Johann Bernstorff - My Three Years in America

To begin with, Herr Albert himself undertook the insurance in cases of exceptional importance. It was at most a question of a small balance, by the furnishing of which an immediate risk or a dangerous delay in shipment was avoided. Our chief efforts were directed towards raising the insurance limit of the German companies. As a result a pool of German insurance companies was formed whose limit for marine and war insurance was gradually raised more and more. In this way it was possible to carry through a number of shipments to European countries, to keep a not inconsiderable tonnage – about 30,000 tons – out of the hands of the Allies, as well as to enable a number of important German firms in South America to carry on extensive trade between North and South America, and so to maintain their business activity in spite of the measures adopted by the English.

About our propaganda I have already spoken in detail in the second chapter. It may be mentioned again here that the centre of gravity of our active propaganda lay in the economic question, which was to a certain extent the key to the understanding of our American policy during the war.

Though the vast and rapid development of American export trade through the trade in war material, and the change in position from debtor to creditor, was only effected gradually, and the loss of the German market at first made itself adversely felt both actively and passively, the size of the contracts from the Allies and the consequent profits at once acted like a narcotic on public opinion. This was all the more the case as a result of the extraordinarily skilful way in which the English handled the question. They always proceeded cautiously and gradually. For instance, they at first accepted the Declaration of London in principle, but made several alterations which to the public, who did not realize the extent of their effect, seemed unimportant and which yet formed the basis for the gradual throwing overboard of the Declaration of London. After public opinion had grown accustomed to the English encroachments and the interests affected had been pacified by the Allied contracts, the blockade was introduced after careful preparation in the Press; it was not at first described as a blockade, but was gradually and systematically tightened. Among other things, the export of cotton to Germany was expressly agreed to at the end of 1914, but was afterwards hampered in practice by various measures, as, for example, the holding up of individual ships, and the refusal of marine insurance, and finally brought to an end by the declaration of cotton as unconditional contraband. It is characteristic that the declaration of cotton as unconditional contraband was made public on the very day on which the whole American Press was in a state of great excitement over the Arabic case, so that this comparatively unimportant incident filled the front pages and leading articles of the newspapers, while the extremely important economic measure was published in a place where it would hardly be noticed.

We made vigorous efforts to oppose this English step. We got into touch with the importers of German goods, who formed an association and forwarded a protest to Washington. Without attracting attention, we gave the association the assistance of a firm of solicitors, whose services were at our disposal, as legal advisers. Relations were entered into with the cotton interest, which, through the political pressure of the Southern States, exerted great influence on public opinion and in Congress. Various projects for buying cotton on a large scale for Germany were considered, discussed with the cotton interest and tested by small purchases. In the same way negotiations were entered upon with the great meat companies, the copper interest and others by systematic explanation and emphasis of the interests with regard to the German market. The result, partly for the reasons given, partly owing to the political development of the general relations between Germany and the United States, was small. This, however, can hardly be taken as an argument against the expediency of the steps taken as at that time. No one could foresee the later development of the war and particularly the length of time it was going to last; whereas had the war been shorter there is no doubt that these measures would have attained their object.

An important part of the economic propaganda was the institution of the so-called "Issues," i.e., the attempt by carefully construing individual incidents to make clear to public opinion the fundamental injustice of the English encroachments and their far-reaching consequences in practice. The most important case in this direction is that of the Wilhelmina . According to the prevailing principles of international law, foodstuffs were only conditional contraband. They might be imported into Germany if they were intended for the exclusive use of the civil population. As, however, England succeeded in restraining the exporters from any attempt to consign foodstuffs to Germany, especially as in view of the enormous supplies that were being forwarded to our enemies they had little interest in such shipment, the question never reached a clear issue. Herr Albert therefore induced an American firm to ship foodstuffs for the civil population of Germany on the American steamer Wilhelmina , bound for Hamburg, by himself undertaking the whole risk from behind the scenes. This was arranged in such a way as to preserve in appearance the good faith of the American firm, and to make the shipment seem purely American in the eyes of the American Government and the English.

The Wilhelmina was taken by the English into Falmouth and detained on the grounds that Hamburg was a fortified town, and that, according to the measures adopted by Germany for supplying the civil population with food – requisitioning, centralization of distribution, etc. – there was no longer any distinction between the supply of the military and the civil population. While the negotiations on this question were still in the air, and seemed to be progressing favorably for us, England resorted to a general blockade. Consequently the case lost its interest, both practical and as a question of principle, especially as England declared her readiness to pay for the goods at Hamburg prices. As, on the other hand, insistence on the purely theoretical claims would give rise to the danger that the English or American secret service might in the end succeed in proving the German origin of the undertaking, Herr Albert accepted the proffered payment of the English Government, and received as compensation a sum which covered all the expenses.

Such incidents could have been construed in several ways. One of the most important, and also the most popular, was the shipment of cotton to Germany for the civilian population between the autumn of 1915 and the middle of 1916. The declaration of cotton as absolute contraband was at first only on paper, as no American exporters had hitherto ventured to ship cotton. Consequently, detailed discussions took place as to whether such an undertaking should be entered upon in the full light of publicity. Great excitement among the cotton growers proved the extremely keen and widespread interest. England would have been forced to act on her declaration at a time when the American Government could not afford to ignore the interests of the cotton industry, with its influence on domestic politics. The full effect of the meagreness of the crops, and on the other hand the increase of consumption in the United States, and consequent rise in price, was not yet realized by the public, nor even in cotton circles. The cotton industry viewed with anxiety the increased difficulty of finding a market, and were anxious for a reopening of that of the Central Powers.

Certainly a shipment of cotton to Germany would only have been justified in conjunction with comprehensive other measures, particularly purchases on the American cotton market on German account. As a result of detailed discussion with American interested parties, who repeatedly urged us to such a step, we forwarded proposals to Berlin on these lines. Their general purport was that about a million bales of cotton should be bought outright on behalf of Germany, and that in addition options should be secured on a further million or two million bales on the understanding that the taking up of the options should be dependent on the possibility of shipment to Germany. On the strength of these measures the shipment of one big consignment should have been undertaken. The plan had sound prospects of success. In any case there would have been no risk worth mentioning, as, to the initiated, there was no doubt as to the rise of prices. In view of the new bank legislation (Federal Reserve Act), no insuperable difficulties would have stood in the way of financing the shipment. The indirect political pressure on the American Government and public opinion, with its reaction on England, would have been considerable.