My Four Years in Germany Part 14

Like most Germans of the ruling cla.s.s, ambition is his only pa.s.sion.

These Spartans do not care either for money or for the luxury which it brings. Their life is on very simple lines, both in the Army and Navy, in order that the officers shall not vie with one another in expenditure, and in order that the poorer officers and their wives shall not be subject to the humiliation which would be caused if they had to live in constant contact with brother officers living on a more luxurious footing.

Von Tirpitz' ambition undoubtedly led him to consider himself as a promising candidate for Bethmann-Hollweg's shoes. The whole submarine issue, therefore, became not only a question of military expediency and a question for the Foreign Office to decide in connection with the relations of America to Germany, but also a question of internal politics, a means of forcing the Chancellor out of office. The advocates for the ruthless war were drawn from the Navy and from the Army, and those who believed in the use of any means of offence against their enemies and particularly in the use of any means that would stop the shipment of munitions of war to the Allies. The Army and the Navy were joined by the Conservatives and by all those who hoped for the fall of the Chancellor. The conservative newspapers, and even the Roman Catholic newspapers were violent in their call for ruthless submarine war as well as violent in their denunciations of the United States of America.

American pa.s.sengers on merchant ships of the enemy were called _Schutzengel_ (guardian angels), and caricatures were published, such as one which showed the mate reporting to the Captain of an English boat that everything was in readiness for sailing and the Captain's inquiry, "Are you sure that the American _Schutzengel_ is on board?" The numerous notes sent by America to Germany also formed a frequent subject of caricature and I remember particularly one quite clever one in the paper called _Brummer_, representing the celebrations in a German port on the arrival of the one hundredth note from America when the Mayor of the town and the military, flower girls and singing societies and _Turnverein_ were drawn up in welcoming array.

The liberal papers were inclined to support the Chancellor in his apparent intention to avoid an open break with America. But even the liberal papers were not very strong in their stand.

The military, of course, absolutely despised America and claimed that America could do no more harm by declaring war than it was doing then to Germany; and that possibly the war preparations of America might cut down the amount of the munitions available for export to the enemies of the Empire. As to anything that America could do in a military way, the Navy and the Army were unanimous in saying that as a military or naval factor the United States might be considered as less than nothing. This was the situation when the last _Suss.e.x_ Note of America brought matters to a crisis, and even the crisis itself was considered a farce as it had been simmering for so long a period.

I arranged that Colonel House should have an interview with the Chancellor at this time, and after dinner one night he had a long talk with the Chancellor in which the dangers of the situation were pointed out.

With this arrival of the last American _Suss.e.x_ Note, I felt that the situation was almost hopeless; that this question which had dragged along for so long must now inevitably lead to a break of relations and possibly to war. Von Jagow had the same idea and said that it was "fate," and that there was nothing more to be done. I myself felt that nothing could alter public opinion in Germany; that in spite of von Tirpitz' fall, which had taken place some time before, the advocates of ruthless submarine warfare would win, and that to satisfy them Germany would risk a break with America.

I was sitting in my office in a rather dazed and despairing state when Professor Ludwig Stein, proprietor of a magazine called _North_and_South_ and a writer of special articles on Germany's foreign relations for the _Vossische_Zeitung_, under the name of "Diplomaticus," called to see me.

He informed me that he thought the situation was not yet hopeless, that there was still a large party of reasonable men in Germany and that he thought much good could be done if I should go to the great general headquarters and have a talk with the Kaiser, who, he informed me, was reported to be against a break.

I told Dr. Stein that, of course, I was perfectly willing to go if there was the slightest chance of preventing war; and I also told the Chancellor that if he was going to decide this question in favor of peace it would be possibly easier for him if the decision was arrived at under the protection, as it were, of the Emperor; or that, if the decision lay with the Emperor, I might possibly be able to help in convincing him if I had an opportunity to lay the American side of the case before him. I said, moreover, that I was ready at any time on short notice to proceed to the Emperor's headquarters.

Dr. Hecksher, a member of the Reichstag, who must be cla.s.sed among the reasonable men of Germany, also advocated my speaking directly to the Kaiser.

CHAPTER XIII

MAINLY COMMERCIAL

Nothing surprised me more, as the war developed, than the discovery of the great variety and amount of goods exported from Germany to the United States.

Goods sent from the United States to Germany are mainly prime materials: approximately one hundred and sixty million dollars a year of cotton; seventy-five million dollars of copper; fifteen millions of wheat; twenty millions of animal fats; ten millions of mineral oil and a large amount of vegetable oil. Of course, the amount of wheat is especially variable. Some manufactured goods from America also find their way to Germany to the extent of perhaps seventy millions a year, comprising machinery such as typewriters and a miscellaneous line of machinery and manufactures.

The princ.i.p.al exports from Germany to America consist of dye stuffs and chemical dyes, toys, underwear, surgical instruments, cutlery, stockings, knit goods, etc., and a raw material called potash, also known as kali. The last is a mineral found nowhere in the world except in Germany and a few places in Austria. Potash is essential to the manufacture of many fertilizers, fertilizer being composed as a rule of potash, phosphates and nitrates.

The nitrates in past years have been exported to all countries from Chile. Phosphate rock is mined in South Carolina and Florida and several other places in the world. Curiously enough, both nitrates and potash are essential ingredients also of explosives used in war. Since the war, the German supply from Chile was cut off; but the Germans, following a system used in Norway for many years before the war, established great electrical plants for the extraction of nitrates from the atmosphere. Since the war, American agriculture has suffered for want of potash and German agriculture has suffered for want of phosphates, possibly of nitrates also; because I doubt whether sufficient nitrogen is extracted from the air in Germany to provide for more than the needs of the explosive industry.

The dyestuff industry had been developed to such a point in Germany that Germany supplied the whole world. In the first months of the war some enterprising Americans, headed by Herman Metz, chartered a boat, called _The_Matanzas_, and sent it to Rotterdam where it was loaded with a cargo of German dyestuffs. Th boat sailed under the American flag and was not interfered with by the English. Later on the German Department of the Interior, at whose head was Delbruck, refused to allow dyestuffs to leave Germany except in exchange for cotton, and, finally, the export of dyestuffs from Germany ceased and other countries were compelled to take up the question of manufacture. This state of affairs may lead to the establishment of the industry permanently in the United States, although that industry will require protection for some years, as, undoubtedly, Germany in her desperate effort to regain a monopoly of this trade will be ready to spend enormous sums in order to undersell the American manufacturers and drive them out of business.

The commercial submarines, _Deutschland_ and _Bremen_, were to a great extent built with money furnished by the dyestuff manufacturers, who hoped that by sending dyestuffs in this way to America they could prevent the development of the industry there.

I had many negotiations with the Foreign Office with reference to this question of dyestuffs.

The export of toys from Germany to the United States forms a large item in the bill which we pay annually to Germany. Many of these toys are manufactured by the people in their own homes in the picturesque district known as the Black Forest. Of course, the war cut off, after a time, the export of toys from Germany; and the American child, having in the meantime learned to be satisfied with some other article, his little brother will demand this very article next Christmas, and thus, after the war, Germany will find that much of this trade has been permanently lost.

Just as the textile trade of the United States was dependent upon the German dyestuffs for colours, so the sugar beet growers of America were dependent upon Germany for their seed. I succeeded, with the able a.s.sistance of the consul at Magdeburg and Mr. Winslow of my staff, in getting shipments of beet seed out of Germany. I have heard since that these industries too, are being developed in America, and seed obtained from other countries, such as Russia.

Another commodity upon which a great industry in the United States and Mexico depends is cyanide. The discovery of the cyanide process of treating gold and silver ores permitted the exploitation of many mines which could not be worked under the older methods.

At the beginning of the war there was a small manufactory of cyanide owned by Germans at Perth Amboy and Niagara Falls, but most of the cyanide used was imported from Germany. The American German Company and the companies manufacturing in Germany and in England all operated under the same patents, the English and German companies having working agreements as to the distribution of business throughout the world.

The German Vice-Chancellor and head of the Department of the Interior, Delbruck, put an export prohibition on cyanide early in the war; and most pigheadedly and obstinately claimed that cyanide was manufactured nowhere but in Germany, and that, therefore, if he allowed cyanide to leave Germany for the United States or Mexico the English would capture it and would use it to work South African mines, thus adding to the stock of gold and power in war of the British Empire. It was a long time before the German manufacturers and I could convince this gentleman that cyanide sufficient to supply all the British mines was manufactured near Glasgow, Scotland. He then reluctantly gave a permit for the export of a thousand tons of cyanide; and its arrival in the United States permitted many mines there and in Mexico to continue operations, and saved many persons from being thrown out of employment. When Delbruck finally gave a permit for the export of four thousand tons more of cyanide, the psychological moment had pa.s.sed and we could not obtain through our State Department a pa.s.s from the British.

I am convinced that Delbruck made a great tactical mistake on behalf of the German Government when he imposed this prohibition against export of goods to America. Many manufacturers of textiles, the users of dyestuffs, medicines, seeds and chemicals in all forms, were clamouring for certain goods and chemicals from Germany. But it was the prohibition against export by the Germans which prevented their receiving these goods. If it had been the British blockade alone a cry might have arisen in the United States against this blockade which might have materially changed the international situation.

The Germans also refused permission for the export of potash from Germany. They hoped thereby to induce the United States to break the British blockade, and offered cargoes of potash in exchange for cargoes of cotton or cargoes of foodstuffs. The Germans claimed that potash was used in the manufacture of munitions and that, therefore, in no event would they permit the export unless the potash was consigned to the American Government, with guarantees against its use except in the manufacture of fertilizer, this to be checked up by Germans appointed as inspectors. All these negotiations, however, fell through and no potash has been exported from Germany to the United States since the commencement of the war. Enough potash, however, is obtained in the United States for munition purposes from the burning of seaweed on the Pacific Coast, from the brines in a lake in Southern California and from a rock called alunite in Utah. Potash is also obtainable from feldspar, but I do not know whether any plant has been established for its production from this rock. I recently heard of the arrival of some potash from a newly discovered field in Brazil, and there have been rumours of its discovery in Spain.

I do not know how good this Spanish and Brazilian potash is, and I suppose the German potash syndicate will immediately endeavour to control these fields in order to hold the potash trade of the world in its grip.

It was a long time after the commencement of the war before England declared cotton a contraband. I think this was because of the fear of irritating the United States; but, in the meantime, Germany secured a great quant.i.ty of cotton, which, of course, was used or stored for the manufacture of powder. Since the cotton imports have been cut off the Germans claim that they are manufacturing a powder equally good by using wood pulp. Of course, I have not been able to verify this, absolutely.

Germany had endeavoured before the war in every way to keep American goods out of the German markets, and even the Prussian state railways are used, as I have shown in the article where I speak of the attempt to establish an oil monopoly in Germany, in order to discriminate against American mineral oils. This same method has been applied to other articles such as wood, which otherwise might be imported from America and in some cases regulations as to the inspection of meat, etc., have proved more effective in keeping American goods out of the market than a prohibitive tariff.

The meat regulation is that each individual package of meat must be opened and inspected; and, of course, when a sausage has been individually made to sit up and bark no one desires it as an article of food thereafter. American apples were also discriminated against in the custom regulations of Germany. Nor could I induce the German Government to change their tariff on canned salmon, an article which would prove a welcome addition to the German diet.

The German workingman, undoubtedly the most exploited and fooled workingman in the world, is compelled not only to work for low wages and for long hours, but to purchase his food at rates fixed by the German tariff made for the benefit of the Prussian Junkers and landowners.

Of course, the Prussian Junkers excuse the imposition of the tariff on food and the regulations made to prevent the entry of foodstuffs on the ground that German agriculture must be encouraged, first, in order to enable the population to subsist in time of war and blockade; and, secondly, in order to encourage the peasant cla.s.s which furnishes the most solid soldiers to the Imperial armies.

The nations and business men of the world will have to face after the war a new condition which we may call socialized buying and socialized selling.

Not long after the commencement of the war the Germans placed a prohibitive tariff upon the import of certain articles of luxury such as perfumes; their object, of course, being to keep the German people from sending money out of the country and wasting their money in useless expenditures. At the same time a great inst.i.tution was formed called the Central Einkauf Gesellschaft.

This body, formed under government auspices of men appointed from civil life, is somewhat similar to one of our national defence boards. Every import of raw material into Germany falls into the hands of this central buying company, and if a German desires to buy any raw material for use in his factory he must buy it through this central board.

I have talked with members of this board and they all unite in the belief that this system will be continued after the war.

For instance, if a man in Germany wishes to buy an automobile or a pearl necklace or a case of perfumery, he will be told, "You can buy this if you can buy it in Germany. But if you have to send to America for the automobile, if you have to send to Paris for the pearls or the perfumery, you cannot buy them."

In this way the gold supply of Germany will be husbanded and the people will either be prevented from making comparatively useless expenditures or compelled to spend money to benefit home industry.

On the other hand, when a man desires to buy some raw material, for example, copper, cotton, leather, wheat or something of that kind, he will not be allowed to buy abroad on his own hook. The Central Einkauf Gesellschaft will see that all those desiring to buy cotton or copper put in their orders on or before a certain date. When the orders are all in, the quant.i.ties called for will be added up by this central board; and then one man, representing the board, will be in a position to go to America to purchase the four million bales of cotton or two hundred million pounds of copper.

The German idea is that this one board will be able to force the sellers abroad to compete against each other in their eagerness to sell. The one German buyer will know about the lowest price at which the sellers can sell their product. By the buyer's standing out alone with this great order the Germans believe that the sellers, one by one, will fall into his hands and sell their product at a price below that which they could obtain if the individual sellers of America were meeting the individual buyers of Germany in the open market.

When the total amount of the commodity ordered has been purchased, it will be divided up among the German buyers who put in their orders with the central company, each order being charged with its proportionate share of the expenses of the commission and, possibly, an additional sum for the benefit of the treasury of the Empire.

Before the war a German manufacturer took me over his great factory where fifteen thousand men and women were employed, showed me great quant.i.ties of articles made from copper, and said: "We buy this copper in America and we get it a cent and a half a pound less than we should pay for it because our government permits us to combine for the purpose of buying, but your government does not allow your people to combine for the purpose of selling.

You have got lots of silly people who become envious of the rich and pa.s.s laws to prevent combination, which is the logical development of all industry."

The government handling of exchange during the war was another example of the use of the centralised power of the Government for the benefit of the whole nation.

In the first year of the war, when I desired money to spend in Germany, I drew a check on my bank in New York in triplicate and sent a clerk with it to the different banks in Berlin, to obtain bids in marks, selling it then, naturally, to the highest bidder. But soon the Government stepped in. The Imperial Bank was to fix a daily rate of exchange, and banks and individuals were forbidden to buy or sell at a different rate. That this fixed rate was a false one, fixed to the advantage of Germany, I proved at the time when the German official rate was 5.52 marks for a dollar, by sending my American checks to Holland, buying Holland money with them and German money with the Holland money, in this manner obtaining 5.74 marks for each dollar. And just before leaving Germany I sold a lot of American gold to a German bank at the rate of 6.42 marks per dollar, although on that day the official rate was 5.52 and although the buyer of the gold, because the export of gold was forbidden, would have to lose interest on the money paid me or on the gold purchased, until the end of the war. What the Germans thought of the value of the mark is shown by this transaction.

The only thing that can maintain a fair price after the war for the products of American firms, miners and manufacturers is permission to combine for selling abroad. There is before Congress a bill called the Webb Bill permitting those engaged in export trade to combine, and this bill, which is manifestly for the benefit of the American producer of raw materials and foods and manufactured articles, should be pa.s.sed.

It was also part of our commercial work to secure permits for the exportation from Belgium of American owned goods seized by Germany. We succeeded in a number of cases in getting these goods released. In other cases, the American owned property was taken over by the government, but the American owners were compensated for the loss.

Germany took over belligerent property and put it in the hands of receivers. In all cases where the majority of the stock of a German corporation was owned by another corporation or individuals of belligerent nationality, the German corporation was placed in the hands of a receiver. The German Government, however, would not allow the inquiry into the stock ownership to go further than the first holding corporation. There were many cases where the majority of the stock of a German corporation was owned by an English corporation and the majority of the stock of the English corporation, in turn, owned by an American corporation or by Americans. In this case the German Government refused to consider the American ownership of the English stock, and put the German company under government control.

With the low wages paid to very efficient workingmen who worked for long hours and with no laws against combination, it was always a matter of surprise to me that the Germans who were in the process of getting all the money in the world should have allowed their military autocracy to drive them into war.

I am afraid that, after this war, if we expect to keep a place for our trade in the world, we may have to revise some of our ideas as to so-called trusts and the Sherman Law. Trusts or combinations are not only permitted, but even encouraged in Germany. They are known there as "cartels" and the difference between the American trust and the German cartel is that the American trust has, as it were, a centralised government permanently taking over and combining the competing elements in any given business, while in Germany the competing elements form a combination by contract for a limited number of years. This combination is called a cartel and during these years each member of the cartel is a.s.signed a given amount of the total production and given a definite share of the profits of the combination. The German cartel, therefore, as Consul General Skinner aptly said, may be likened to a confederation existing by contract for a limited period of time and subject to renewal only at the will of its members.

It may be that compet.i.tion is a relic of barbarism and that one of the first signs of a higher civilisation is an effort to modify the stress of compet.i.tion. The debates of Congress tend to show that, in enacting the Sherman Law, Congress did not intend to forbid the restraint of compet.i.tion among those in the same business but only intended to prohibit the forming of a combination by those who, combined, would have a monopoly of a particular business or product. It is easy to see why all the coal mines in the country should be prohibited from combining; but it is not easy to see why certain people engaged in the tobacco business should be prohibited from taking their compet.i.tors into their combination, because tobacco is a product which could be raised upon millions of acres of our land and cannot be made the subject of a monopoly.