CHAPTER XIV

COMMERCIAL VENTURES

German law in America--Waetzoldt's reports--The British

blockade--A report from Washington--Stopping the

chlorine supply--Speculation in wool--Dyestuffs and the

_Deutschland_--Purchasing phenol--The Bridgeport Projectile

Company--The lost portfolio--The recall of the attachés--A summary

of Dr. Albert's efforts.

In addition to the exercise of its diplomatic functions, now more

important than they had ever been before, the German Embassy had

assumed the burden of large commercial enterprises. Their execution

was entrusted to Dr. Albert, the privy councillor and fiscal agent

for the Empire. There was apparently no limit, either financial or

territorial, to the scope of his efforts, and the fact that he was able

to administrate such a volume of work is no small tribute to his zeal.

But that very zeal outran his regard for American law, so in one of his

earlier ventures he set out to substitute the law of the Empire for

that of the nation to which he was accredited.

Dr. Albert was informed on March 10, 1915, by a German lawyer,

S. Walter Kaufmann of 60 Wall Street, that his clients, the

Orenstein-Arthur Keppel Company, had an order for 9,000 tons of

steel rails to be shipped to Russia, despite instructions from the

company's home office in Berlin that "no orders should be accepted for

shipment to any country at war with Germany, because of Paragraph 89

of the Gesetz Buch." The Gesetz Buch is the German Penal Code. (One

of Kaufmann's law partners was Norvin R. Lindheim, legal adviser to

Germany's agents in the United States.) The manufacturers begged the

permission of the Embassy to accept the order and pass the actual

manufacture on to the United States Steel Company, in order to evade

the letter of Paragraph 89, and in order "to delay the order, if

that would in any way be desirable." The matter was neglected in the

Embassy, and on July 13 the Orenstein-Arthur Keppel Company wrote from

Keppel, Pa., to the German consul, Philadelphia, Dr. George Stobbe,

again asking permission to accept the order. The consul replied,

denying permission, on the ground that the shipment would facilitate

the Russian transport of troops, and that such action would be within

the meaning of Paragraph 89 of the Gesetz Buch. "That you are in

position to delay the delivery of the order, to the prejudice of the

hostile country ordering, in no way makes you less punishable," he

continued. He forwarded a copy of his ruling to the Ambassador for

approval, and it in turn was forwarded to Dr. Albert. The order was

not taken; the fear of punishment by Germany was greater than the

protection afforded by American Law.

The foregoing episode reveals the nature of Dr. Albert's chief

problem--the financial blocking of supplies for the Allies. Let Boy-Ed

destroy the ships, von Papen dynamite the factories and railways,

Rintelen run his mad course of indiscriminate violence--the smooth

financial agent would undertake only those great business ventures in

which his shrewdness and experience could have play. He was receiving

reports constantly on the economic status, and the following extract

from a report from G. D. Waetzoldt, a trade investigator in the

Consulate in New York, will illustrate the German frame of mind about

midsummer of 1915:

"The large war orders, as the professional journals also print, have

become the great means of saving American business institutions from

idleness and financial ruin.

"The fact that institutions of the size and international influence

of those mentioned could not find sufficient regular business to keep

them to some extent occupied, half at least, throws a harsh light upon

the sad condition in which American business would have found itself

had it not been for the war orders. The ground which induced these

large interests to accept war orders rests entirely upon an economical

basis and can be explained by the above-mentioned conditions which were

produced by the lack of regular business. These difficulties, resulting

from the dividing up of the contracts, are held to have been augmented,

as stated in business circles, by the fact that certain agents working

in the German interest succeeded in further delaying and disturbing

American deliveries....

"So many contracts for the production of picric acid have been placed

that they can only be filled to a very small part."

Dr. Albert also received a report from another trade expert, who had

had a long conference with ex-Senator John C. Spooner of Wisconsin

as to whether or not there could be prosecutions under the Sherman

Anti-Trust Law against British representatives because of the

restrictions placed by the British Government upon dealings by

Americans in certain copper, cotton and rubber.

Naturally one of the most vital problems that stirred Dr. Albert was

the British Orders in Council blockading Germany, from which resulted

the seizure of meat and food supplies and cotton by British war

vessels. He was always on the alert for information of the attitude

of the Administration and the people of the United States toward the

blockade. In another report dated June 3, 1915, Waetzoldt said:

"There can be no doubt that the British Government will bring into play

all power and pressure possible in order to complete the total blockade

of Germany from her foreign markets, and that the Government of the

United States will not make a strenuous effort to maintain its trade

with Germany....

"It has been positively demonstrated during this time that the falling

off of imports caused by the war in Europe will in the future be

principally covered by American industry....

"The complete stopping importation of German products will, in truth,

to a limited extent, especially in the first part of the blockade, help

the sale of English or French products, but the damage which will be

done to us in this way will not be great....

"The _Lusitania_ case did, in fact, give the English efforts in this

direction a new and powerful impetus, and at first the vehemence with

which the Anti-German movement began anew awakened serious misgivings,

but this case also will have a lasting effect, which, unless fresh

complications arise, we may be able to turn to the advantage of the

sales of German goods....

"The war will certainly have this effect, that the American business

world will devote all its energy toward making itself independent of

the importation of foreign products as far as possible....

"If the decision is again brought home to German industry it should

not be forgotten what position the United States took with reference

to Germany in this war. Above all, it should not be forgotten that

the 'ultimate ratio' of the United States is not the war with arms,

but a complete prohibition of trade with Germany, and in fact,

through legislation. That was brought out very clearly and sharply

in connection with the still pending negotiations regarding the

_Lusitania_ case."

That Dr. Albert used secret and perhaps devious means to secure his

information is revealed by an unsigned confidential report which he

received under most mysterious circumstances concerning an interview

by a man referred to as "M. P." with President Wilson and Secretary

Lansing. The person who wrote of "the conversation" on July 23, 1915,

with "Legal Agent" Levy and Mr. John Simon does not give his name. A

striking part of this conversation follows:

"Levy advises regarding a conference with M. P. Thereafter M. P. saw

Lansing as well as Wilson. He informed both of them that an American

syndicate had approached him which had strong German relations. This

syndicate wishes to buy up cotton for Germany in great style, thereby

to relieve the cotton situation, and at the same time to provide

Germany with cotton." (Dr. Albert attempted, with a suitable campaign

of press and political propaganda, to inflame the Southern planters

over the British embargo on cotton.) "The relations of the American

syndicate with Germany are very strong, so that they might even

possibly be able to influence the position of Germany in the general

political question. M. P. therefore asked for a candid, confidential

statement in order to make clear not only his own position, but also

necessarily the political opportunity. The result of the conversation

was as follows:

"1. The note of protest to England will go in any event whether Germany

answers satisfactorily or not.

"2. Should it be possible to settle satisfactorily the _Lusitania_

case, the President will bind himself to carry the protest against

England through to the uttermost.

"3. The continuance of the difference with Germany over the _Lusitania_

case is 'embarrassing' for the President in carrying out the protest

against England....

"4. A contemplated English proposal to buy cotton in great style and

invest the proceeds in America would not satisfy the President as an

answer to the protest....

"5. The President, in order to ascertain from Mr. M. P. how strong the

German influence of this syndicate is, would like to have the trend

of the German note before the note is officially sent, and declares

himself ready, before the answer is drafted, to discuss it with M. P.,

and eventually to so influence it that there will be an agreement for

its reception, and also to be ready to influence the press through a

wink.

"6. As far as the note itself is concerned, which he awaits, so he

awaits another expression of regret, which was not followed in the last

note. Regret together with the statement that nobody had expected that

human lives would be lost and that the ship would sink so quickly.

"7. The President is said to have openly declared that he could hardly

hope for a positive statement that the submarine warfare would be

discontinued."

Dr. Albert conferred with Captains Boy-Ed and von Papen on all military

and naval matters having a commercial phase. Captain von Papen, on July

7, 1915, submitted to Dr. Albert a memorandum for his consideration and

further recommendation, headed "Steps Taken to Prevent the Exportation

of Liquid Chlorine." He told of the efforts made by England and France

to buy that chemical in America, estimated the output here, and cited

the manufacturers. He also enclosed a plan for checkmating the Allies

and concluded with the following paragraph:

"It will be impossible, however, for this to go on any length of time,

as the shareholders wish the profits to be derived therefrom. Dr.

Orenstein therefore suggests that an agreement be consummated with the

Electro Bleaching Company, through the President, Kingsley, whereby the

delivery of liquid chlorine by this country to France and England will

be stopped. A suggested plan is enclosed herewith.

"From a military standpoint I deem it very desirable to consummate such

an agreement, in order to stop thereby the further exportation of about

fifty-two tons of liquid chlorine monthly, especially in view of the

fact that in France there is only one factory (Rouen) which can produce

this stuff in small amounts, while it is only produced in very small

quantities, in England."

During 1914 and 1915 German speculation in wool was active. Early

in the war von Bernstorff summoned a German-American wool merchant

recommended by a business friend in Berlin and directed him to buy all

the wool he could secure. He did so, using Deutsches Bank credits for

the purchases made for Germany, and making his purchases of wool for

Germany even in Cape Town and Australia. The German-American, after

following this practice for some months, decided that his financial

allegiance belonged to America, so he tried, through Hugo Schmidt, to

induce the German interests in his firm to sell out to him. On August

9, 1915, Schmidt wrote to Keswig, the Berlin principal:

"Your friend here has inquired in London, and he offers no matter what

price may be realizable in London at that time to take over the wool

from you at the original price, in which case you would naturally pay

all the expenses, which are estimated to be about 6 per cent. As you

see, it is not so simple to deal with your friends."

The German-American's offer meant a good profit to him, as the London

price of wool at that time had advanced nearly 15 per cent. Yet he

apparently fell into no ill favor with Berlin, for in June, 1916, the

German Foreign office wrote von Bernstorff:

"Interested parties here have repeatedly made representations for

preferential treatment of the firm of Forstmann & Huffman in Passaic,

N. J., in connection with shipment of coal tar dyes to the United

States of America. Since this pure German firm, as is well known

on your side, undertook last year the wool supply for Germany, and

therefore claim it has been especially badly treated by England, it

is most respectfully recommended to Your Excellency, should there

be no reason to the contrary, to arrange for the greatest possible

consideration for this firm in the later distribution of the shipments

to consumers which now are in prospect."

Necessity, the mother of invention, had forced America's production

of coal-tar derivatives and dyestuffs upward enormously during the

first year of war. As the British blockade tightened, the German

supply, which had long constituted the world supply, was cut off

completely. The value of dyestuffs in America increased enormously

from 1914 to 1915. Germany witnessed this growth with apprehension,

and realized gravely that export expansion would follow increased

and perfected production in America, which it promptly did. German

chemical interests involved in a drug house familiar with the German

market, have testified that their firm "paid three times the value"

of a cargo of dyestuffs shipped from Bremen to Baltimore in 1916 in

the huge undersea-boat _Deutschland_, "which paid for the ship and

cargo." Her sister ship, the _Bremen_, which set forth for America, but

never arrived, was also "built with money furnished by the dyestuff

manufacturers," according to Ambassador Gerard.

The _Deutschland_ herself was 300 feet long, with a cargo capacity of

some 800 tons. She docked at the North German Lloyd piers in Baltimore,

and after loading a cargo of rubber and nickel, took an opportune

moment one foggy twilight to cast off and slip out to sea. She not only

returned safely to Germany but made another round trip to America,

putting in the second time at New London. She was at sea about three

weeks on each crossing of the Atlantic.

Dr. Albert made plans for buying up carbolic acid to prevent it from

reaching the Allies. Dr. Hugo Schweitzer, a German-American chemist

of New York, paid down $100,000 cash on June 3, 1915, to the American

Oil & Supply Company in New Jersey as part payment of $1,400,000 for

1,212,000 pounds of carbolic acid, of which the American Oil & Supply

Company had directed the purchase from Thomas A. Edison. Dr. Schweitzer

said that he bought the liquid not to prevent it from falling into the

hands of the Allies but to use in the manufacture of medical supplies.

Not the least interesting of Dr. Albert's financial experiences is

that which conceived and bore the Bridgeport Projectile Company. In a

conference early in 1915 in the offices of G. Amsinck & Co., in New

York, Count von Bernstorff came to the conclusion that one way to

prevent the shipment of munitions to the enemy was to monopolize the

industry, or at least to control it financially as far as possible. Dr.

Albert made an unsuccessful attempt to buy the Union Metallic Cartridge

plant for $17,000,000. He chose as his lieutenants for his next task

Hugo Schmidt, the New York representative of the Deutsches Bank, and

Karl Heynen, whose past record had been auspicious, as agent for Mexico

of the Hamburg-American Line. Heynen it was who had smuggled a cargo

of arms ashore for Huerta at Vera Cruz, under the nose of the American

fleet; he had received some 40,000 pesos (Mexican) for the coup, and he

was regarded as a capable individual. On March 31, 1915, the Bridgeport

Projectile Company was incorporated for $2,000,000, paid in, with

Walter Knight as president, Heynen as treasurer, and Karl Foster as

secretary and counsel.

Schmidt drew up a contract with the new-born company calling for a

large order of shells. On May 17 Heynen reported to Albert that 534

hydraulic presses for making shells of calibres 2.95 to 4.8 had been

ordered, and would cost $417,550. These orders, with all others for

tools and machinery which the Bridgeport company placed, were so

well concealed about the business world that as late as August the

impression was current that Great Britain was financing the company.

On June 30 Heynen reported to Albert through Schmidt that the first

shell cases would be manufactured under United States government

inspection, in order to create the impression that the company was

anxious for American contracts, and so that immediate delivery could be

made in case such contracts were actually secured. "The most important

buildings, forges, and machine shops, are almost under roof; the other

buildings are fairly under way; presses, machinery and all other

materials are being promptly assembled, and there is every indication

that deliveries will commence as provided in the contract; i. e., on

Sept. 1st, 1915."

The Bridgeport Projectile Company contracted with the Ætna Powder

Company, one of the largest producers of explosives in America, for

its entire output up to January, 1916, and then turned round and

offered the Spanish government a million pounds of powder. The Spanish

representatives may have suspected the identity of the company, for

they raised certain objections to the contract, to which Heynen

refused to listen, and he also reported to his superiors that British

and Russian purchasing agents were going to call on him within a few

days. He made a contract with Henry Disston & Co. for two million

pieces of steel, most of them tools, for which Schmidt advanced the

money. He contracted with the Camden Iron Works of Camden, N. J., for

presses, and posted a forfeit of $165,000 in case the contract should

be cancelled; the contract was signed and cancelled the next day by

the Bridgeport company, causing the Camden concern great business

difficulty.

Thus, by the manipulation of contracts, Dr. Albert and his associates

were accomplishing the following ends:

1. Arranging to supply Germany with shells and powder (as soon as

smuggling could be effected) at a time when official Germany was

attempting to persuade the United States to place an embargo on the

shipment of war materials to the Allies.

2. Securing a monopoly on all powder available.

3. So tying up the machinery and tool manufacturers that all their

production for months to come was under contract to the Bridgeport

Projectile Company, yet so wielding the cancellation clauses in its

contracts that delivery could be delayed and the date further postponed

when the manufacturers of machinery and tools could be free to take

Allied orders.

4. Arranging to accept contracts for the United States and the Allies

under such provisions that there would be no impossible forfeit if the

contracts could not be fulfilled. This would have the effect of making

the Allies believe that they were going to receive supplies which the

Bridgeport Projectile Company had no intention of furnishing them.

5. Heynen, by the contract with the munitions industry, which his

work afforded, knew where Allied orders for shells were placed, and

he learned to his pleasure that the Allies were being forced to

contract for shrapnel which was forged--a less satisfactory process

than pressing. He also learned that the first two orders for forged

shrapnel placed by the Allies had been rejected because the product was

inferior.

6. Paying abnormal wages with the unlimited funds at its disposal,

stealing labor from the Union Metallic Cartridge Company in Bridgeport,

and generally unsettling the labor situation.

7. Offering powder to Spain, a neutral with strong German affiliations.

The project was glorious in its forecast. But we may well let a German

hand describe how it failed; among the papers captured by the British

on the war correspondent and secret messenger Archibald at Falmouth in

late August was a letter from Captain von Papen to his wife in Germany,

in which he said:

"Our good friend Albert has been robbed of a thick portfolio of papers

on the elevated road. English secret service men of course." (Papen

was not altogether correct in this statement.) "Unfortunately, some

very important matters from my report are among the papers, such as the

purchase of liquid chlorine, the correspondence with the Bridgeport

Projectile Company, as well as documents relating to the purchase of

phenol, from which explosives are manufactured, and the acquisition of

Wright's aeroplane patents. I send you also the reply of Albert, in

order that you may see how we protect ourselves. This we compounded

last night in collaboration."[4]

Dr. Albert could hardly have chosen a more unfortunate set of documents

to carry about with him and lose. "Pitiless publicity" was his reward,

and the statement which he and von Papen prepared in refutation and

denial was received by those in authority as precisely the sort of

denial which any unscrupulous and able master of intrigue might be

expected to issue under the circumstances--and no more. If there had

been any doubt of the perniciousness of his activities--and there was

none--it would have been dispelled by the seizure of the Archibald

letters, but the result of the exposures of German activity which

made the _New York World_, a newspaper worth watching during August

and September, 1915, was not the expulsion of Dr. Albert, but of the

military and naval attachés. Albert, while he had been magnificently

busy attempting to disturb America's calm, had been cunning enough

to keep his hands free of blood and powder smoke; Boy-Ed and von

Papen had to answer for the origination of so many crimes that it

is almost incredible in the light of later events that they escaped

with nothing more than a dismissal. On December 4, Secretary Lansing

demanded their recall on account of their connection "with the illegal

and questionable acts of certain persons within the United States";

Bernstorff made no reply for ten days, and received a sharp reminder

for his delay; he then replied that the Kaiser agreed to the recall.

Four days before Christmas von Papen sailed for England and Holland.

On January 2 and 3, 1916, his effects were searched by the British at

Falmouth and two documents among others found may be cited here. Boy-Ed

sailed on New Year's Day, but with no incriminating documents, for he

had been warned.

The first document found on von Papen was a letter from President

Knight of the Bridgeport Projectile Company, dated Sept. 11, 1915,

addressed to Heynen at 60 Wall Street--the building in which von Papen

had his office--giving certain specifications for shells that were

being made in the new Bridgeport plant; the second was a memorandum of

an interview on December 21, between Papen, Heynen, G. W. Hoadley of

the affiliated American-British Manufacturing Company, and Captain

Hans Tauscher. The four men had discussed specifications for a time,

and had agreed that firing tests of the projectiles could be made "in

a bomb-proof place by electrical explosion." Delays in production at

Bridgeport are evident in the last sentence of the memorandum:

"It was agreed that Mr. Hoadley, till date, has complied with

all the conditions of the contracts of the 1st April, with the

exception of the commencement of the delivery of the shells, which

is due to _force majeure_, i. e., to failure to timely obtain

the delivery of machinery and tools occasioned by strikes in the

machine factories."

A letter to von Papen from Dr. Albert, then in San Francisco, undated

but obviously written in December, 1915, contained these farewell

sentiments:

"Dear Herr von Papen,

"Well, then! How I wish I were in New York and could discuss the

situation with you and B. E.... So we shall not see each other

for the present. Shall we at all before you leave? It would be

my most anxious wish; but my hope is small. From this time, I

suppose, matters will move more quickly than in Dumba's case.

I wonder whether our Government will respond in a suitable

manner! In my opinion it need no longer take public opinion so

much into consideration, in spite of it being artificially and

intentionally agitated by the press and the legal proceedings,

so that a somewhat 'stiffer' attitude would be desirable,

naturally quiet and dignified!... Please remember me to your chief

personally. I assume that he still remembers me from the time of

the 'experimental establishment for aircraft,' and give my best

wishes to Mr. Scheuch, and tell him that the struggle on the

American front is sometimes very hard.... When I think of your and

Boy-Ed's departure, and that I alone remain behind in New York, I

could--well, better not!"

Perhaps Dr. Albert would have accompanied the attachés had not the

submarine situation been so acute. For while the Government had in its

possession sufficient provocation for his dismissal, and that of Count

von Bernstorff as well, the Government's desire at that time was peace,

and stubbornly, patiently, it clung to its ideal in a dogged attempt to

preserve its neutrality. Dr. Albert had run the British blockade with

his supplies for Germany, and had roared protest when Great Britain

seized cargoes of meat intended for Germany, although she paid the

packers for them in full. He had floated a German loan through Chandler

& Company, a New York house of which Rudolph Hecht, one of his agents,

was a member; he had sold $500,000,000 worth of German securities; to

sum up his financial activities, he had played every trick he knew, and

his last year in America was unfruitful of result, for he was watched.

He returned to Germany personally enriched, for time and again,

prompted by stock tips from his German friends on stocks or "September

lard," and by diplomatic information which he knew would influence the

stock market, he made handsome winnings for von Bernstorff and himself.

FOOTNOTE:

[4] The captain added: "The sinking of the _Adriatic_" (by which he

meant the _Arabic_, which had been sunk without warning on August 19,

with a loss of sixteen lives, two of them American), "may be the last

straw for the sake of our cause. I hope the matter will blow over."

On October 5 the German Government, consistent with its assurance of

September 1 that no more ships would be sunk without warning, disavowed

the sinking of the _Arabic_, and offered to pay indemnities. So the

matter "blew over."

The German Secret Service in America 1914-1918 · 第 14 / 18 章