Chapter VIII: Politics (2)

"If I were to say that London was completely dominated by the
election campaign, this would be a very mild way of characterizing
the situation as it is. The whole population has been seized with a
fit of madness. The City men who, until quite recently, had
preserved an admirable calm, have now lost their heads altogether,
and are the most ardent advocates of Tariff Reform. Every victory
of a Conservative candidate is cheered by them to the echo. Under
these circumstances, even in the City, the fear of war has grown.
If we ask ourselves what it is that has brought about such an
extraordinary change in the attitude of commonsense business
people, we find that there are several reasons for it, viz. the
general slump in business; the unfortunate policy cf Lloyd George
with regard to the Irish Nationalists; the advances he made to the
Labour Party, and the effects of his social legislation which are
now felt with increasing seriousness.

"Business is bad in England, and up to now very little has been
seen of the improvement which is so marked in Germany. It is but
natural that, in view of the extended trade depression which has so
far lasted more than two years, a people endowed with such business
instincts as the British should feel favourably disposed towards a
change of the country's commercial policy. This disposition is
further strengthened by the constant reiteration of the promise
that it will be possible to provide the money needed for new
warship construction and for the newly inaugurated social policy by
means of the duties which the foreigner will be made to pay.

"It seems pretty certain that the present Government, in spite of
the great election successes gained by the Conservative party, will
still retain a slight majority if it can rely on the Nationalist
vote. That is what I had always predicted. But the majority on
which the Liberal Cabinet depends will doubtless be a very
uncomfortable one to work with, and the opinion is general that it
will hardly take more than a twelvemonth before another dissolution
of Parliament will be necessary. It is said that the elections that
will then be held will smash up the Liberal party altogether, but I
consider this is an exaggeration. In this country everything
depends on the state of business. If, in the course of the year,
trade prospects brighten up again, and if everything becomes normal
once more, the Tariff Reformers in the City will turn Free Traders
again and will take great care not to kill the goose that lays the
golden eggs. I am quite convinced that everything hangs on the
future development of trade and traffic. To-day, as I have said
before, Tariff Reform and a Zollverein with the Colonies are the
catchwords that are on everybody's lips, and the anti-German
feeling is so strong that it is scarcely possible to discuss
matters with one's oldest friends, because the people over here
have turned mad and talk of nothing but the next war and the
protective policy of the near future. Large crowds are spending
hours every night in the principal squares such as Trafalgar
Square, where they have come to watch the announcements of the
election results in the provinces. Their behaviour is exemplary. It
is a curious thing that in this country the election game is spread
over several weeks, in consequence of which the political
excitement of the masses is raised to boiling-point. Within a few
months' time, I am sure, things will look entirely different
again."

From the second report, in the summer of 1910, the following is the salient extract:

"I am now returned from England, and it may not be out of place to
report the impressions I received of the political and economic
conditions over there.

"My previous visit to London coincided with the big election
campaign, and I have already described the fit of mad excitement
which had taken possession of the people, and which was directed
against Germany.

"The situation has now undergone a complete change, which is
noticeable everywhere and which is caused by the close of the
election campaign, by the death of the King, and, finally, by the
visit of the Kaiser on the occasion of the Royal funeral. Everyone
whom I met in London--Liberals and Conservatives alike--spoke in
terms of the highest praise of the Kaiser's sympathetic attitude
displayed during his stay in England, and which was all the more
commendable as it was not denied that he had suffered many slights
during the lifetime of his late uncle.

"The attitude of the people towards the new monarch is one of
reserve, but also--in conformity with the national character of the
English--one of loyalty and good faith. The situation with regard
to home politics is as difficult now as it has been all along.
Unless a compromise between the parties is arrived at new elections
will be unavoidable in the spring or even before. I have met a
great many persons of political experience who are of opinion that,
even if a compromise is made, it will be necessary to submit such
an arrangement to the decision of the electorate by an appeal to
the country. It is difficult to predict the result of such new
elections. The views held by large sections of the Press and of the
public bear out the truth of the remarks in my previous letter when
I emphasized the fact that the British are a nation of business men
who act on the principle of 'leave well alone,' and who will refuse
to have anything to do with Tariff Reform as soon as there is an
improvement in trade.

"Business has, indeed, improved in the meantime, but only very
slightly, and much less than in Germany. This slight improvement,
however, has not failed to give a fillip to the cause of Free Trade
among the City men. If elections in the spring are regarded as
likely, much will depend on the further development of trade. I
must confess that I take a very pessimistic view as to the future
of Great Britain in this respect. The British can really no longer
compete with us, and if it were not for the large funds they have
invested, and for the sums of money which reach the small
mother-country from her great dominions, their saturated and
conservative habits of life would soon make them a _quantité
négligeable_ as far as their competition with us in the world's
markets is concerned.

"Of course, their financial strength and their excellent system of
foreign politics, in which they have now been trained for
centuries, will always attract business to their country, the
possession of which we shall always begrudge them (for is not envy
one of the national characteristics of the German race?)."

Up to the summer of 1911 the feeling remained friendly. Early in July Ballin wrote:

"To-day the feeling, as far as the City is concerned, is thoroughly
friendly towards Germany. The visit in the spring of the Kaiser
and the Kaiserin, on the occasion of the unveiling of the monument
to Queen Victoria, has created a most sympathetic impression--an
impression which has been strengthened by the participation of the
Crown Prince and Princess in the Coronation festivities. At present
the Kaiser is actually one of the most popular persons in England,
and the suggestion of bringing about an Anglo-German understanding
is meeting with a great deal of approval from all sections of the
population."

However, this readiness to come to an understanding received a setback during the course of the year, when it was adversely affected by the new developments in the Morocco affair and by the dispatch of the _Panther_ to Agadir, which led to fresh complications with France, and later also with Great Britain. The grievances of the latter found expression in a sharply worded speech by Lloyd George in July, 1911, the main argument of which was that Great Britain, in questions affecting her vital interests, could not allow herself to be treated as though she were non-existent. In Germany this pronouncement led to violent attacks on the part of the Conservative opposition against Herr v. Bethmann and against England, and it was the latter against whom Herr v. Heydebrand directed his quotation from Schiller, to the effect that a nation which did not stake her everything on her honour was deserving only of contempt. It is also well known that the outcome of the whole affair, as well as its sequel, the Franco-German Congo agreement, produced much indignation in Germany, where it was felt that the material results obtained were hardly worth the great display of force, and that it was still less worth while to be drifted into a big war in consequence of this incident.

The measure of the anxiety which was felt at that time in business and financial circles all over the world may be gauged by reading the following letter from Ballin to the Secretary of State, Herr v. Kiderlen-Wächter, in which it is necessary to read between the lines here and there.

"Baron Leopold de Rothschild has just sent me a wire from London in
which he says that, on the strength of information he has received
from the Paris Rothschilds, people there are greatly disappointed
to see that the German answer--the details of which are still
unknown there--leaves some important questions still unsolved.
Public sentiment in the French capital, he says, is beginning to
get excited, and it would be to the interest of everybody to settle
matters as speedily as possible.

"I felt it my duty to draw your attention to this statement, and
you may take it for what it is worth.

"I need not tell your Excellency that people here and, I suppose,
all over Germany, are watching the progress of events with growing
anxiety. In this respect, therefore, the desires of the German
people seem identical with those of the French.

"It would also be presumptuous on my part to speak to your
Excellency about the feeling in England and the British armaments,
as the information you derive from your official sources is bound
to be better still than that which I can obtain through my
connexions.

"With best wishes for a successful solution of this difficult and
important problem, I have the honour to remain,

"Your Excellency's most obedient servant, (_Signed_) BALLIN."

A most interesting document, and one which casts a clear sidelight on the divergence of opinion held in Germany and Great Britain, and on the chances of arriving at an agreement, is an article which dates from the latter part of 1911.

This article deals with the Anglo-German controversy and was published by the _Westminster Gazette_. It was sent to Ballin by an English friend with the remark that it presented a faithful picture of the views on foreign affairs held by the great majority of British Liberals. Ballin forwarded it to Berlin for the Kaiser's information, with a note saying that he had received it from one of the most level-headed Englishmen he had ever met. It was subsequently returned to him, with the addition of a number of marginal notes and a lengthy paragraph at its close, all written in the Kaiser's own handwriting. The numerous underlinings, too, are the Kaiser's own work. On account of its historical interest a facsimile reproduction of this article is inserted at the end of the book. The following is a translation of the Kaiser's criticism at the conclusion of the article:

"Quite good, except for the ridiculous insinuation that we are
aspiring after the hegemony in Central Europe. We simply _are_
Central Europe, and it is quite natural that other and smaller
nations should tend towards us and should be drawn into our sphere
of action owing to the law of gravity, particularly so if they are
of our own kin. To this the British object, because it absolutely
knocks to pieces their theory of the Balance of Power, i.e. their
desire to be able to play off one European Power against another at
their own pleasure, and because it would lead to the establishment
of a united Continent--a contingency which they want to prevent at
all costs. Hence their lying assertion that we aim at a predominant
position in Europe, while it is a fact that they claim such a
position for themselves in world politics. We Hohenzollerns have
never pursued such ambitious and such fantastic aims, and, God
granting it, we shall never do so.

"(_Signed_) WILHELM I.R."

The year 1912 opened with several pronouncements of the British Press in favour of an Anglo-German understanding. It was even hinted that Britain would raise no objections to a possible extension of Germany's colonial activities, or, as one paper put it, "to the foundation of a German African empire stretching from the Atlantic to the Indian Ocean." Similar sentiments were expressed in a letter from Sir Ernest Cassel to Ballin, dated January 9th, 1912.

"Since writing to you last," says Sir Ernest, "I have had the
opportunity of a confidential chat with Mr. Winston Churchill. He
is aware that the position which he has now occupied for some time
ties him down to some special limitations which will not allow him
to pay a visit of the kind you suggest so long as the situation
remains what it is. Should the King go to Germany, and should he
take Winston with him, he--Winston--would feel highly honoured if
he were permitted to discuss the important questions that were
demanding a solution. Such an opportunity would have to come about
quite spontaneously, and Winston would have to secure the previous
consent of the Prime Minister and of Sir Edward Grey.

"Thus far Winston. His friendly sentiments towards Germany are
known to you. I have been acquainted with him since he was quite a
young man, and he has never made a secret of his admiration of the
Kaiser and of the German people. He looks upon the estrangement
existing between the two countries as senseless, and I am quite
sure he would do anything in his power to establish friendly
relations.

"The real crux of the situation is that Great Britain regards the
enormous increase of the German Navy as a grave menace to her vital
interests. This conviction is a deep-rooted one, and there are no
two opinions in London as to its significance.

"If it were possible to do something which, without endangering the
safety of Germany, would relieve Great Britain of this nightmare,
it is my opinion that people over here would go very far to
conciliate German aspirations."

The striking fact that after a long interval, and in spite of the failure of the previous endeavours, a renewed attempt was made to arrive at a naval understanding, and that special pains were taken to ensure its success, may be due to various causes. For instance, the Morocco incident of 1911 had shown how easily a series of comparatively unimportant events might lead within reach of a dangerous catastrophe, unless the atmosphere of general distrust could be removed, and it was felt in Great Britain that this distrust was largely the result of the constant and regular increase of Germany's armaments. Moreover, it was known that a new Navy Bill was then forthcoming in Germany which, in its turn, would be bound to cause fresh alarm, and growing expenditure in Great Britain, and that the Liberal Cabinet would prefer to gain its laurels by bringing about a more peaceful frame of mind. Finally, Mr. Winston Churchill had been appointed First Lord of the Admiralty in October, 1911, and as he was known to be by no means anti-German, his entering upon office may have given rise to the hope that, while he was administering the affairs of the Navy, it would be possible to settle certain purely technical matters affecting his department, which could then furnish the conditions preliminary to an understanding with Germany. Ballin, at any rate, had cherished the hope--as is borne out by the letter quoted above--that Mr. Churchill could be induced to pay a visit to Germany, and that an opportunity might then be found to bring the naval experts of both countries face to face with each other. Ballin had always eagerly desired that such a meeting should take place, because his long experience in settling difficult business questions had taught him that there was no greater barrier between people, and certainly none that hampered their intellectual _rapprochement_ to a larger extent, than the fact of their never having come into personal contact with one another, and of never having had a chance to actually familiarize themselves with the mentality and the whole personality of the man representing the other side. It might also be assumed that, once the two really responsible persons--Churchill and Tirpitz--had met in conclave, the feeling of their mutual responsibility would be too strong to allow the negotiations to end in failure.

Unfortunately, such a meeting never took place; all that was achieved was a preliminary step, viz. the visit of Lord Haldane to Berlin.

Owing to the lack of documentary evidence it is not possible to say who first suggested this visit, but it is clear that the suggestion--whoever may have been its author--was eagerly taken up by Sir Ernest Cassel and Ballin, and that it also met with a warm welcome on the part of Herr v. Bethmann. In reply to a telegram which Ballin, with the approval--if not at the actual desire--of the Chancellor, sent to his friend in London, a message reached him on February 2nd, 1912, when he was in Berlin engaged on these very matters. This reply, which originated with the Foreign Office, expressed the sender's thanks for the invitation to attend a meeting of delegates in Berlin and his appreciation of the whole spirit which had prompted the German suggestion, and then went on to say that the new German Navy Bill would necessitate an immediate increase in the British naval estimates, because the latter had been framed on the supposition that the German programme would remain unaltered. If the British Government were compelled to find the means for such an increase, the suggested negotiations would be difficult, if not impossible. On the other hand, the German programme might perhaps be modified by spreading it out over a longer period of time or by some similar measure, so that a considerable increase of British naval construction in order to balance the German efforts could be avoided. In that case the British Government would be ready to proceed with the negotiations without loss of time, as it would be taken for granted that there was a fair prospect of the proposed discussions leading to a favourable result. If this suggestion was acceptable to Germany, the British Government thought the next step should be a private--and not an official--visit of a British Cabinet Minister to Berlin.

Perhaps it is now permissible to give the text of some documents without any further comment, as these latter speak for themselves. The first is a letter of the Chancellor addressed to Ballin, and reads as follows:

"BERLIN. _Febr. 4th, 1912._

"DEAR MR. BALLIN,--

"We are still busy wording the text of our reply, and I shall not
be able to see you at 11 o'clock. As soon as the text is settled, I
shall submit it to His Majesty for his approval. Under these
circumstances I think it is doubtful whether we ought to adhere to
the time fixed for our appointment. I rather fancy that I cannot
tell you anything definite before 12 or 1 o'clock, and I shall ring
you up about that time. You have already made such great sacrifices
in the interest of our cause that I hope you will kindly accept
this alteration as well.

"In great haste.

"(_Signed_) BETHMANN-HOLLWEG."

The next document is a letter of Ballin to Sir Ernest Cassel, intended to explain the situation.

"The demand raised by your official telegram rather complicates
matters. The fact is that the Bill as it stands now only asks for
half as much as was contained in the original draft. This reduced
demand is much less than the nation and the Reichstag had expected.
If after this a still further curtailment is decided upon, such a
step will create the highly undesirable impression that, in order
to pave the way for an understanding with London, it had become
necessary to make very considerable sacrifices. This, of course,
must be avoided at all costs, because if and when an understanding
is arrived at, there must be neither victors nor vanquished.

"I need not emphasize the fact that our Government is taking up the
matter with the greatest interest and that it is keenly anxious to
bring about a successful issue. The reception with which you have
met on our side must have given you convincing and impressive
proofs of this attitude.

"I have now succeeded in making our gentlemen promise me--although
not without much reluctance on their part--that they would not
object to the formula proposed by your Government, viz. 'It is
agreed to submit the question of the proposed increase of naval
tonnage to a _bona fide_ discussion.' Thus there is now a fair
prospect of reaching a favourable result, and the preliminary
condition laid down by your Government has been complied with.

"I think that the delegate sent should be accompanied by a naval
expert. The gentleman in question should also understand that he
would have to use the utmost frankness in the discussions, and that
he must be able to give an assurance that it is intended to subject
the British programme, too, to such alterations as will make it not
less, but rather more, acceptable than it is now. Surely, your
Government has never desired that we should give you a definite
undertaking on our part, whereas you should be at liberty to extend
your programme whenever you think fit to do so. A clearly defined
neutrality agreement is another factor which will enter into the
question of granting the concessions demanded by your Government.

"'Reciprocal assurances' is a term which it is difficult to define;
if, for instance, the attitude of Great Britain and her action last
summer had been submitted to a court of law, it would hardly be
found to have violated the obligations implied by such 'reciprocal
assurances,' and yet we were at the edge of war owing to the steps
taken by your people.

"I thought it my duty, my dear friend, to submit these particulars
to you, so that you, for the benefit of the great cause we are
engaged in, may take whatever steps you consider advisable before
the departure of the delegate.

"Our people would appreciate it very much if you would make the
great sacrifice of coming over to this country when the meeting
takes place. I personally consider this also necessary, and it
goes without saying that I shall be present as well.

"P.S.--The Chancellor to whom I have shown this letter thinks it
would be better not to send it, because the official note contains
all that is necessary.

"However, I shall forward it all the same, because I believe it
will present a clearer picture of the situation to you than the
note. Please convince the delegate that it is a matter of give and
take, and please come. It entails a great sacrifice on your part,
but the cause which we have at heart is worth it.

"The bearer of this note is our general secretary, Mr. Huldermann.
He is a past master of discretion, and fully acquainted with the
situation."

I was instructed to hand the following note by the German Government to Sir Ernest Cassel with the request to pass it on to the British Government, and at the same time I was to explain verbally and in greater detail the contents of Ballin's letter on the situation.

The text of the official note is as follows:

"We are willing to continue the discussion in a friendly spirit.
The Navy Bill is bound to lead to a discussion of the naval plans
of both countries, and in this matter we shall be able to fall in
with the wishes of the British Government if we, in return, receive
sufficient guarantees as to a friendly disposition of British
policy towards our own interests. Any agreement would have to state
that either Power undertakes not to join in any plans,
combinations, or warlike complications directed against the other.
If concluded, it might pave the way for an understanding as to the
sums of money to be spent on armaments by either country.

"We assume that the British Government shares the views expressed
in this note, and we should be glad if a British Cabinet minister
could proceed to Berlin, in the first instance for the purpose of a
private and confidential discussion only."

On the evening of the same day (February 4th) I left for London. I arrived there the following evening and went straight to Sir Ernest Cassel. I prepared the following statement for Ballin at the time, in which I described the substance of our conversation and the outcome of my visit:

"The note which I had brought with me did not at first satisfy our
friend. He made a brief statement to the effect that we saw a fair
prospect of reaching a successful solution of the problem was all
that was needed, and that our answer was lengthy, but evasive. This
opinion, however, he did not maintain after the close of our
conversation, which lasted more than two hours. I pointed out to
him that, as I understood it, the phrase 'We are willing to
continue the discussion in a friendly spirit' amounted to a
declaration on the part of the German Government that, in its
opinion, there was a 'fair prospect,' and that an accommodating
spirit was all one could ask at present. He thought that Lord
Haldane had been asked to go to Berlin so that a member of the
Cabinet should have an opportunity of ascertaining on the spot that
Berlin was really disposed to discuss matters in a friendly spirit.
On this point positive assurances were needed before Sir Edward
Grey and Mr. Winston Churchill went across, who, if they did go,
would not return without having effected the object of their visit.
Sir Ernest always emphasized that he only stated his own private
views, but it was evident that he spoke with the highest authority.
The demand for three Dreadnoughts, he said, which the new German
Navy Bill asked for, amounted to a big increase of armaments, and
Great Britain would be compelled to counterbalance it by a
corresponding increase, which she would not fail to do. If,
however, Germany were prepared not to enlarge her existing
programme, Great Britain would be pleased to effect a reduction on
her part. When I referred to the apprehension of the German
Government lest Great Britain should take advantage of the fact
that Germany had her hands tied, in order to effect big armaments
which it would be impossible for us to equal, our friend remarked
that, for the reason stated above, such fears were groundless. In
spite of this assurance, I repeatedly and emphatically drew his
attention to the necessity for limiting the British programme just
as much as the German one. He evidently no longer fancied the
suggestion previously put forward that the question of agreeing
upon a definite ratio of strength for the two navies should be
discussed; because, if this was done, one would get lost in the
details. Nevertheless, he did not, as the discussion proceeded,
adhere to this standpoint absolutely. He agreed that the essential
thing was to establish friendly political relations, and if, as I
thought, Germany had reason to complain of British opposition to
her legitimate expansion, one could not do better than discuss the
various points at issue one by one, similar to the method which had
proved so successful in the case of the Anglo-French negotiations.
Great Britain would not raise any objections to our desire for
rounding-off our colonial empire, and she was quite willing to
grant us our share in the distribution of those parts of the globe
that were still unclaimed.

"By keeping strictly to the literal text of the German note, he
found the latter quite acceptable as far as it referred to the
question of a declaration of neutrality. He said there was a great
difference between such declarations, and often it was quite
possible to interpret them in various ways. I imagined that what
was in his mind were the obligations which Britain had taken upon
herself in her agreement with France, and I therefore asked him for
a definition of the term 'neutrality.' His answer was very guarded
and contained many reservations. What he meant was something like
this: Great Britain has concluded agreements with France, Russia,
and other countries which oblige her to remain neutral where the
other partner is concerned, except when the latter is engaged in a
war of aggression.

"Applied to two practical cases, this would mean: If an agreement
such as the one now under consideration had been in existence at
the time of the Morocco dispute last summer, Great Britain would
have been free to take the side of France if war had broken out
between that country and ourselves, because in this case we--as he
argued with much conviction--had been the aggressors. On the other
hand, if we had severed our relations with Italy during the
Turco-Italian war and had come to the support of Turkey, Great
Britain would not have been allowed to join Italy in conspiring
against us if we had an agreement such as the one in question.

"In the interval between my first and my second visit Sir Ernest
evidently had, by consulting his friend Haldane, arrived at a very
definite opinion, and when I visited him for the second time he
assured me most emphatically that Great Britain would concede to us
as much as she had conceded to the other Powers, but not more. We
could rely on her absolute loyalty, 'and,' he added, 'our attitude
towards France proves that we can be loyal to our friends.'

"For the rest, the manner in which he pleaded the British point of
view was highly interesting. Great Britain, he argued, had done
great things in the past, but owing to her great wealth a decline
had set in in the course of the last few decades. ('Traces of this
development,' he added, 'have also been noticeable in your
country.') Germany, however, had made immense progress, and within
the next fifteen or twenty years she would overtake Great Britain.
If, then, such a dangerous competitor commenced to increase his
armaments in a manner which could be directed only against Britain,
he must not be surprised if the latter made every effort to check
him wherever his influence was felt. Great Britain, therefore,
could not remain passive if Germany attempted to dominate the whole
Continent; because this, if successful, would upset the Balance of
Power. Neither could she hold back in case Germany attacked and
annihilated France. Thus, the situation being what it was, Britain
was compelled--provided the proposed agreement with Germany was not
concluded--to decide whether she would wait until her competitor
had become still stronger and quite invincible, or whether she
would prefer to strike at once. The latter alternative, he thought,
would be the safer for her interests.

"Our friend had a copy of the German note made by his secretary,
and then forwarded it to Haldane. In the course of the evening the
latter sent an acknowledgment of its receipt, from which Sir
Ernest read out to me the words: 'So far very good.' It was evident
that his friend's opinion had favourably influenced his own views
on the German note.

"On Tuesday Sir Ernest and Lord Haldane drove to the former's house
after having attended Thanksgiving Service. Lord Haldane stayed for
lunch, and was just leaving when I arrived at 3 o'clock. He did not
want to be accompanied by a naval expert, for, although he did not
pretend to understand all the technical details, he said that he
knew all that was necessary for the discussion. He stated that he
would put all his cards on the table and speak quite frankly.

"Our friend spoke of our German politics in most disparaging terms,
saying that they had been worth nothing since Bismarck's time. What
Ballin had attained in his dealings with the shipping companies was
far superior to all the achievements of Germany's diplomatists."

The positive information which this report contained was passed on to the Chancellor.

By way of explanation it may be added that the German Navy Bill, which later on, at the end of March, 1912, was laid before the Reichstag, provided for the formation of a third active squadron in order to adapt the increase in the number of the crews to the increase in the material. This third squadron necessitated the addition of three new battleships and of two small cruisers, and it was also intended to increase the number of submarines and to make provision for the construction of airships.

The discussions with Lord Haldane took place at the Royal Castle, Berlin, on February 9th, the Kaiser being in the chair. The Chancellor did not attend, he had a separate interview with Haldane. The outcome of the conference is described in a statement from an authoritative source, viz. in a note which the Kaiser dispatched to Ballin by special messenger immediately after the close of the conference. It reads as follows:

"THE CASTLE, BERLIN. "9.2.1912. 6 P.M.

"DEAR BALLIN,

"The conversation has taken place, and all the pros and many cons
have been discussed. Our standpoint has been explained in great
detail, and the Bill has been examined. At my suggestion, it was
resolved to agree on the following basis (informal line of action):

"(1) Because of its scope and its importance, the Agreement must be
concluded, and it must not be jeopardized by too many details.

"(2) Therefore, the Agreement is not to contain any reference to
the size of the two fleets, to standards of ships, to
constructions, etc.

"(3) The Agreement is to be purely political.

"(4) As soon as the Agreement has been published here, and as soon
as the Bill has been laid before the Reichstag, I, in my character
of commander-in-chief, instruct Tirpitz to make the following
statement to the Committee: The third squadron will be asked for
and voted, but the building of the three additional units required
to complete it will not be started until 1913, and one ship each
will be demanded in 1916 and 1919 respectively.

"Haldane agreed to this and expressed his satisfaction. I have made
no end of concessions. But this must be the limit. He was very nice
and very reasonable, and he perfectly understood my position as
commander-in-chief, and that of Tirpitz, with regard to the Bill. I
really think I have done all I could do.

"Please remember me to Cassel and inform him.

"Your sincere friend, "(_Signed_) WILHELM I.R."

After Lord Haldane's departure from Berlin there was a gap of considerable length in the negotiations which had made such a promising start, and unfortunately during that time Mr. Churchill made a speech which not only the German papers but also the Liberal Press in Great Britain described as wanting in discretion. The passage which German opinion resented most of all was the statement that, in contrast with Great Britain, for whom a big navy was an absolute necessity, to Germany such navy was merely a luxury.

For the rest, the following two letters from the Chancellor to Ballin may throw some light on the causes of the break in the negotiations:

"BERLIN. "2.3.1912.

"DEAR MR. BALLIN,

"Our supposition that it is the contents of the Bill which have
brought about the change of feeling is confirmed by news from a
private source. It is feared that the Bill as it stands will have
such an adverse influence on public opinion that the latter will
not accept a political agreement along with it. Nevertheless, the
idea of an understanding has not been lost sight of, even though it
may take six months or a year before it can be accomplished.

"In consequence of this information the draft reply to London
requires to be reconsidered, and it has not been dispatched so far.
I shall let you know as soon as it has left.

"Sincerely yours. "(_Signed_) BETHMANN-HOLLWEG."

"BERLIN. "8.3.1912.

"DEAR MR. BALLIN,

"This is intended for your confidential information. Regarding the
naval question Great Britain now, as always, lays great stress on
the difficulty of reconciling public opinion to the inconsistency
implied by a big increase in the Naval Estimates hand in hand with
the conclusion of a political and colonial agreement. However, even
if an agreement should not be reached, she hopes that the
confidential relations and the frank exchange of opinions between
both Governments which have resulted from Lord Haldane's mission
may continue in future. The question of a colonial understanding is
to be discussed in the near future.

"It is imperative that the negotiations should not break down.
Success is possible in spite of the Navy Bill if the discussions
are carried on dispassionately. As matters stand, the provisions
of the Bill must remain as they are. Great Britain has no right to
interfere with our views on the number of the crews which we desire
to place on board our existing units. As far as the building dates
of the three battleships are concerned, I should have preferred--as
you are aware--to leave our hands untied, but His Majesty's
decision has definitely fixed 1913 and 1916 as the years for laying
them down. This is a far-reaching concession to Great Britain.

"Discreet support from private quarters will be appreciated.

"Many thanks for your news. You know that and why I was prevented
from writing these last few days.

"Sincerely yours, "(_Signed_) BETHMANN-HOLLWEG."

In order to find out whether any foreign influence might have been at work in London, I was commissioned to meet Sir Ernest Cassel in the South of Europe early in March. Ballin supplied me with a letter containing a detailed account of the general situation. Owing to a delay in the proposed meeting, I took the precaution of burning the letter, as I had been instructed to do, and I informed Sir Ernest of its contents by word of mouth.

In this document Ballin gave a brief résumé of the situation as it appeared to him after his consultations with the various competent departments in Berlin, somewhat on the following lines:

(1) After Lord Haldane's return Sir Edward Grey officially told Count Metternich that he was highly pleased with the successful issue of Lord Haldane's mission, and gave him to understand that he thought it unlikely that any difficulties would arise.

(2) A few days later Mr. Asquith made a statement in the House of Commons which amply confirmed the views held by Sir Edward Grey, and which produced a most favourable impression in Berlin.

(3) This induced the Chancellor to make an equally amicable and hopeful statement to the Reichstag.

(4) In spite of this, however, there arose an interval of several weeks, during which neither Count Metternich nor anybody in Berlin received any news from the proper department in London. This silence naturally caused some uneasiness.

(5) Count Metternich was asked to call at the Foreign Office, where Sir Edward Grey commenced to raise objections mainly in reference to the Navy Bill. "I must add in this connexion--as, no doubt, Lord Haldane has also told you verbally--that on the last day of his stay in Berlin an understanding was arrived at between the competent quarters on our side and Lord Haldane with regard to the building dates of the three battleships. As you will remember, it had been agreed not to discuss the proposed establishment of the third squadron on an active footing and the increase in the number of the crews connected with it, but to look upon these subjects as lying outside the negotiations." Quite suddenly and quite unexpectedly we are now faced with a great change in the situation. Grey, as I have said before, objects--in terms of the greatest politeness, of course--to the increase in the number of the crews, asks questions as to our intentions with regard to torpedo boats and submarines, and--this is most significant--emphasizes that the Haldane mission has at any rate been of great use, even if the negotiations should not lead to any definite result.

(6) The next event was a further interview with Count Metternich during which it was stated that, according to the calculations of the First Lord of the Admiralty, the increase in the number of the crews amounted to 15,000 men, whilst it had been thought in England that it would be a question of from 4,000 to 5,000 men at the outset. It appeared that this large increase was looked upon with misgivings, and that it was desired to enter into fresh negotiations which would greatly interfere with the arrangements made by the German competent quarters with regard to the navy. Hence Metternich replied that, in his opinion, these explanations could only mean that the Cabinet did not agree to the arrangements made by Lord Haldane. Grey's answer was full of polite assurances couched in the language of diplomacy, but, translated into plain German, what he meant was: "You are quite right."

Ballin's letter went on to say that the German Navy Bill had gradually been reduced to a minimum, and that it was not possible to cut it down any further. We could not, and we would not, give rise to the suspicion that great alterations had been made merely to meet British objections. Finally, Ballin requested his friend to go to London in order to make inquiries on the spot, and also declared his readiness to go there himself.

My report on my conversations with Sir Ernest Cassel, which took place at Marseilles on March 9th and 10th, is as follows:

"Our friend arrived about four hours late, but he received me all
the same at 10 P.M. on that evening. I told him all about my
journey and related to him verbally the contents of Ballin's
letter. When I described the incident of how Grey had raised new
objections at his interview with Metternich, and when I explained
how, after that, the matter had come to a dead stop, so that
nothing further was heard of it in Germany, our friend interrupted
me by saying that since then the British Government had presented a
memorandum containing the objections raised against the German Navy
Bill. The latter, he suggested, was the only stumbling-block, as
could be inferred from a letter which he had received _en route_
from Haldane.

"When I remarked that Ballin, in a postscript to his letter, had
expressed an apprehension lest some foreign influence had
interfered with the course of events, our friend positively denied
this. France, he said, was on good terms with Great Britain, and
had no reason for intriguing against an Anglo-German agreement
destined, as it was, to promote the cause of peace.

"When I then proceeded with my account, drawing his special
attention to the reduction of the estimates contained in the Navy
Bill, Sir Ernest interposed that he was not sufficiently _au
courant_ as to the details. He himself, in his statement prepared
for the British Government, had only referred to the battleships,
and he thought he had perhaps given too cursory an account of the
other factors of the case. He also threw out some fairly plain
hints that Haldane had gone too far in Berlin, and that he had made
statements on a subject with which he was not sufficiently
conversant. Later on, he continued, the Navy Bill had been
subjected to a careful examination by the British Admiralty, and
before his departure from Cannes he, Sir Ernest, had received a
letter from Mr. Churchill, the tone of which was very angry.
Churchill complained that Germany had presented such a long list of
the wishes with which she wanted Great Britain to comply, that the
least one could hope for was an accommodating spirit in the
question of the Navy. Everything now depended on Churchill; if he
could be satisfied, all the rest would be plain sailing. He and
Lloyd George were the greatest friends of the agreement. Sir Ernest
also made it fairly clear that Great Britain would be content with
a postponement of the building dates, or in other words with a
'retardation of the building programme.' The negotiations would be
bound to fail, unless Ballin could secure such a postponement. It
was necessary to strike whilst the iron was hot, and this
particular iron had already become rather cool. He quite accepted
Grey's statement that the Haldane mission had not been in vain, as
the feeling had doubtless become more friendly since then. Some few
individual indiscretions, such as Churchill's reference to the
German Navy as an article of luxury, should not be taken too
seriously. If the German Bill were passed into law in its present
shape, the British Government would be obliged to introduce one
asking for three times as much, but it could not possibly do this
and declare at the same time that it had reached an understanding
with Germany. Such a proceeding would be absurd. The argument that
it is inconsistent with common sense to conclude an agreement and
yet to continue one's armaments, is evidently still maintained in
Great Britain, and is one which, of course, it is impossible to
refute.

"In the course of our conversation Sir Ernest produced the letter
which he had received from Haldane _en route_. This letter stated
that the discussions with Metternich were then chiefly on the
subject of the Navy Bill, and that the Admiralty had prepared a
memorandum for the German Government dealing with these questions.
The letter was dated February 25th, and its tone was not
pessimistic; Churchill, however, as stated above, had previously
written him a 'very angry' letter. In this connexion it must not be
forgotten that the man on whom everything depends is not the
amiable negotiator Haldane, but Churchill."

In order to make further inquiries about the state of things and to assist in promoting the good cause, Ballin, immediately after my return, proceeded to Paris and then to London. He reported to the Chancellor upon the impressions he had received in Paris. The following is an extract from his report:

"Owing to the brief time at my disposal when I was in Paris, I
could only learn the views of the members of the '_haute finance_.'
It is well known that in France the attitude taken up by financial
circles is always regarded as authoritative. They look upon the
present situation as decidedly pacific; they are pleased that the
Morocco affair is settled, and they feel quite sure that the
political sky is unclouded by complications. They would gladly
welcome an agreement between Germany and Great Britain. My friends
assure me that the Government also does not view the idea of such
an understanding with displeasure; on the contrary, it looks upon
it as an advantage. It is, however, thought unlikely that an
agreement will be reached, because it is believed that popular
feeling in Germany is too much opposed to it. If, notwithstanding
these pacific views held by influential and competent sections, the
casual visitor to the French capital is impressed by a certain
bellicose attitude of the nation as a whole, it is largely due to
the propaganda carried on by the _Matin_ with the purpose of
obtaining voluntary subscriptions for the furtherance of aviation.
The French are enthusiastic over this idea, and as it has a strong
military bearing, the man in the street likes to connect the French
aviation successes with a victorious war."

From London Ballin sent me some telegrams which I was instructed to pass on to the Chancellor. In these messages he stated that his conversations with the German Ambassador and with Haldane had convinced him that people in London believed that the increase in the number of the crews, if the proposed German Navy Bill became law, would be greater than the figures given by Berlin would make it appear. It would therefore be most desirable to arrange for a meeting of experts to clear up this discrepancy. Ballin's impression was that the British Cabinet, and also the King, were still favourably disposed to the whole plan, and that the Cabinet was unanimous in this view. A conversation with Churchill, which lasted several hours, confirmed these impressions. In London the increase in the number of the crews had previously been estimated at half of what it would really be, and alarm was felt about the large number of torpedo boats and submarines demanded; but since the German Government had explained that the figures arrived at in London--i.e. those stated in the memorandum which had been addressed to the German Government some time before--were not correct, Churchill had agreed that both sides should nominate experts who would check the figures and put them right. Churchill was anxious to see that the matter was brought to a successful issue, and he was still hoping that a neutrality agreement would induce the German Government to make concessions in regard to the Navy Bill.

When Ballin had satisfied himself as to this state of things, he immediately returned to Berlin, as he did not consider it appropriate that any private person should do anything further for the time being, and as he thought that the conduct of the discussions concerning the neutrality agreement were best left to the Ambassador.

Meanwhile, however, the German Government had definitely made up its mind that the Navy Bill would have to remain as it stood. This was the information Ballin received from the Kaiser and the Chancellor when he returned from London on March 16th.

Sir Ernest Cassel then suggested to the British Government that the negotiations concerning the neutrality agreement should be re-opened as soon as the first excitement caused by the Navy Bill had subsided, which would probably be the case within a few months, and that the interval should be utilized for clearing up the details. In Berlin, however, the discussions were looked upon as having been broken off, as may be seen from the following telegram which the Kaiser sent to Ballin on March 19th in reply to Ballin's information about his last exchange of telegrams with London:

"Many thanks for letter. The latest proposals arriving here
immediately after you had left raised impossible demands and were
so offensive in form that they were promptly rejected. Further harm
was done by Churchill's arrogant speech which a large section of
the British press justly described as a provocation of Germany. The
'agreement' has thus been broken by Great Britain, and we have done
with it. The negotiations must be started afresh on quite a
different basis. What apology has there been offered to us for the
passage in the speech describing our fleet as an article of luxury?

"(_Signed_) WILHELM I.R."

That the negotiations had actually been broken off was confirmed to Ballin by a letter of the Chancellor of the same date:

"DEAR MR. BALLIN,

"My cordial thanks for your letter of the 18th. What your friend
told Metternich is identical with what he wired you. Churchill's
speech did not come up to my expectations. He really seems to be a
firebrand past praying for. The Army and Navy Bills will probably
not go up to the Federal Council until the 21st, as the Army Bill
requires some amendments at the eleventh hour. Their contents will
be published simultaneously.

"My opinion is that our labours will now have to be stopped
altogether for some time. The problem before us suffers from the
defect that, because of its inherent difficulties, it admits of no
solution. I shall always remain sincerely grateful to you for your
loyal assistance. When you come to Berlin next time, please don't
forget to call at the Wilhelmstrasse.

"With kindest regards, "Sincerely yours, "(_Signed_) BETHMANN-HOLLWEG."

The conviction of the inherent impossibility of solving the problem was shared by many people in Germany--chiefly, of course, by those connected with the Navy; and some critics went so far as to say that Great Britain had never honestly meant to arrive at an understanding, or at any rate that Haldane--whose honesty and sincerity were beyond doubt--was disowned by his fellow-members in the Cabinet.

When Ballin, in compliance with the wishes of the Foreign Office, went to London during the critical period before the outbreak of the war in 1914, he wrote a letter from there to a naval officer of high rank with whom he had been on terms of friendship for years. This document is of interest now because it shows what Ballin's own standpoint was with regard to the views described in the previous paragraph:

"People over here," he wrote, "do not believe that negotiations
with Great Britain on the subject of a naval agreement could
possibly be crowned with success, and you yourself contend that it
would have been better if such negotiations had never been started.
Your standpoint is that the failure of any efforts in that
direction would merely tend to aggravate the existing situation, a
point of view with which I entirely concur.