Johann Bernstorff - My Three Years in America

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

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

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

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

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

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

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

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

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