Chapter X: The War (1)

About the middle of the month of July, 1914, Ballin, when staying at Kissingen for the benefit of his health, received a letter from the Foreign Secretary, Herr v. Jagow, which made him put an immediate end to his holiday and proceed to Berlin. The letter was dated July 15th, and its principal contents were as follows:

The _Berliner Tageblatt_, it said, had published some information concerning certain Anglo-Russian agreements on naval questions. The Foreign Office did not attach much value to it, because it was at variance with the general assumption that Germany's relations with Great Britain had undergone a change for the better, and also with the apparent reluctance of British statesmen to tie their country to any such agreements. The matter, however, had been followed up all the same, and through very confidential channels it had been ascertained that the rumours in question were by no means devoid of an actual background of fact. Grey, too, had not denied them point blank at his interview with Lichnowsky. It was quite true that Anglo-Russian negotiations were proceeding on the subject of a naval agreement, and that the Russian Government was anxious to secure as much mutual co-operation between the two countries as possible. A definite understanding had not, so far, been reached, notwithstanding the pressure exercised by Russia. Grey's attitude had become somewhat uncertain; but it was thought that he would ultimately give his consent, and that he would quieten his own conscience by arguing that the negotiations had not really been conducted between the Cabinets, but between the respective naval authorities. It was also quite likely that the British, who were adepts at the art of making nice distinctions, would be negotiating with the mental reservation that they would refrain from taking an active part when the critical moment arrived, if it suited them not to do so; and a _casus foederis_ would presumably not be provided for in the agreement. At any rate, the effect of the latter would be enormously to strengthen the aggressive tendencies of Russia. If the agreement became perfect, it would be useless for Germany to think any longer of coming to a _rapprochement_ with Great Britain, and therefore it would be a matter of great importance to make a last effort towards counteracting the Russian designs. His (v. Jagow's) idea was that Ballin, who had intimate relations with numerous Englishmen in leading positions, should send a note of warning across the North Sea. This suggestion was followed up by several hints as to the most suitable form of wording such a note, and the letter concluded with the statement that the matter was one of great urgency. A postscript dated July 16th added that a further article had been published by the _Berliner Tageblatt_, according to which the informants of the author also took a serious view of the situation.

Ballin, in response to the request contained in the letter, did not content himself with sending a written note to his London friends, but he immediately went to Berlin for the purpose of gaining additional information on the spot, with special reference to the general political outlook. He learned that Austria intended to present a strongly worded note to Serbia, and that it was expected that in reply a counter-note dictated by Russia would be received. He was also told that the Government not only wanted some information regarding the matter which formed the special subject of Herr v. Jagow's letter, but also regarding the general political situation in London, as it was doubted whether the reports received from the ambassador were sufficiently trustworthy and complete. This was all that Ballin was told. Since then many facts have become known which throw a light on the way in which political questions were dealt with by the Berlin authorities during the critical period preceding the war, and if we, knowing what we know now, read the letter of Herr v. Jagow, we ask ourselves in amazement what was the object of the proposed action in London? Could it be that it was intended to intimidate the British Government? This could hardly be thought possible, so that some other result must have been aimed at. We can only say that the whole affair is still surrounded by much mystery, and we can sympathize with Ballin's bitter complaints in later days that he thought people had not treated him with as much openness as they should have done, and that they had abused his intimate relations with leading British personages.

Ballin then left Berlin for Hamburg. He gave me his impressions of the state of political affairs--which he did not regard as critical--and went to London, ostensibly on business. In London he met Grey, Haldane, and Churchill, and there also he did not look upon the situation as critical--at least, not at first. When, however, the text of the Austrian note became known on Thursday, July 23rd, and when its full significance had gradually been realized, the political atmosphere became clouded: people asked what was Austria's real object, and began to fear lest the peace might be disturbed. Nevertheless, Ballin returned from London on July 27th with the impression that a fairly capable German diplomat might even then succeed in bringing about an understanding with Great Britain and France which, by preventing Russia from striking, would result in preserving the peace. Great Britain and the leading British politicians, he said, were absolutely in favour of peace, and the French Government was so much against war that its representatives in London seemed to him to be rather nervous on the subject. They would, he thought, do anything in their power to prevent war. If, however, France was attacked without any provocation on her part, Great Britain would be compelled to come to her assistance. Britain would never allow that we, as was provided for in the old plan of campaign, should march through Belgium. It was quite true that the Austrian note had caused grave anxiety in London, but how earnestly the Cabinet was trying to preserve peace might be gauged by the fact that Churchill, when he took leave of Ballin, implored him, almost with tears in his eyes, not to go to war. These impressions of Ballin are confirmed by the reports of Prince Lichnowsky and other members of the German Embassy in their observations during the critical days.

Apart from these politicians and diplomatists on active service there were other persons of political training, though no longer in office, who did not think at that time that there was an immediate danger of war. In this connexion I should like to add a report of a very remarkable conversation with Count Witte, which took place at Bad Salzschlirf on July 24th. The Count--whose untimely death was greatly regretted--was without any doubt one of the most capable statesmen of his time--perhaps the only one with a touch of genius Europe possessed--and he certainly knew more about the complicated state of things in Russia than any living person. For these reasons his views on the events which form the first stage of the fateful conflict are of special interest. I shall reproduce the report of this conversation exactly as we received it at the time, and as we passed it on to Berlin. The authenticity of the statements of Count Witte as given here is beyond question.

"Yesterday (on July 24th) I paid a visit to Count Witte who was
staying at Bad Salzschlirf, and in the course of the day I had
several conversations with him, the first of which took place as
early as ten o'clock in the morning. After a few words of welcome,
and after discussing some matters of general and personal interest,
I said to the Count: 'I should like to thank you for your welcome
letter and for your telegram. The question which you raise in them
of a meeting between our two emperors appears of such fundamental
importance to me that I may perhaps hope to be favoured with some
details by you personally.'

"Witte replied: 'In the first instance I wish to reaffirm what I
have repeatedly told you, both verbally and by letter, viz. that I
am not in the least anxious to be nominated Russian delegate for
the proposed negotiations concerning a commercial treaty between
Germany and Russia. Whoever may be appointed from the Russian side
will gain no laurels. I think a meeting between the Kaiser and the
Tsar some time within the next few weeks would be of very great
importance. Have you read the French papers? The tone now assumed
by Jules Hedeman is a direct challenge. I know Hedeman, and I also
know that he only writes what will please Sasonov, Poincaré and
Paléologue (the French ambassador in Petrograd). Now that the
Peterhof meeting has taken place the language employed by all the
French and Russian papers will become more arrogant than ever. It
is quite certain that the Russian diplomatists and their French
colleagues will now assume a different tone in their intercourse
with the German diplomatists. The _rapprochement_ with Great
Britain is making considerable progress, and whether a naval
convention exists or not, Great Britain will now side with Russia
and France. If even now a meeting could be arranged between the two
Emperors, this would be of immense significance. The
mischief-makers both in Russia and in France would be made to look
small, and public opinion would calm down again."

"I asked Witte: 'Do you think, Sergei Yulyevitch, that the Tsar
would avail himself of a possible opportunity of meeting the
Kaiser?'

"Witte replied: 'I am firmly convinced of it; I may, indeed, state
without hesitation that the Tsar would be delighted to do so. The
personal relations between the Tsar and the Kaiser are not of an
ordinary kind. They converse with each other in terms of intimate
friendship, and each time the Tsar has had a chat with the Kaiser
he has been in better spirits. Believe me, if this meeting comes
off, the impression which the French visit has left on the Tsar
will be entirely wiped out. The effect of the showy reception of
the French visitors which the press agitators have not failed to
use for their own ends will be obliterated. Such a meeting will
express in unambiguous terms that, whatever value the Tsar attaches
to the Franco-Russian alliance, he insists on the maintenance of
amicable relations with Germany. The meeting will have to be
arranged without loss of time, in about four or six weeks, because
in two months from now the Tsar will be leaving for Livadia. The
army manoeuvres will be held within the next few weeks, and the
Tsar will then go to the Finnish skerries where, in my opinion, the
meeting might take place without difficulty.'

"I asked Witte: 'Do you not think that, if the meeting were
officially proposed by Germany, it might be looked upon as a sign
of weakness on her side, especially in view of the now existing
tension between the two countries?'

"Witte replied: 'By no means. One has always to take into account
the fact that the relations between the Tsar and the Kaiser, as I
explained before, are in the highest degree friendly and intimate.
I do not know how the Kaiser would feel on the subject, but I am
convinced that he is possessed of the necessary political sagacity
to find the way that will lead to a meeting. He might, e.g., write
to the Tsar quite openly that, as the relations between their two
countries had lately been somewhat under a cloud in consequence of
the inefficient diplomacy of their respective representatives, he
would be particularly happy to meet him at this juncture. Or the
suggestion might reach the Tsar _via_ the Grand Duke of Hesse and
his sister, the Tsarina. But this is immaterial, because the Kaiser
is sure to find the right way. I can only repeat that the effect of
the meeting would be enormous. The Russian press and Russian
society would change their whole attitude, and the agitation in the
French press would receive a severe setback.'

"I said to Witte: 'I shall communicate the gist of our conversation
to Mr. Ballin. As it is quite possible that he will be ready to
endorse this suggestion, I should like to know your answer to one
more question, viz., whether, if Mr. Ballin were to submit the
proposal to the proper quarters, you would allow him to refer to
you as the originator of the suggestion.'

"Witte replied: 'Certainly. He may say that I look upon this
meeting as an event of the utmost importance to both countries at
the present moment.'

"I said: 'Seeing that you will be leaving Germany within five days
from now, would you be prepared to go to Berlin if the Kaiser would
receive you unofficially?'

"Witte replied: 'Certainly. At any moment.'

"When we went for a walk in the afternoon, Witte made reference,
amongst other things, to various political questions. I shall
confine myself to quoting only a few of his remarks.

"'Practically speaking,' he said, 'I think that there will be no
war, although theoretically the air is thick with difficulties
which only a war can clear away. But nowadays there is nobody who,
like William the First, would put his foot down and say: "Now I
will not yield another inch!" The spot at Ems where this happened
is now adorned with a monument. Within a few years when the
armaments which for the present are on paper only, shall be
completed, Russia will really be strong. But even then, one has
still to reckon with the possibility of internal complications.
France, however, need not fear any such difficulties, because
countries possessing a constitution acknowledged by all their
inhabitants are not liable to revolutionary movements, no matter
how often their governments change.'

"In speaking of Hartwig, Witte remarked: 'His death is the severest
blow to Russian diplomacy. He was unquestionably the most gifted
Russian diplomatist. When Count Lammsdorff, who was a great friend
of mine, was Minister for Foreign Affairs, he used to do nothing
without first asking my advice. Hartwig, at that time, was the
chief of his departmental staff, and he often came to see me. Even
in those early days I had an opportunity of admiring his eminent
diplomatic gifts.'"

The suggestion which formed the principal subject of the above conversations--viz. that a personal meeting of the two Emperors should be arranged in order to remove the existing tension--was not followed up, and the proposal would in any case have been doomed to failure, because the politicians who were responsible for the conduct of affairs at that time had done nothing to prevent the Kaiser from embarking on his customary cruise in Northern waters.

The latter end of July was full of excitement for the directors and the staff of the Hamburg-Amerika Linie. We endeavoured to acquaint the vessels that were under way with the critical situation, and we instructed each captain to make for a neutral port in case war should break out. The naval authorities warned us not to allow any ships to put to sea, and we were particularly asked not to permit the sailing of the s.s. _Imperator_, which was fixed for July 31st, because the attitude of Great Britain was uncertain. At a midnight meeting held at Ballin's private residence it was decided to postpone the departure of the vessel "on account of the uncertain political situation." Every berth on the steamer was booked, and hundreds of passengers were put to the greatest inconvenience. Most of them proceeded to a neutral or to a British port from which they subsequently embarked for the United States.

After this, events followed upon each other's heels in swift succession. When war broke out, most of the ships succeeded in reaching neutral ports, so that comparatively few of them were lost in the early part of the war. By August 5th the cables had been cut. This circumstance made it very difficult to keep up communications with New York, and compelled the majority of our agencies and branches abroad to use their own discretion as to what to do. The place of regular business was taken by the work involved in carrying out the various agreements which the company had entered into during peace time, viz. those for the victualling and bunkering of various units of the Imperial Navy, for the supply of auxiliary vessels, and for the establishment of an organization which was to purchase the provisions needed by the navy.

In the meantime, the Ministry of the Interior had started to devise measures for provisioning the country as a whole, as far as that was still possible. It is well known that the responsible authorities had done far too little--indeed, hardly anything at all--to cope with this problem, because they had never taken a very serious view of the danger of war. Even the arrangements of the military authorities in connexion with the plans of mobilization were utterly deficient in this respect.

The first who seriously studied the question as to what would have to be done for the provisioning of the military and civil population if Germany had to fight against a coalition of enemies, and if the overseas supplies were stopped, was General Count Georg Waldersee, who became Quartermaster General in 1912. In a letter which he wrote to Ballin about that time, he gave a very clear description of the probable state of things in such an emergency. He pointed out that the amount of foodstuffs required during a war would probably be larger than the quantities needed in peace time--a contingency which had escaped attention in Germany altogether--and that above all there would be an enormous shortage of raw materials. Therefore, he said, if it was desired to guard the country against disagreeable surprises, it was imperative to make certain preparations for an economic and a financial mobilization. The military authorities at least had studied this problem theoretically, but the civil authorities would not make any move at all. The general said he thought it desirable that this question should receive more attention in the future, and he asked Ballin to let him know his views on the matter, and to give him some practical advice. The anxiety felt in military quarters was largely augmented by the receipt of disquieting rumours about the increase of Russian armaments.

In reply we furnished Count Waldersee with a brief memorandum written by myself in which, amongst other items, I referred him to some suggestions put forward by Senator Possehl, of Lübeck, in the course of a lecture delivered about the same time before a selected audience. In view of the fact that Germany depended for her food supply and for her raw materials to an increasing extent on foreign sources, there could be no doubt as to the necessity for making economic preparations against the possibility of a war, if a war was considered at all probable.

Nevertheless, and in spite of the newly awakened interest on the part of the military authorities, these economic preparations had, before the war, made absolutely no progress worth mentioning. The only practical step which, as far as my knowledge goes, had been taken by the civil authorities, was the conclusion of an agreement entered into with a Dutch firm dealing with the importation of cereals in case of war. When, in the fateful summer of 1914, this contingency arose, the firm in question had chartered some British steamers, which instead of carrying their cargoes to Rotterdam took them to British ports.

Thus, no serious efforts of any kind had been made to grapple with the problem. On Sunday, August 2nd, Geheimrat Frisch, who afterwards became the director of the _Zentral-Einkaufs-Gesellschaft_ (Central Purchasing Corporation), came to Hamburg, in order to inform Ballin, at the request of the Ministry for the Interior, that the latter felt very anxious in regard to the quantity of food actually to be found in Germany, which, it was feared, would be very small, and that it was expected that a great shortage would arise after a very brief period. He therefore asked him to use his best endeavours in order to secure supplies from abroad. A Hamburg firm was immediately requested to find out how much food was actually available in the country, and, although the figures obtained were not quite so bad as it was expected, steps were taken at once to remedy the deficiencies by importing food from neutral countries. A great obstacle to the rapid success of these efforts was the absolute want of any preparatory work. The very attempt to raise the necessary funds abounded with difficulties of every kind, because no money had been set aside for such expenditure in connexion with the scheme of mobilization, and the time taken by the attempts made in this direction, as well as the circumstance that communication with the United States could only be maintained _via_ neutral countries, were the causes of a great deal of serious delay.

At Ballin's suggestion the _Reichseinkauf_ (Government Purchasing Organization) was then formed. For this organization the Hamburg-Amerika Linie was to do all the purchasing, and it was arranged that it should put at the disposal of the new body all those members of its staff who were not called up, and who were considered suitable for the work. Buyers were sent to every neutral country; but the mobilization then in progress led to a complete stoppage of railway travelling for the civil population, thus causing no end of difficulties to these buyers, and making personal contact with the Berlin authorities almost impossible. Added to all this, there was the inevitable confusion which the replacement of the civil administration by the army commands brought in its train. It had, in fact, been assumed that this war would resemble its predecessors in every respect, and no one was prepared for a world war. Hence, such important matters as the importation of foodstuffs from abroad and the work of supplying political information to neutral countries concerning the German standpoint were sadly neglected; everything had to be provided at a moment's notice, and had to be carried through in the face of a great deal of opposition. Funds and energy were largely wasted; the military, naval, and civil organizations were working against one another instead of co-operating; and it took a long time before a little order could be introduced into the chaos. It was also found that the German credits abroad were quite inadequate for such enormous requirements. An attempt to dispose of some treasury bills in New York was only moderately successful, and in consequence of this lack of available funds the supplies obtained from the United States were but small. Even the fact that the Hamburg-Amerika Linie immediately succeeded in establishing the necessary connexions with American shippers, and in securing a sufficient amount of neutral tonnage, did not improve matters in the least. To obtain the required funds in Berlin, as has been explained before, involved considerable loss of time; and as the months passed the British blockade became more and more effective. Thus, as the war continued, large quantities of food could only be procured from European countries.

Ballin took a large personal share in the actual business transacted by the _Reichseinkauf_. He did so, if for no other reason, because he needed some substitute for the work connected with the real shipping business which was rapidly decreasing in extent. The only benefit his company derived from its new work was that it gave employment to part of the members of its staff, thus reducing in some measure the expenses. With the stoppage of the company's real business its principal source of income ran dry in no time, and the small profits made out of the supply of provisions to the navy was only a poor compensation.

The world's economic activities in those days presented a picture of utter confusion. All the stock exchanges were closed; all dealings in stocks and shares had ceased, so that no prices could be quoted; several countries had introduced a moratorium, and numerous banks had stopped payment. Germany had no longer any direct intercourse with the overseas countries; the British censorship was daily increasing its hold on the traffic proceeding _via_ neutral ports. At first those foreign steamship companies which maintained passenger services to America did splendid business, because Europe was full of American tourists and business men who were anxious to secure a berth to get home, and numerous cabin passengers had to be content with steerage accommodation. When this rush was past, however, shipping business, like international commerce, entered upon its period of decline. The freight rates came down, the number of steamers laid up assumed large proportions, and the world's traffic, in fact, was paralysed.

After a comparatively brief period it was found too difficult to conduct the _Reichseinkauf_ organization with its headquarters at Hamburg, because the intercourse with the Imperial Treasury at Berlin, which provided the funds, took up too much time, and also because it seemed highly advisable to purchase the foreign foodstuffs needed by the military as well as the civil population through one and the same organization. The state of things in respect to these matters was simply indescribable; indeed, if it had been purposely intended to encourage the growth of war profiteering, it would have been impossible to find a better method of setting about it. Numerous buyers, responsible to different centres, not merely purchased without regard to each other, but even outbid each other, thus causing a rise in prices which the public had to pay. Conditions such as these were brought about by the utter unpreparedness of the competent civil authorities and by the fact that the military authorities could dispose of the vast amounts of money placed at their command at the outbreak of the war. These conditions were doubtless the soil from which sprang all the evils which later on developed into the pernicious system we connect with the name of _Kriegswirtschaft_, and for which it will be impossible to demand reparation owing to the lost war and to the outbreak of the revolution.

In order to facilitate the intercourse with the proper Government boards, and to centralize the purchasing business as much as possible, Ballin's suggestion that the seat of the organization should be removed to Berlin was adopted, and at the same time the whole matter was put on a sounder footing by its conversion into a limited company under the name of _Zentral-Einkaufs-Gesellschaft_ (Central Purchasing Corporation). The history of the Z.E.G. is well known in the country, and its work has been subject to a great deal of criticism, largely due to the fact that all the annoyance caused by the many restrictions which the Government found it necessary to impose, and which had to be put up with during the war, was directed against this body. Generally speaking, this attitude of the population was very unfair, because the principal grievances concerned the distribution of the foodstuffs, and for this part the Z.E.G. was not responsible. Its only task was to obtain the necessary supplies from abroad. If it is remembered that the transactions of the corporation reached enormous proportions, and that, after all, it was improvised at a time of war, we cannot be surprised to see that some mistakes and even some serious blunders did occur occasionally, and that the right people were not always found in the right places. Moreover, some of the really amazing feats accomplished by the Z.E.G--e.g. the supply of grain from Roumania, which necessitated enormous labour in connexion with the transhipment from rail to steamer and with the conveyance up the Danube--were only known to a few people. It is obvious that nothing could be published during the war about these achievements nor about the agreements concluded, after endless negotiations, with neutral countries and thus the management of the Z.E.G. was obliged to suffer in silence the criticisms and reproaches hurled at it without being able to defend itself.

The volume of the work done by the Z.E.G. may be inferred from the fact that the goods handled by the organization during the four years from 1915 to 1918 represented a value of 6,500 million marks, in which connexion it must not be forgotten that at that time the purchasing power of the mark was still nearly the same as before the war. When the Roumanian harvest was brought in the daily imports sometimes reached a total of 800 truck-loads. However, the greatest credit, in my opinion, is due to the Z.E.G. for putting a stop to the above-mentioned confusion in the methods of buying abroad and for establishing normal conditions. To-day it is scarcely possible to realize how difficult it was and how much time it required to overcome the opposition often met with at home.

Not much need be said here about the activities of the Hamburg-Amerika Linie during the war. The longer the struggle lasted, and the larger the number of countries involved in the war against Germany became, the heavier became the company's losses of tonnage and of other property. All the shore establishments, branch offices, pier accommodation, etc., situated in enemy countries, were confiscated, and the anxiety about the post-war reconstruction grew from month to month. Ballin never lost sight of this problem, and it is chiefly due to his efforts that the Government and the Reichstag passed a Bill (1917) providing the means for the rebuilding of the country's mercantile marine. Along with this he tried to keep the company financially independent by cutting down expenses, by finding work for the inland offices of the company, by selling tonnage, and by other means. The families and dependents of those employees who had been called to the colours were assisted as far as the funds at the company's disposal permitted. Of all these measures the company has already given the necessary information to the public, and I can confine myself to these brief statements. There is only one circumstance which requires special mention.

It is universally acknowledged that no German industry has suffered so greatly through the action of the German Government as the shipping business. When the discussions as to the rebuilding of the merchant fleet were being carried on, the Government frankly admitted this fact. I am not thinking, in this connexion, of those measures which were imposed upon the Government by the Versailles Treaty, such as the surrender of the German mercantile marine, but what I have in mind is the steps taken whilst the war was in actual progress. These have one thing in common with those imposed by the enemy: their originators have, more or less, arrived at the belated conviction that they have sacrificed much valuable property to no purpose. In Great Britain it is admitted quite openly that the confiscation of the German merchant fleet has very largely contributed to the ensuing collapse of the world's shipping markets, and to the confusion which now prevails on every trade route. The war measures of the German Government--or, rather, of the German naval authorities--have sacrificed enormous values merely for the sake of a phantom, thus necessitating the compensation due to the shipowners--a compensation far from sufficient to make good even a moderate fraction of the loss. The vessels that can be built for the sums thrown out for this purpose will not be worth the twentieth part of the old ones, if quality is taken into account as well as quantity. This will become apparent when the compensation money has been spent, and when it will be possible to compare the fleet of German passenger boats then existing with what the country possessed previous to the war.

The phantom just referred to was the foolish belief that it would be possible to eliminate all ocean tonnage from the high seas--a belief which was in itself used to justify the submarine war, and which was responsible for the assumption that the withdrawal of German tonnage from the high seas would affect the food and raw material supply of the enemy countries. This mistaken idea was also the reason for prohibiting the sale of the German vessels in neutral ports, and for ordering the destruction of their engines when it became impossible to prevent their confiscation. The latter measure, and in particular the manner in which it was carried out, prove the utter inability of the competent authorities to grasp the very elements of the great problem they were tackling, and in view of such lack of knowledge it is easy to understand the bitterness of tone which characterizes Ballin's criticism of these measures as contained in his memorandum to the Minister of the Interior (1917). He wrote:

"When Your Excellency decided to permit the sale of our vessels in
the United States it was too late to do so, because the U.S.
Government had already seized them. Previous to that, when we saw
that war would be inevitable, and when we had received an
exceedingly favourable purchasing offer from an American group, we
had asked permission to sell part of our tonnage laid up in that
country.

"Your Excellency, acting on behalf of the Chancellor, declined to
grant this permission. I am quite aware that neither the Chancellor
nor Your Excellency as his representative were responsible for this
refusal, but that it was due to a decision of the Admiralty Staff.
However, the competent authority to which the protection and the
furtherance of the country's shipping interests are entrusted is
the Ministry of the Interior. With the Admiralty Staff itself, as I
need not remind Your Excellency, we have no dealings whatever, and
we are not even entitled to approach that body directly in such
matters.

"Our company which was the biggest undertaking of its kind in the
world, and which previous to the war possessed a fleet aggregating
about 1,500,000 tons, has lost practically all its ships except a
very few. The losses are not so much due to capture on the part of
the enemy as to the measures taken by our own Government. If our
Government had acted with the same foresight as did the
Austro-Hungarian Government with respect to its ships in United
States and Chinese waters, the German vessels then in Italy,
Portugal, Greece, the United States, Brazil, and elsewhere, might
have been either retained by us or disposed of at their full value.

"The Austrian ships, with their dismantled engines were, at the
instance of the Austrian Government, sold in such good time that
the shipping companies concerned are not only in a position to-day
to refrain from asking their Government to pass a Shipowners'
Compensation Bill, as we are bound to do, but they have even
enriched the Austrian national wealth by such handsome additions
that their capital strength has reached a sum never dreamt of
before, and that they are now able to rebuild their fleet by
drawing upon their own funds, and to make such further additions to
their tonnage that in future we shall not only be compelled to
compete with the shipping companies of neutral and enemy
countries--which have accumulated phenomenal profits--but with the
Austrian mercantile marine as well.

"From the point of view of our country's economic interests it is
greatly to be regretted that the policy of the Government has not
changed in this respect even now. We have received reliable news
from private sources to the effect that the engines of the German
vessels now in Argentine waters have been destroyed without Your
Excellency having so far informed us of this action, and without
Your Excellency having asked us to take steps to utilize the
vessels, if possible, for the benefit of the country's economic
interests and for that of the completely decimated German merchant
fleet.

"Moreover, a wire sent by His Excellency Herr v. Jonquières to the
competent Hamburg and Bremen authorities states that the ships in
Uruguayan waters are also in great jeopardy. The Government of that
country, according to this report, would prefer to purchase them
rather than confiscate them. After what has been done before, we
fear that the Admiralty Staff will either not permit the sale at
all, or only grant its permission when it is too late.

"Your Excellency, I am sure, is fully aware of the fact that the
methods of the Admiralty Staff--ignoring, as it does, all other
considerations except its own--have caused one country after the
other to join the ranks of Germany's enemies. In view of the
shortage of tonnage which Great Britain and other of our enemies
systematically try to bring about--evidently with the intention of
inconveniencing neutral countries as much as possible--these latter
feel compelled, for the very reason of this lack of tonnage, to
declare war upon us, because the politics of our country are guided
by a body of men who, unfortunately, shut their eyes to the
economic and political consequences of their decisions.

"Several months ago, at a time when nobody thought of unrestricted
submarine warfare, an opportunity presented itself to us of
concluding an agreement with the Belgian Relief Committee by which
it would have been possible for us to withdraw our steamers, one
after the other, from American ports and, under the flag of that
committee, to bring them to Rotterdam. At that time, it was again
the Admiralty Staff which prevented the conclusion of this
agreement, because, for reasons best known to itself, it would
grant permission for only three of these vessels, although Great
Britain had agreed that the whole of our fleet interned in U.S.
ports, representing 250,000 tons in all, could sail under the terms
of the proposed agreement, and although the Allies as a whole had
signed a written declaration to the effect that they would not
interfere with our ships so long as they were used for the
provisioning of Belgium. I took the liberty of pointing out to
Captain Grashoff, the representative of the Admiralty Staff, that
nothing could have prevented us from letting the ships remain at
Rotterdam after they had completed their mission, and that
afterwards, as has been borne out by later facts, they could have
been safely taken to Hamburg.

"I respectfully ask Your Excellency whether it is not possible to
enter a protest against such unnecessary dismemberment of part of
the German national assets....

" ... I must also protest most emphatically against the
insinuation--which is sure to be made--that I have no right to
criticize any steps which the Admiralty Staff has regarded as
necessary for reasons of our naval strategy. Without reservation
the German shipowners agree to any measures which are strategically
necessary, however greatly they may injure their interests. The
criticism which I beg to make on behalf of German
shipping--although possessing no formal mandate--concerns itself
with those steps which might have been taken without jeopardizing
the success of our naval strategy if the vital necessities of
German mercantile shipping had been studied with as much
consideration as this branch of the economic activities of our
country has a right to claim.

"What we principally take exception to in this connexion is that no
information was sent to us before the decision to destroy the
engines of our ships was arrived at, and that we were not assisted
in making use of these dismantled vessels in the financial
interests of our country. Nothing of this kind was done, although
it was the most natural thing to do so, and although such action
would have deprived many a country of a reason to declare war upon
Germany."

To a man of the type of Ballin--who had, throughout his life, been accustomed to perform a huge amount of successful work--a period of enforced inactivity was unbearable. The longer it lasted the more he suffered from its effects, especially because the preparatory work for the post-war reconstruction, the work connected with the war organization of the German shipowners, etc., was only a poor substitute for the productive labour he had been engaged in during more than thirty years of peace. There is no doubt but that the Government could have made better use of Ballin's gift of organization, but it must be remembered that there was really no effective central Government in Germany throughout the war. The civil administration was not exactly deposed, but it was subordinated to the military one from the very beginning, and the latter carried on its work along the guiding lines laid down in the scheme of mobilization. The authorities to whose care the economic aspects of the war were entrusted did not often--if at all--avail themselves of Ballin's advice; and to offer it unbidden never entered his mind, because he was cherishing the hope that the war would not last long, and because it was his belief that the world would be sensible enough to put an end to the wholesale destruction before long. It was a bitter disappointment to him to find how greatly he was mistaken, and to see that the forces of unreason remained in the ascendancy, especially as he was always convinced that Time would be on the side of Germany's enemies. The sole aim of his political activities during the war was to bring about peace as early as possible.

Of all the attempts at mediation known to me, the one which seemed to be most likely to succeed passed through the hands of Ballin. To give a detailed account of it must be left to a time which need no longer pay regard to governments and individuals. Ballin's share in it was brought about through his former international connexions. Through him it reached the Kaiser and the Chancellor, and owing to his untiring efforts, which lasted for two years, the position in the early part of 1917 was such that the establishment of direct contact between the two sides was imminent. Then the unrestricted submarine war began, the intended direct contact could not be established, and the carefully woven thread was definitely snapped asunder; because from that time on the Allies were certain that the United States would join them, and they felt assured of victory. No other mediation scheme with which I am acquainted has been pursued with so much unselfishness, devotion, and energy as this one. This attempt, however, no more than any other, could have procured for us that kind of peace which public opinion in Germany had been led for years to expect, thanks to the over-estimation of the country's strength, fostered by the military censorship and by the military reports.

From such exaggerated opinions Ballin always held himself aloof. He recognized without reservation the immense achievements of Germany in the war, but he was fearful lest the strength of the country could not cope in the long run with the ever-increasing array of enemies, and he therefore maintained that, if it was desired to bring about peace, the Government would have to be moderate in its terms. A much discussed article which he contributed to the _Frankfürter Zeitung_ on January 1st, 1915, under the heading of "The Wet Triangle," is not inconsistent with these views of his. In it he pointed out that Germany's naval power, in order to make a future blockade impossible, should no longer be content to be shut up in the "wet triangle," i.e. the North Sea, but ought to establish itself on the high seas. This statement has been alleged to refer to Belgium, and Ballin has been wrongly claimed a partisan by those who supported the annexation of that country. What he really meant was that Germany should demand a naval base on the Atlantic, somewhere in the northern parts of Africa, and this idea seemed to be quite realizable if taken in conjunction with the terms of peace he had in view, viz. no annexations, no indemnities, economic advantages, a permanent political and naval understanding with Great Britain, based on her recognition that a military defeat of Germany was impossible. All this would be somewhat on the lines of the article published by the _Westminster Gazette_, referred to in the eighth chapter and a facsimile of which is given at the end of the book. Ballin was firmly convinced that, even if a mere peace of compromise was the outcome, i.e. one which left Germany without any territorial gains and without any indemnities, the impression which the German achievements during the war would produce on the rest of the world would be so overwhelming that the country would secure indirectly far greater advantages than could be gained by means of the largest possible indemnity and the most far-reaching annexations. Besides, the experiences of former times had proved that Germany would be quite unable to absorb such large accessions of territory as certain people had in mind. These views of Ballin, of course, were looked upon as those of a "pacificist," and Ballin was classified among their number.

In a letter which Ballin wrote to a friend of his, a naval officer, in April, 1915, he puts up a highly characteristic defence of himself against the accusations implied by describing him as "pacificist" and "pro-English."

"If," he wrote, "the fact that I have been privileged to spend a
considerable part of my life in close contact with you, entitles me
to add a few personal remarks, I should like to say that I have
made up my mind to retire from my post after the end of the war
altogether. I told you shortly after the outbreak of the war that
my life's work was wrecked. To-day I am convinced that it will soon
come to life again, but my youth would have to be restored to me
before I could ever dream of taking up again that position in
international shipping which I held before the war. I cannot
imagine that I would ever go to London again and take the chair at
the conferences at which the great problems of international
shipping would come up for discussion, and nobody, I think, can
expect that I should be content to play second fiddle at my age.
Indeed, I cannot see how I could ever re-enter upon intimate
relations with the British, the French, the Italians, and
especially with the Americans. Strangely enough, influential
circles on our side, and even His Majesty himself, look upon me as
'pro-English,' and yet I am the only German who can say with truth
that he has been fighting the English for supremacy in the shipping
world during the last thirty years. During this long period I have,
if I am allowed to make use of so bold a comparison, conquered one
British trench after the other, and I have renewed my attacks
whenever I could find the means for doing so."

It is no secret that during the war many prominent politicians and economists--men of sound political training--viewed the question of the war aims which it was desirable to realize very much in the same light as did Ballin, but that the censorship made it impossible for anyone to give public expression to such opinions. Ballin's appreciation of the probable gain which Germany would derive from a peace by compromise has now been amply confirmed by the undeniable fact that the rest of the world has been tremendously impressed by Germany's achievements, an impression which has made foreigners regard her chances of recovery with much more confidence than she has felt herself, stunned as she was by the immensity of her _débâcle_.

The following notes, which are largely based on Ballin's own diary, are intended to supplement the information given so far as to his political activities during the war.

The outbreak of war, as may be inferred from what has already been related, took him completely by surprise, and he did not think that the struggle would last very long. "The necessities of the world's commerce will not stand a long war," was his opinion during the early days. For the rest, he tried to find work for himself which would benefit his country. "What we need to-day," he wrote to a friend, "is work. This will lift us up and keep us going, and will make those of us who are no longer fit to fight feel that we are still of some use after all." But in connexion with this thought another one began to occupy his mind. He anxiously asked: "Which of the men now at headquarters will have the strength and the wisdom required to negotiate a successful peace when the time comes?" All his thoughts centred round the one idea of how to secure peace; what advantages his country would derive from it; and how it would be possible to bring about an international grouping of the Powers which would be of the greatest benefit to Germany. On October 1st, 1914, he wrote to Grand Admiral v. Tirpitz:

" ... I quite agree with what you say in your welcome letter.
Indeed, you could not view these matters[3] with graver anxiety
than I do myself. I hope I shall soon have the opportunity I desire
of discussing these things with you personally.

"To win the peace will be hardly less difficult than to win the
war. My opinion is that the result of this world war, if it lasts
12 months, will be exactly the same as if it lasts six months. I
mean to say that, if we do not succeed in acquiring the guarantees
for our compensation demands within a few months, the further
progress of events will not appreciably improve our chances in this
direction.

"What we must aim at is a new grouping of the Powers round an
alliance between Germany, Great Britain and France. This alliance
will become possible as soon as we shall have vanquished France and
Belgium, and as soon as you shall have made up your mind to bring
about an understanding with Great Britain concerning the naval
programme.

"I am aware that this idea will find but slight favour with you,
but you will never secure a reasonable peace with Great Britain
without a naval agreement.

"By a reasonable peace I mean one which will enable both Germany
and Britain to sheathe their swords in honour, and which will not
burden either nation with a hatred which would contain within it
the germs of future war.

"We have had no difficulty in putting up with the French clamour
for _revanche_ for a period of 44 years, because in this case we
had only to deal with a small group of nationalist firebrands, but
a British clamour for revenge would produce an exceedingly adverse
effect on the future of our national well-being and of our share in
the world's trade and commerce.

"For a long time past it has been my conviction that the era of the
super-Dreadnoughts has passed, and some time ago I asked Admiral
von Müller if it was not possible to consider the question of a
naval understanding simply on the basis of an agreement as to the
sum of money which either Government should be entitled to spend
annually on naval construction, leaving it to the discretion of
each side how to make use of the money agreed upon for the building
of the various types of ships.

"Great Britain is putting up a fight for her existence just as much
as we do, if not to an even greater extent. Her continuance as a
world power depends on the superiority--the numerical superiority
at least--of her navy.

"I am convinced--always supposing that we shall succeed in
conquering France and Belgium--that the British terms concerning
her naval supremacy will be very moderate, and I cannot help
thinking that a fair understanding regarding naval construction is
just as important to Germany as it is to Great Britain.

"The present state of things is the outcome of a _circulus
vitiosus_, and is bound to produce a soreness which will never
permit of a sound understanding....

" ... And what about the further course of the war? I sincerely
hope that your Excellency will not risk the navy. The expression
'The Fleet in being' which has never left my memory, and which has
lately been heard of again, implies exactly all I mean.

"The navy, in my opinion, has never been, and never ought to be,
anything but the indispensable reserve of a healthy international
policy. Just as a conscientious director-general would never dream
of reducing the reserve funds of his company, unless compelled to
do so by sheer necessity, we ought not to drag the navy into the
war, if it could possibly be avoided.

"What would it profit you to risk a naval battle on the high seas?
Not only our own, but British experts as well, believe that our
ships, our officers, and our crews are superior to the British, and
King Edward emphasized at every opportunity that the crews on
British warships are not a match to those on German vessels. But
what are you going to do? Are you going to make them fight against
a numerically superior enemy? Such a course would be open to great
objections, and even, if the battle turned out successfully, the
victors would not escape serious damage.

"I do not know how your Excellency, and their Excellencies v.
Müller and Pohl look upon these matters, but since you yourself
have asked me to state my views, I hope you will not take it amiss
if my zeal causes me to enlarge upon a subject which is not quite
within my province. Besides, I have another reason for doing so.