the other at Tuckerton (New Jersey). Both were partly financed by American and French capital. As at the beginning of the war the cable fell entirely into English hands and was destroyed by them, we had no telegraphic communication with home at our disposal. We had to fall back exclusively on the wireless stations, when, as frequently happened, we were unable to make use of the circuitous routes via neutral countries. Unfortunately it appeared that the legal position with regard to the proprietorship of the two stations was not clear. Actions were immediately brought on the French side, and the closing of the stations by decree of the courts demanded. Under these circumstances it was fortunate for us that the American Government, after tedious negotiations with me, took over possession of both stations. Otherwise they would have been closed and we should have been unable to use them.

Our satisfaction at this decision was modified by the establishment of a censorship of radio-telegrams on the part of the American Government on the strength of the Hague Convention, which prohibits the communication by wireless from a neutral country with the military or naval forces of a combatant. If the stations had been publicly used before the war we should have stood on firm legal ground, for such cases are excepted by the Hague Convention. Unfortunately the stations were in 1914 only partially completed, and the application of the clauses in question was therefore doubtful. It is true that the stations were ready for immediate use, but as a result of the French protest the American Government held strictly to the legal standpoint. In these negotiations we had to content ourselves with pointing out that whereas our enemies could pass on military information to their Governments by means of coded cablegrams, we should be confined to the use of the wireless stations. Finally we came to an agreement with the American Government that they should have a copy of the code which we used for the wireless telegrams. In this way their contents were kept secret from the enemy, but not from the Washington Government. This course we only agreed to as a last resource as it was not suitable for handling negotiations in which the American Government was concerned.

The course of this controversy was typical of the fate of German interests in America throughout the whole period of American neutrality. Unfortunately we had absolutely no means at hand for putting any pressure on America in our own favor. In comparison with the public opinion in the Eastern States, which followed in the wake of the Entente, and with the authoritative circles of New York, Wilson's Administration without question strove for an honorable neutrality. In spite of this most of their decisions were materially unfavorable to us, so that a German observer from a distance might, not without reason, obtain the impression that the neutrality of the American Government was mere hypocrisy and that all kinds of pretexts were found for helping England.

This was not the chief impression made on a near observer. In politics the Americans are first and foremost jurists, and indeed in a narrower and more literal sense than the English Imperialists, with whom, according to their old traditions, justice only serves as a cloak for their political ambitions. I cannot judge how far the Americans have become full-blooded Imperialists since their entry into the war, i.e., since about 1917. At the time of which I speak this was far from being the case. If, moreover, it is a fact that the majority of the decisions of the United States turned out unfavorably to us, the question of the American motives should have been carefully differentiated from the other question as to what inferences may be drawn from the state of affairs. Even if we had had just reason to complain of unfair treatment it was for us to be as indulgent towards America as was compatible with our final aim not to lose the war. The question is not whether we had cause for resentment and retaliation, but simply what benefit could be extracted for Germany out of the existing situation.

At this visit to the White House, the only question that was acute was that of the wireless stations. This and the negotiations which I shall mention later, dealing with the coaling of our ships of war and the American export of arms and ammunition, I discussed with Secretary of State Bryan. The first time I visited this gentleman he exclaimed with great warmth: "Now you see I was right when I kept repeating that preparation for war was the best way of bringing war about. All the European Powers were armed to the teeth and always maintained that this heavy armament was necessary to protect them from war. Now the fallacy is obvious. We alone live in peace because we are unarmed."

Mr. Bryan has always been a genuine pacifist, and later sacrificed his Ministerial appointment to his convictions. So long as he remained in office he continued to influence the American Government to maintain neutrality and constantly strove to bring about peace.

A first attempt in this direction was made from Washington immediately after the outbreak of the war, but met with no response from the combatant Powers. At the beginning of September, Mr. Bryan repeated the offer of American mediation.

At that time a vigorous agitation had begun in New York for the restoration of peace. Mr. William Randolph Hearst, the well-known editor of widely circulated newspapers, and other well-known personalities, called together great meetings at which America's historical mission was said to be the stopping of the wholesale murder that was going on in Europe. At this time I was, together with several other gentlemen, staying with James Speyer, the banker, at his country house. The host and the majority of the guests, among whom was the late ambassador in Constantinople, Oscar Straus, were supporters of the prevailing pacific movement. The question of American mediation was eagerly discussed at the dinner table. Mr. Straus was an extremely warm adherent of this idea. He turned particularly to me because the German Government were regarded as opponents of the pacifist ideas. I said that we had not desired the war and would certainly be ready at the first suitable opportunity for a peace by understanding. Thereupon Mr. Straus declared that he would at once travel to Washington and repeat my words to Mr. Bryan. Immediately after dinner he went to the station and on the following day I received a wire from the Secretary of State, asking me to return to Washington as soon as I could to discuss the matter with him. There we had a long interview in his private residence, with the result that an American offer of mediation was sent to the Imperial Chancellor. Meanwhile Mr. Straus had gone to the ambassadors of the other combatant Powers, who all more or less rejected the proposal. The friendly reply of the German Government coincided in principle with what I had said, but added that Mr. Bryan should first address himself to the enemy, as the further course of the negotiations depended on their attitude, which was not yet known. The American Government never returned to the question and I had no reason to urge them to do so. Any importunity on our side would have given an impression of weakness. Nevertheless this interlude was so far favorable to us that it contrasted our readiness for negotiation with the enemy's refusal.

In consequence of the failure of their first attempt to intervene the American Government thought it necessary to exercise more restraint. In spite of this, however, President Wilson, before the end of the winter of 1914-15, sent his intimate friend, Colonel Edward M. House, to London, Paris and Berlin, in order to ascertain semi-officially whether there were any possibilities of peace.

Mr. House, who lived in an unpretentious abode in New York, occupied a peculiar and very influential position at the White House. Bound to the President by intimate friendship, he has always refused to accept any Ministerial appointment, either at home or abroad, although he was only possessed of modest means and could certainly have had any post in the Cabinet or as an ambassador that he had liked to choose. In this way he remained entirely independent, and since President Wilson's entry into office, was his confidential adviser in domestic, and particularly in foreign politics. As such Colonel House had a position that is without precedent in American history. During his stay in London, at this time, he is said to have described himself to the wife of an English Cabinet Minister, herself not favorably disposed towards America, as the "eyes and ears of the President." I know from my own experience how thoroughly and effectively he was able to inform his friend on the European situation, and how perfectly correctly, on the other hand, he interpreted Mr. Wilson's views.

It was not easy to become more closely acquainted with Colonel House, whose almost proverbial economy of speech might be compared with the taciturnity of old Moltke.

Unlike the majority of his fellow-nationals, and particularly his immediate fellow-countrymen of the Southern States, Colonel House, while possessing great personal charm and the courtesy that is characteristic of the Southern States, is reserved and retiring. It took a considerable time before I got to know this able and interesting man at all intimately. I did not become intimate with him until the time of the journey to Berlin already mentioned. Even then it was the earnest wish of Colonel House to obtain for his great friend the chief credit of being the founder of peace. Colonel House was particularly well fitted to be the champion of the President's ideas. I have never known a more upright and honorable pacifist than he. He had a horror of war because he regarded it as the contradiction of his ideals of the nobility of the human race. He often spoke with indignation of the people who were enriching themselves out of the war, and added that he would never touch the profits of war industry. He afterwards repeatedly told me that he had spoken as energetically in London against the blockade, which was a breach of international law, as against the submarine war in Berlin. Both these types of warfare were repugnant to the warm, sympathetic heart of Colonel House. He could not understand why women and children should die of hunger or drowning in order that the aims of an imperialist policy, which he condemned, might be attained. At the same time he was convinced that neither of these types could decide the war, but would only serve to rouse in both the combatant countries a boundless hatred which would certainly stand in the way of future co-operation in the work of restoring peace. In many of his remarks at that time, Colonel House proved to be right, since the war was decided mainly by the entry of America and the consequent overwhelming superiority in men, money and material.

Meanwhile, as a result of the traffic in munitions, feeling in Germany had turned sharply against the United States. Our position with regard to this question was very unfavorable as we had no legal basis for complaint. The clause of the Hague Convention which permitted such traffic had been included in the second Hague Convention at our own suggestion. Nevertheless it was natural that the one-sided support of our enemies by the rapidly growing American war industry roused strong feeling in Germany. As a result there began a controversy with the American Government similar to that with England during the war of 1870-71. Even in the United States there was a considerable minority which disapproved of the munitions traffic, though on moral rather than political or international grounds. It goes without saying that the agitation of this minority was supported in every way by the German representatives. There was no law in America to prohibit such support, which could not, moreover, be regarded as a breach of American neutrality. It is true that in this way a few Germans got themselves into an awkward position because they were suspected of stirring up the German-Americans, who together with the Irish played a leading part in the agitation against the Government. In particular, Dr. Dernburg became unpopular in America, since he began to address meetings in addition to his journalistic work. The Washington Government regarded him as the leader of the "hyphenated Americans" who were opposing the policy of the President's Administration, because the latter took up the strict legal standpoint that the traffic in munitions was permissible, and that it would therefore be a breach of neutrality in our favor if such traffic were forbidden after the outbreak of hostilities. President Wilson himself even had an idea of nationalizing the munition factories, which would have rendered traffic with the combatant Powers a breach of international law. When, however, he sounded Congress on this matter, it became evident that a majority could not be obtained for such a step. The United States had already brought forward a similar proposal at the Hague Conference with the intention of conceding one of the chief demands of the pacifists. It was in wide circles in America an axiom that the munitions factories were the chief incentives to war. As during the first winter of the war there were very few such factories in America the President's plan was not merely Utopian but meant in all seriousness, in which connection it should be noted that American industrial circles were among Mr. Wilson's bitterest opponents. If Mr. Wilson's proposal had been known to German public opinion he would have been more favorably judged.

The negotiations which I had to carry out on this question of the munitions traffic concerned themselves also with the question of the coaling of our ships of war. This was based on an agreement between the American Government and the Hamburg-Amerika line. The port authorities had at first shown themselves agreeable. As a result of the English protest the attitude of the American Government became increasingly strict. With the actual coaling I had nothing to do. That came within the sphere of the Naval Attache, who, for obvious reasons connected with the conduct of the war at sea, kept his actions strictly secret. My first connection with this question was when I was instructed to hand over to the American Government the following memorandum, dated 15th December, 1914:

"According to the provisions of general international law, there is nothing to prevent neutral States from allowing contraband of war to reach the enemies of Germany through or out of their territory. This is also permitted by Article VII. of the Hague Convention of the 19th October, 1907, dealing with the rights and duties of neutrals in the case of land or sea war. If a State uses this freedom to the advantage of our enemies, that State, according to a generally recognized provision of international law, which is confirmed in Article IX. of the two aforesaid Conventions, may not hamper Germany's military power with regard to contraband through or out of its territory.

"The declaration of neutrality of the United States takes this view fully into account since the furnishing of contraband of war to all combatants is likewise permitted: 'All persons may lawfully and without restriction by reason of the aforesaid state of war, manufacture and sell within the United States, arms and ammunitions of war and other articles ordinarily known as contraband of war.'

"This principle has been accepted in the widest sense by the public declaration of the American State Department of the 15th October, 1914, with regard to neutrality and contraband.

"Nevertheless different port authorities in the United States have refused to supply the necessary fuel to merchant vessels in which it might be carried to German ships of war on the high seas or in other neutral ports. According to the principles of international law already mentioned, there is no need for a neutral State to prevent the transport of fuel in this way; such a State then ought not to hold up merchant ships loaded in this way nor interfere with their freedom of movement, once it has countenanced the supply of contraband to the enemy. The only case in which it would be the duty of such a nation to hamper the movements of these ships in this one-sided fashion would be one in which such traffic might be turning the ports into German naval bases. This might perhaps have been the case if German coal depots had been situated at these ports, or if the ships used them for a regular calling port on their way to the German naval forces. It is, however, unnecessary to urge that the occasional sailing of a merchant ship with coal for German ships of war does not make a port into a base for German naval enterprises out of keeping with neutrality.

"Our enemies are obtaining contraband of war from the United States, in particular rifles, to the value of many milliards of marks; this is within their rights. But toleration becomes serious injustice if the United States refuses to allow the occasional provisioning of our ships of war from her ports. This would mean unequal treatment of the combatants and a recognized rule of neutrality would be infringed to our disadvantages."

This memorandum played an important part in the subsequent negotiations, because Mr. Flood, the president of the Committee for Foreign Affairs of the American House of Representatives, interpreted it as amounting to a German agreement to the supply of arms and ammunition to her enemies.

In view of the situation in the United States, it was to our interest to leave the struggle for a prohibition of the munitions traffic to our American friends. The efforts of Senator Stone in this direction are well known, and have been recently quoted before the Commission of the German National Assembly. If a considerable number of influential Americans took up the case for the prohibition there was far more hope of bringing it about than if it was apparent that the American Government were surrendering to German pressure. The pacifist Mr. Bryan was very sensitive on this point and visited me frequently to assert his neutrality.

I therefore advised the Imperial Government in this matter not to send an official Note for the moment, so that the American agitation in favor of the prohibition of munition traffic might have full freedom for development. As, however, our enemies continually harked back to the idea that the Imperial Government did not take exception to the supply of munitions, I was forced, as the result of continual pressure from our American friends, to alter my attitude, and, after receiving permission from Berlin, to hand to the Washington Government on 4th April, 1915, a memorandum, of which I give the most important part here.

"Further I should like to refer to the attitude of the United States towards the question of the export of arms. The Imperial Government is convinced that the Government of the United States agree with them on this point, that questions of neutrality should be dealt with not merely with regard to the strict letter, but the spirit also must be taken into consideration, in which neutrality is carried through.

"The situation arising out of the present war cannot be compared with that in any previous war. For this reason no reference to supplies of arms from Germany in such wars is justified; for then the question was not whether the combatants should be supplied with material but which of the competing States should secure the contract.

"In the present war all the nations which possess a war-industry of any importance are either themselves involved in the war, or occupied with completing their own armament, and therefore have prohibited the export of war material. The United States are accordingly the only neutral State in a position to supply war-material. The idea of neutrality has, therefore, assumed a new significance, which is quite independent of the strict letter of the laws that have hitherto prevailed. On the other hand the United States are founding a gigantic war industry in the broadest sense, and they are not only working the existing plant but are straining every nerve to develop it and to erect new factories. The international agreement for the protection of the rights of neutrals certainly arose from the necessity of protecting the existing branches of industry in neutral countries as far as possible against an encroachment upon their prerogatives. But it can in no way accord with the spirit of honorable neutrality, if advantage is taken of such international agreements to found a new industry in a neutral State, such as appears in the development in the United States of an arms-industry, the output of which can, in view of the existing situation, be solely to the advantage of the combatant powers.

"This industry is at present only delivering its wares to the enemies of Germany. The readiness, in theory, to do the same for Germany, even if the transport were possible, does not alter the case. If it is the desire of the American people to maintain an honorable neutrality, the United States will find the means to stop this one-sided traffic in arms, or at least to use it for the purpose of protecting legitimate commerce with Germany, particularly in respect of foodstuffs. This conception of neutrality should appeal all the more to the United States in view of the fact that they have allowed themselves to be influenced by the same standpoint in their policy in regard to Mexico. On the 4th February, 1914, President Wilson, according to a statement of a member of Congress on 30th December, 1914, before the commission for foreign affairs with regard to the withdrawal of the prohibition of the export of arms to Mexico, said: 'We shall be observing true neutrality by taking into consideration the accompanying circumstances of the case.... He then took up the following point of view: 'Carranza, in contrast to Huerta, has no ports at his disposal for the importation of war-material, so in his case we are bound, as a State, to treat Carranza and Huerta alike, if we are to be true to the real spirit of neutrality and not mere paper neutrality.'

"This point of view, applied to the present case, indicates prohibition of the export of arms."

Although during the war all Notes were at once made public, the American Government were very annoyed at my publishing this memorandum, which in any case would have met with no success. The agitation for the prohibition of the export of arms and munitions was vigorously pressed, and in spite of the "Lusitania incident" never completely subsided. But the American Government held to their point of view, which they explained to me on the 21st April, as follows:

"In the third place, I note with sincere regret that, in discussing the sale and exportation of arms by citizens of the United States to the enemies of Germany, Your Excellency seems to be under the impression that it was within the choice of the Government of the United States, notwithstanding its professed neutrality and its diligent efforts to maintain it in other particulars, to inhibit this trade, and that its failure to do so manifested an unfair attitude toward Germany. This Government holds, as I believe Your Excellency is aware, and as it is constrained to hold in view of the present indisputable doctrines of accepted international law, that any change in its own laws of neutrality during the progress of a war which would affect unequally the relations of the United States with the nations at war would be an unjustifiable departure from the principle of strict neutrality by which it has consistently sought to direct its actions, and I respectfully submit that none of the circumstances urged in Your Excellency's memorandum alters the principle involved. The placing of an embargo on the trade in arms at the present time would constitute such a change and be a direct violation of the neutrality of the United States. It will, I feel assured, be clear to Your Excellency that, holding this view and considering itself in honor bound by it, it is out of the question for this Government to consider such a course."

In the meantime, Colonel House returned from Europe without having met with any success, but he had opened useful personal relations. The Governments of all the combatant Powers then held the opinion that the time had not yet come when they could welcome the mediation of President Wilson. Colonel House, however, did not allow the lack of success of his first mission to deter him from further efforts, and remained to the last the keenest supporter of American mediation. Since this journey Colonel House and I became on very friendly and intimate terms, which should have helped to bring about such a peace.



CHAPTER IV

ECONOMIC QUESTIONS

In the preceding chapter I mentioned that Dr. Dernburg's plan for raising a loan in the United States had failed. Later the direction of all our economic and financial affairs passed into the hands of Geheimrat Albert. His original task was to organize in New York extensive shipments of foodstuffs, particular wheat and fats, which were to be exported through the New York office of the Hamburg-Amerika line. This depended, in the first place, on the possibility of raising the necessary funds, and in the second, on the possibility that England, out of regard for the neutrals, and particularly the United States, would be compelled to abide by the codified principles of international law. Neither of these premises materialized.

As the necessary means for carrying through the scheme could not be raised it might have been possible to finance it if the Government had taken over the not inconsiderable funds of the German banks and the great industrial enterprises, e.g., the chemical factories in the United States, and used them for the shipments. The suggestions we made to this effect were not answered until the end of August, when we arrived in New York and had already lost many weeks in trying to negotiate the loan. One organ, which immediately after the war had taken up these questions on its own initiative, failed, and so nothing was done in the whole wide sphere of credit, supply of raw materials and foodstuffs and shipping until my arrival with the other gentlemen, so that the most favorable opportunity was lost. Remittances from Germany did not arrive until long afterwards, and then only to a very modest extent. Consequently the whole economic scheme was considerably narrowed and hampered from the beginning.

The second assumption, that the United States, in consideration of her great commercial connections with Germany, would maintain her rights as a neutral State to unrestricted sea trade within the provisions of international law, proved to be unfounded. The United States, at any rate according to the view of some very distinguished Americans, as, for example, in the journal New Republic, violated the spirit of neutrality when she allowed commerce of the neutrals one with another to be strangled by England. To the interest in traffic with the neutral States, and indirectly with Germany, was opposed the interest in the still greater trade with our enemies, to which was added, and indeed to a rapidly increasing extent, the supply of war material. The United States did not realize the extent of their economic power in respect of England, as the inexperienced, newly-appointed Democratic Government had no statistics to which to refer, and from a military point of view were defenceless for want of an army or fleet. So England was able, slowly and cautiously, but surely, to cut off the Central Powers from the American market. In view of this state of things the important thing was to pass all shipments off as neutral. The exporter had to be an American or a subject of neutral Europe. The financing had also to be European, at any rate outwardly. The destination could only be a port in Holland, Scandinavia, Spain or—at that time—Italy. Consequently it was not long before the consignments could no longer be made through the New York representative of the Hamburg-Amerika line, but were taken in hand by Herr Albert himself, who merely availed himself of the professional advice of the Hamburg-Amerika line.

All decisions therefore could emanate from the same source, which prevented loss of time, especially as the financial responsibility also rested with Herr Albert. The most important thing, however, was that attention was distracted from the shipping, as for a long time Herr Albert remained unknown, whereas the Hamburg-Amerika line from the first was kept under the closest observation by England. On the other hand, this arrangement exposed the cargoes to condemnation by the English prize courts as they were now State-owned. But Herr Albert could assume—and, as it turned out, rightly—that so long as the English respected neutral property, it would be difficult as a rule to trace the shipments back to him. Otherwise there would have been no security for a German private undertaking.

In carrying out his task, Herr Albert at first shipped the purchased goods by the usual lines (Scandinavia-American line). Soon, however, difficulties arose, because these lines, in order to avoid being held up in English ports, would no longer accept cargoes which were intended, if possible, for Germany, so a special line was formed sailing under the American flag. The direction of this line was in the hands of an American firm who represented themselves as the owners, whereas, in reality, the ships were chartered by Herr Albert. As, at the beginning of the war, the American flag was more respected by the English than those of the other neutrals, a number of these ships got through without much delay. Later this method of shipping also became impossible. Then single ships were chartered—mostly under the American flag—and when the owners, from fear of loss, refused the charter, or when outrageous conditions made chartering impossible, they were bought outright. The ships were consigned as blockade runners to a neutral port, and later either made direct for Germany or were taken in by a German ship of war. As the most important examples I may mention the Eir, Maumee, Winneconne, Duneyre, Andrew, Welch and Prince Waldemar.

With the tightening up of the English measures and blockade these undertakings became increasingly difficult, and finally had to be abandoned. Moreover the cost and the trouble of preparation grew out of all proportion to the results. Every individual shipment had to be prepared long beforehand. Out of ten attempts often only one would succeed. Very often an attempt which had cost weeks of work would fall through at the last moment owing to the refusal of credit by the banks, particularly when the political position was strained, or to an indiscretion, or English watchfulness, or difficulties with the American port authorities.

The English surveillance had assumed dimensions that would not have been possible without the tacit connivance, which at times became active support, of the American authorities. Not only did the English consuls demand that in each individual case the bills of lading should be submitted to them, but in addition to this an efficient surveillance and spy service was organized, partly by American detective bureaus and partly by a separate and wide-reaching service. The English had confidential agents in all the shipping offices, whose services had for the most part been acquired by bribery. At various times attempts were made to break into Herr Albert's office, to learn the combination for opening his safe, to get hold of papers through the charwomen and other employees, and even to rob him personally of papers. The control of the American port authorities was within the letter of the law, but in practice it worked very unfavorably to us. The regulation was that ship and cargo must be consigned to a definite port. This regulation was drawn up purely for purposes of statistics, and consequently no importance was attached to it before the war. As a rule the bills of lading were filled in by subordinate employees of the exporter. Soon after the outbreak of the war a special "neutrality squad" was attached to the "Collector of the Port of New York" whose duty it was to maintain strict neutrality by seeing that the said laws were properly observed. This led, in cases where there was a suspicion that the cargo was not intended for the given port of destination, but for Germany, to an exhaustive inquiry. This measure could not fail to act as a deterrent, and even Herr Albert was seriously hampered in his enterprises. The whole system amounted to a complement of the English blockade. When Herr Albert finally succeeded in coming to an agreement with the Customs authorities in this matter a great number of opportunities had been missed and the shipments had been made practically impossible by the tightening of the English blockade.

There was no question of entrusting the shipping to American exporters who had had long experience of German trade. Herr Albert from the first considered it advisable to interfere as little as possible with the existing business relations between the two countries, and he left it to the firms trading with Germany to carry through their commissions as best they could. This method of supplying Germany with food, however, completely failed. The fault also lies partly with the importers in Germany. In these circles it was for a long time hoped, but in vain, to obtain consignments from American firms. Further, they clung too long to the business methods of peace, demanded estimates, bargained about prices, and, most important of all, did not realize that the risk to the exporter as a result of the English blockade made special compensation or payment necessary. In consequence the valuable time at the beginning of the war was lost. Very soon, however, the American exporters withdrew completely, because those who had had previous business relations with Germany were known to the English, and so were suspected and finally placed on the black list. A shipment by one of these firms would then at once have been marked down as destined for Germany, and would have run risk of capture. Herr Albert, therefore, made use of special agencies. At first, in addition to employing Danish firms, he founded several new American export companies. These new organizations were of course only available for a short time, and, as soon as they came under English suspicion and were consequently rendered useless, had to be replaced by others.

The reproach that has been made from time to time that these enterprises were confined to a small clique of confidential persons and firms seems to be unjustified by the facts. The circumstances demanded the closest possible secrecy, for otherwise the origin and destination of the cargoes would have been discovered by the English secret service before they left New York. This would have involved the complete loss of the cargo as a result of the English embargo. That firms already engaged, even though for a short time, in German-American commerce could not be considered is obvious. Not only were they known to the English, but in some cases their German names already laid them open to suspicion. Accordingly, their occasional requests that they should carry through enterprises of this nature were consistently refused. This criticism is only made by a small circle of German-American firms grouped round the German Union and the so-called German-American Chamber of Commerce, and originated in an anxiety, understandable but based on an inadequate knowledge of the facts, to participate in the undertakings.

Although the export of raw material did not actually come within the scope of Herr Albert's original commission, it often became necessary, at special request or from the nature of the case, to lend a helping hand in the export of raw material, particularly wool and cotton. In this way, in the autumn of 1914, the American steamer Luckenbach was successfully run through direct to Germany with several million pounds of wool on board. With regard to cotton, Herr Albert, also in the autumn of 1914, by negotiations which he carried on through me with the State Department and the Foreign Trade Adviser, succeeded in obtaining English recognition that cotton should not be regarded as contraband of war. Even after this recognition, England made the export of cotton practically impossible by intimidating the cotton exporters in every possible way, among others by spreading the rumor that the ships would be captured nevertheless, and by prohibiting English insurance companies from underwriting such cargoes. Here Herr Albert intervened by effecting the insurance through German insurance companies, and proved by the loading and arming of cotton ships, e.g., the American ship Carolyn, that the threat of capture was not to be taken seriously but was simply an attempt at intimidation on the part of the English. In this way, confidence was so far restored that in the autumn of 1914 and the beginning of 1915 a large number of other firms joined in the business. When, later, cotton was made unconditional contraband of war, Herr Albert made attempts to fit out blockade runners—which ended with the arrival at a German port of the Eir with 10,000 bales of cotton.

The various attempts to export copper, rubber and other raw materials which were unconditional contraband, apart from the cases already mentioned of wool and cotton, proved impossible, in spite of repeated, extensive and very cautious preparation. A very ambitious scheme of this kind with the S.S. Atlantic had to be abandoned at the last moment owing to difficulties with the port authorities.

All these enterprises, the purchase, sale and shipment of foodstuffs and raw material, the chartering, buying and selling of ships, the founding of shipping lines, new companies, etc., as well as the financial business had their political as well as their purely business side. They were either intended to serve as precedents in the definite phases of development of international maritime law or to exert influence on American public opinion from an economic point of view.

When the result of these shipping enterprises is weighed after the event, it will be seen that they did not play a decisive part in the supply of Germany with foodstuffs and raw material. Germany would during the first year of war have managed to get along even without the few hundred thousand tons which in this way were brought in via neutral countries. Nevertheless, in conjunction with the imports from neutral countries, they several times served to relieve the situation. Very important in this respect was the successful struggle for the free import of cotton at the end of 1914 and the beginning of 1915, quite apart from our own shipments. Without this we should have come to an end of our supplies considerably earlier.

The question of war and marine insurance very soon called for particular attention to the interests of our own shipping. The American insurance market was dominated by the English companies. The latter not only conducted about two-thirds of the whole insurance business of the country, but also exerted a decisive influence on the American companies. In addition to this, they held an authoritative position as holding a share of the capital. England very soon gave instructions that English insurance companies should not participate in any business in which German interests were in any way involved. Consequently in making shipments to neutral countries, we were faced with great difficulties, for the power of the German insurance companies and the few American companies that were independent of England did not suffice.

The two most important German companies with branches in New York, the Norddeutsche Versicherungsgesellschaft and the Mannheimer Versicherungsgesellschaft, which was excellently, actively, and very loyally represented in New York by the firm F. Hermann & Co., at first offered an insurance limit of about 75,000 dollars, that is 150,000 dollars together, which in any case was insufficient. At first they had no authority to undertake war insurance.

The economic importance of the insurance question is obvious on the face of it. No marine insurance was possible without war insurance. In particular the American Government bureau for war insurance made the covering of the marine insurance an essential condition. This example was followed by all the American insurance companies. A satisfactory settlement of the insurance—both war and marine—on the other hand was a necessary condition for the financing of the shipments. The shippers only obtained credit from the bank on handing over the insurance policies. In addition to this it came about later that the few American shipping lines which remained independent of England, and so were on the black list, were no longer in a position to cover the "Hull Insurance," i.e., the insurance of the ship herself, and therefore the solution of the insurance question became a necessary condition for obtaining freight space. Here too, then, it was to our interest to come to the rescue, because otherwise the lines in question would have been forced to come to an understanding with the English firms, which would have placed their tonnage at the service of our enemies.

To begin with, Herr Albert himself undertook the insurance in cases of exceptional importance. It was at most a question of a small balance, by the furnishing of which an immediate risk or a dangerous delay in shipment was avoided. Our chief efforts were directed towards raising the insurance limit of the German companies. As a result a pool of German insurance companies was formed whose limit for marine and war insurance was gradually raised more and more. In this way it was possible to carry through a number of shipments to European countries, to keep a not inconsiderable tonnage—about 30,000 tons—out of the hands of the Allies, as well as to enable a number of important German firms in South America to carry on extensive trade between North and South America, and so to maintain their business activity in spite of the measures adopted by the English.

About our propaganda I have already spoken in detail in the second chapter. It may be mentioned again here that the centre of gravity of our active propaganda lay in the economic question, which was to a certain extent the key to the understanding of our American policy during the war.

Though the vast and rapid development of American export trade through the trade in war material, and the change in position from debtor to creditor, was only effected gradually, and the loss of the German market at first made itself adversely felt both actively and passively, the size of the contracts from the Allies and the consequent profits at once acted like a narcotic on public opinion. This was all the more the case as a result of the extraordinarily skilful way in which the English handled the question. They always proceeded cautiously and gradually. For instance, they at first accepted the Declaration of London in principle, but made several alterations which to the public, who did not realize the extent of their effect, seemed unimportant and which yet formed the basis for the gradual throwing overboard of the Declaration of London. After public opinion had grown accustomed to the English encroachments and the interests affected had been pacified by the Allied contracts, the blockade was introduced after careful preparation in the Press; it was not at first described as a blockade, but was gradually and systematically tightened. Among other things, the export of cotton to Germany was expressly agreed to at the end of 1914, but was afterwards hampered in practice by various measures, as, for example, the holding up of individual ships, and the refusal of marine insurance, and finally brought to an end by the declaration of cotton as unconditional contraband. It is characteristic that the declaration of cotton as unconditional contraband was made public on the very day on which the whole American Press was in a state of great excitement over the Arabic case, so that this comparatively unimportant incident filled the front pages and leading articles of the newspapers, while the extremely important economic measure was published in a place where it would hardly be noticed.

We made vigorous efforts to oppose this English step. We got into touch with the importers of German goods, who formed an association and forwarded a protest to Washington. Without attracting attention, we gave the association the assistance of a firm of solicitors, whose services were at our disposal, as legal advisers. Relations were entered into with the cotton interest, which, through the political pressure of the Southern States, exerted great influence on public opinion and in Congress. Various projects for buying cotton on a large scale for Germany were considered, discussed with the cotton interest and tested by small purchases. In the same way negotiations were entered upon with the great meat companies, the copper interest and others by systematic explanation and emphasis of the interests with regard to the German market. The result, partly for the reasons given, partly owing to the political development of the general relations between Germany and the United States, was small. This, however, can hardly be taken as an argument against the expediency of the steps taken as at that time. No one could foresee the later development of the war and particularly the length of time it was going to last; whereas had the war been shorter there is no doubt that these measures would have attained their object.

An important part of the economic propaganda was the institution of the so-called "Issues," i.e., the attempt by carefully construing individual incidents to make clear to public opinion the fundamental injustice of the English encroachments and their far-reaching consequences in practice. The most important case in this direction is that of the Wilhelmina. According to the prevailing principles of international law, foodstuffs were only conditional contraband. They might be imported into Germany if they were intended for the exclusive use of the civil population. As, however, England succeeded in restraining the exporters from any attempt to consign foodstuffs to Germany, especially as in view of the enormous supplies that were being forwarded to our enemies they had little interest in such shipment, the question never reached a clear issue. Herr Albert therefore induced an American firm to ship foodstuffs for the civil population of Germany on the American steamer Wilhelmina, bound for Hamburg, by himself undertaking the whole risk from behind the scenes. This was arranged in such a way as to preserve in appearance the good faith of the American firm, and to make the shipment seem purely American in the eyes of the American Government and the English.

The Wilhelmina was taken by the English into Falmouth and detained on the grounds that Hamburg was a fortified town, and that, according to the measures adopted by Germany for supplying the civil population with food—requisitioning, centralization of distribution, etc.—there was no longer any distinction between the supply of the military and the civil population. While the negotiations on this question were still in the air, and seemed to be progressing favorably for us, England resorted to a general blockade. Consequently the case lost its interest, both practical and as a question of principle, especially as England declared her readiness to pay for the goods at Hamburg prices. As, on the other hand, insistence on the purely theoretical claims would give rise to the danger that the English or American secret service might in the end succeed in proving the German origin of the undertaking, Herr Albert accepted the proffered payment of the English Government, and received as compensation a sum which covered all the expenses.

Such incidents could have been construed in several ways. One of the most important, and also the most popular, was the shipment of cotton to Germany for the civilian population between the autumn of 1915 and the middle of 1916. The declaration of cotton as absolute contraband was at first only on paper, as no American exporters had hitherto ventured to ship cotton. Consequently, detailed discussions took place as to whether such an undertaking should be entered upon in the full light of publicity. Great excitement among the cotton growers proved the extremely keen and widespread interest. England would have been forced to act on her declaration at a time when the American Government could not afford to ignore the interests of the cotton industry, with its influence on domestic politics. The full effect of the meagreness of the crops, and on the other hand the increase of consumption in the United States, and consequent rise in price, was not yet realized by the public, nor even in cotton circles. The cotton industry viewed with anxiety the increased difficulty of finding a market, and were anxious for a reopening of that of the Central Powers.

Certainly a shipment of cotton to Germany would only have been justified in conjunction with comprehensive other measures, particularly purchases on the American cotton market on German account. As a result of detailed discussion with American interested parties, who repeatedly urged us to such a step, we forwarded proposals to Berlin on these lines. Their general purport was that about a million bales of cotton should be bought outright on behalf of Germany, and that in addition options should be secured on a further million or two million bales on the understanding that the taking up of the options should be dependent on the possibility of shipment to Germany. On the strength of these measures the shipment of one big consignment should have been undertaken. The plan had sound prospects of success. In any case there would have been no risk worth mentioning, as, to the initiated, there was no doubt as to the rise of prices. In view of the new bank legislation (Federal Reserve Act), no insuperable difficulties would have stood in the way of financing the shipment. The indirect political pressure on the American Government and public opinion, with its reaction on England, would have been considerable.

Unfortunately the plan was frustrated by the taking up of the matter in America direct from Germany, without regard to the shipment difficulty, without going into the question of the options and without knowledge of the political or economic situation. Bremen actually placed a contract in New York for one million bales to be delivered in Bremen at a fixed price. It was, however, clear from the first to anyone acquainted with the circumstances that such a step was bound to be futile. The whole thing turned on the question of shipping. The American Press, again under English influence, at once pointed the finger of scorn, saying that the contract was not meant seriously, but was merely a piece of bluff for purposes of German propaganda.

After this had brought about the collapse of the more ambitious plan, the shipment of a single cargo still continued to be discussed and detailed preparations were made. The idea had, however, to be abandoned, because the difficulties of passing off the shipment as a purely American enterprise were practically insuperable without the background of great economic measures, which placed the cost out of all proportion to the chances of success. The whole cost, as in the "Wilhelmina case" would have to be guaranteed from Germany, and would of course have been lost if the English secret service succeeded in establishing the German connection.

The propaganda for preventing and hampering the supply of war material to our enemies turned at first on the question of principle whether such supplies were reconcilable with neutrality. The attempt was made—as has been briefly mentioned already—with the special support of the German-American circles, to impress upon the American people the immorality and essentially unneutral nature of the supplies, especially in view of the vast scale they were assuming. It is well known that these attempts, which extended to a strictly legal exertion of influence on Congress, failed. The lack of unity and limited political experience of the German-Americans contributed to this result, but the economic interest of the nation in the supplies, in which the whole American Administration and industry were finally concerned, formed the decisive factor.

Attempts too were very soon made to hamper the supplies in a practical way. In August, 1914, it might perhaps have been possible to buy up the Bethlehem Steel Works, if the outlay of the necessary capital had been promptly decided upon. At that time the Americans themselves did not foresee what a gigantic proportion these supplies were to assume. The purchase of these works would have deprived the whole munition industry of its main support. Similar proposals have repeatedly been worked out by us, as, for example, the proposal to amalgamate the whole shrapnel industry of the United States. The fear, well grounded in itself, that such an arrangement was scarcely within the bounds of practical politics and could have been got round, could be ignored. In case of disputes as to the validity of such a step we should have gained more by the publicity than we stood to lose. At that time, however, the Berlin Government took up a negative attitude, and did not interest itself in the question until the beginning of 1915, when the vast supplies of material from America began to make themselves felt and the concentration of German industry on the production of munitions was not yet complete. The Military Attache received instructions to do everything possible to hamper the fulfilment of the great outstanding French and Russian contracts for shrapnel, which was at that time still the chief shell used by the Allies. This was done successfully, if on a small scale, by founding an undertaking of our own, called the Bridgeport Projectile Company, and entering into contracts to establish the most important machinery for the manufacture of powder and shrapnel. Through this company, which originally passed as entirely American, the special machinery required for the manufacture of shrapnel was bought on a scale which seriously affected the American output, and in particular hindered the acceptance and carrying through of further contracts from the Allies for a considerable time. Herr Albert assisted and advised the Military Attache in making these contracts, arranged the financing of the enterprise later on, and worked at its development after Herr von Papen's departure.

Still more successful were the efforts to remove from the market the surplus benzol, which is the raw product for the production of picric acid. The benzol was bought up by a company specially formed for the purpose, who sent it to a chemical works under German management to be manufactured into salicylic preparations. These products were sold for the most part for the American market, and also, with the approval of the Ministry for War, exported to neutral countries. The undertaking was eventually closed down after making considerable profits for the Imperial Treasury. In the same way, for some time, all the bromine coming on to the market, the products of which were used to manufacture and increase the density of gas, were bought up.

To these efforts to hamper and delay the supply of war material belonged also the much-discussed agreement with the Bosch Magneto Company, the American branch of the Stuttgart firm. The substance of the arrangement was that this company, which was under German direction, should not immediately refuse Allied contracts for fuses, but should appear to accept them and delay their fulfilment, and, to complete the deception, even occasionally deliver small quantities, and finally, at the last moment, refuse to complete the contract. This procedure was attacked at the time by a German-American journalist, von Skal. On the strength of short notices which Herr von Skal published in the German Press, in ignorance of the real state of the case, public opinion in Germany turned against the parent firm, the Bosch works in Stuttgart. The question then became the subject of my reports, and was submitted to an inquiry by the home authorities and the courts. I still hold to my opinion that the whole affair was unnecessarily exaggerated by German public opinion, and that the detailed investigation into its legality by the home authorities and courts was unnecessary, as the managing director of the American branch and the directors of the German company had acted in perfect good faith in an attempt to advance the interests of the German cause. It was merely a question of the result. If their policy of procrastination had succeeded in delaying the contracts and had kept our enemies for a considerable time from building their own factory for fuses and aeroplane magnetoes, their action would have been justified; in the contrary event it would have been vain, but blameless from a moral and legal point of view. The fact that at the beginning the English relied on the possibility of the production and supply of such fuses from America, and only later gradually came to a decision to build and fit out their own factories, consequently under much more difficult circumstances, offered an opening for this procedure. That difficulties were caused to the enemy in this respect until quite recently is unmistakably shown by the messages that reached America from England.

As a result of the extensive purchases of the Allies, there came about a gradual change in the attitude of the American Government to the question of issuing loans. At the end of March, 1915, we succeeded, acting on instructions from Berlin, in raising a small loan. It involved an unusual amount of trouble. The American financial world was already completely dominated by the Morgan trust. This domination resulted from the fact that the Allied commissions were concentrated in English hands and were placed by England in the hands of J. P. Morgan & Co., who acted as the agents of the English Government. As these commissions finally included every sphere of economic life, all the great American banks and bankers were called upon, and so drawn into the Morgan circle. The result was that no big firm could be induced to undertake a German loan. However, several trust companies of repute, who already had or wished to have business relations with Germany, declared their readiness to become partners in a syndicate if we succeeded in finding a "Syndicate Manager." A certain New York firm which afterwards made a name for itself, but at that time was comparatively unknown, seemed suited for this position. When all the preparations and preliminary agreements had been carried through, the trust companies, under the pressure of the Morgan influence, declared that their names must not be associated with the syndicate. Meanwhile the matter had gone so far that withdrawal would have meant a moral surrender which would have been dangerous for our credit. Consequently, we had to make up our minds to negotiate the loan under the signature of this one firm, which was naturally undesirable for the general interest.

Looking back, I am of the opinion that we should have done better not to consider a loan in the United States, but to remit the necessary funds from Berlin. This had to be done later to redeem the loan, and at a time when the rate of exchange was much more unfavorable. When the loan was raised we had certainly no idea that it would have to be redeemed during the war, as we had reckoned on a shorter duration of hostilities. On the other hand there is no truth in the statement that this loan in some way cleared the way for further Allied loans. These loans, which were the natural result of the great supplies of material to the Allies, would have come in any case. We did, however, deprive ourselves by this loan of an argument to prove the defective neutrality of the United States.

In 1916 we succeeded in getting hold of some five millions in Treasury notes without formal loan negotiations.

Another economic question which occupied my attention was connected with the export of German dye-stuffs to the United States. In Berlin it was held that German dye-stuffs should be withheld from the United States as a lever for inducing them to protest against the English blockade, and possibly have it raised. The same point of view was adopted with regard to other goods which were necessities for the United States, as, for example, potassic salt, sugar beetroot seed and other commodities. A change of view did not occur until the spring of 1916 at my suggestion. It is my belief that the withholding of these goods proved a serious mistake. The political aim of bringing pressure to bear on England with a view to the raising of the blockade was not realized. The American industry partly got over the difficulty by obtaining dye-stuffs in other ways—importation of German dyes from China, where they had been systematically bought, smuggling of German dyes via neutral countries, importation of Swiss dyes, introduction of natural dyes and dye-substitutes—but more especially by the foundation of a dye industry of their own. In the case of potash, they had simply to do with what little they could get; which was all the easier as the American manure manufacturers and dealers had already in their own interests begun a systematic propaganda to prove that potash was not indispensable, but could be replaced by their own products. It might be observed as a generalization that ultimately no individual product has proved to be really indispensable. The result of holding back our exports was therefore simply—apart from a quite unnecessary straining of political relations, since England succeeded in diverting all the odium on to us—a scarcity of important German commodities in the United States and the substitution of their own production.

In negotiating the German loan, the chief difficulty was that grasping speculators got hold of the market, discredited the war loan by underbidding one another and in part by direct dishonorable dealing, and also that owing to the impossibility of producing ready money, interest in the war loan flagged. Early on I suggested the issue of bills ad interim. The scheme, however, failed, because the representative of the Deutsche Bank opposed it, and because the natural opposition of two great institutions, who were making a profitable business out of the sale of war loans and the speculations on the value of the mark, which were closely connected with it, could not be overcome. I am still of the opinion that with well-timed organization the sum raised by the war loan could have been increased by several millions.