My Three Years in America

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 Attaché, 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.