THE ECONOMIC WAR AND ITS PROPAGANDA
"Economic War":--This reiterated German phrase is not mere metaphor. The
Germans pursued in peace the operations of war. To them commerce meant
not merely the pursuit of trade in peaceful rivalry with others, but a
sustained effort to defeat and oust rivals and reduce to economic
subjugation the lands penetrated. By plunging into open war, which was
meant to continue and to confirm that process, the Germans have risked
their previous gains. Their own weapons are turned against them. The
economic character of the actual war and the efficacy of the economic
weapon in the hands of the Allies become more and more evident. In the
early months of the war this weapon was not wielded with thorough
decision, and Germans beyond the Atlantic were able to carry on
considerable European trade. But today the German merchant is striving
to defend, against an overwhelming weight of maritime pressure, the
ground which he had won through a generation of laborious and patient
effort.
This economic struggle covers all the shores of all the Oceans. Its
Latin-American phase has a special interest owing to the remarkable
position attained in those lands by the Germans, the high value which
they attach to that position, and their special efforts to maintain it
under present difficulties. The most varied ingenuity is called into
play to circumvent the barrier which now cuts off those countries from
Germany. Present risks and losses are viewed as part of the inevitable
waste of war, as an outlay deliberately incurred in the all-important
task of holding open the gate through which, upon the conclusion of
peace, the fruits of German industry are at once to pour in an
irresistible stream, in exchange for those raw materials which are
urgently needed to feed the industrial life of Germany after the war.
This is the constant preoccupation of German business circles--the need
of raw materials. And this is the reason why Latin America, the great
source of raw materials, is courted with eager hope and anxious
apprehension.
It is noticeable that a very large part of the cargoes condemned by the
British Prize Court, as actually intended for the enemy though consigned
to other pretended destinations, consists of goods from Latin America.
For example, in August 1917 the Court condemned quantities of coffee,
seized on a score of neutral steamers and ostensibly consigned to
Scandinavian and Dutch merchants, but in fact shipped by a German firm
at Santos for the parent house in Hamburg. Two months later, it was
stated in court that nearly £400,000 worth of wool, shipped from Buenos
Aires to the Swedish Army Administration at Gothenburg, had been seized
by the British as being in fact destined for Leipzig. At the same time
the Court condemned a number of manufactured rubber articles which had
been found concealed in a passenger's clothing. On a later occasion,
coffee and cocoa valued at nearly £200,000 were condemned, being part
cargo of a Swedish ship bound from California to Gothenburg. They were
consigned by a new and insignificant firm in San Francisco to various
persons in Scandinavia, but were in fact on their way from Guatemala to
Hamburg through Sweden.
The elaborate webs spun by German traders and revealed by intercepted
correspondence were exposed in the Prize Court. Their methods were to
find persons in neutral countries as nominal consignees, to act as
intermediaries for getting the goods to Germany; to set up bogus
companies for the same purpose; to use false names, or names of persons
having no genuine interest in the consignment, and to manufacture false
documents in order to give the appearance of neutral business. This was
done to evade capture by deceiving the belligerent searchers. In some
instances these methods succeeded. Quantities of coffee, consigned to
Scandinavia, managed to elude the allied warships and reach Hamburg.
These are cases of import into Germany. The reverse process, export from
Germany through neutrals, follows similar lines. German goods, falsely
labelled and described as Swiss or Dutch or Scandinavian manufactures,
have found their way across the Atlantic in neutral ships.
The Post Office has also served as a channel of secret trade. Pictures
in the Press have exhibited the odd ingenuity of these devices: how
coffee from Brazil to Germany was found concealed in rolls of
newspapers, and how thin slabs of rubber were sent by post as
photographs, also how quantities of jewellery have been despatched from
Germany for South America in letters and in bundles of samples or
journals. Goods so sent from Germany through the Post Office are mostly
such as combine small bulk with high value--especially drugs and
jewellery.
These partial examples, although each instance may seem small enough,
indicate collectively a good deal of enemy trade which has found devious
routes under stress of war. These manoeuvres may seem at first sight
merely trivial curiosities or at all events to have no more than
ephemeral importance, since they were improvised to overcome temporary
obstacles. But, apart from their intrinsic interest as episodes in one
phase of the war and as evidence of the efficacy of Sea Power, these
devices merit practical attention in view of proposals to fasten
economic fetters upon Germany by the terms of peace, and in view of the
odium which may tell against German commerce for years to come. German
business men are preparing to meet these difficulties by continuing the
method of exporting through neutral agents, and are proposing in some
cases to transport to a neutral country the work of completing
manufacture, in order that goods so produced may appear to be
indisputably of non-German origin; and the Foreign Trade Department at
Berlin has advised German merchants to employ, for some years after the
war, travellers and agents who can pass as French or English. It would
be unwise to underrate any instance of German inventive persistency.
Before the United States came into the war, that country was the channel
of much German trade with Latin America. That road is now closed. The
United States Government has gone further. It refuses coal in North
American ports to ships proceeding from South America to neutral
countries in Europe, unless the innocence of the cargo can be
conclusively proved. This regulation shows that the United States
authorities have knowledge that the ultimate destination of much South
American cargo, particularly from the Argentine Republic, has been
Germany. The blockade becomes more stringent through the co-operation of
the United States and of Brazil, and through the action of the statutory
list of "persons and firms with whom persons and firms in the United
Kingdom are prohibited from trading." British commerce is a big and
living thing, and the prohibition hits very hard any firm placed on this
Black List. One finds here not only Teutonic names, but also
innocent-sounding Latin names: for if a Latin-American is found to be
acting as agent or cloak for a German trader, he finds himself pilloried
on the Black List beside the German. There are obvious ways of evasion.
The name of a clerk or door-keeper or a lady type-writer may appear as
consignee. A varied ingenuity has to be met by constant watchfulness,
and the list is regularly altered and kept up to date. The Black List
has been much criticised for omissions, which are sometimes due to
motives of expediency. But the bitter complaints about its injustice are
unsolicited testimony to its efficacy. A striking example of its working
was manifested in September 1917. After the outbreak of war, such of the
Chilian nitrate works as were owned by Germans were unable to sell their
nitrate or even to obtain jute bags, the supply of which is in British
control. The unsold stocks went on accumulating, until one by one the
German nitrate works were compelled to close down. Long negotiations
between Santiago and Berlin found at last a remedy for this waste. It
was agreed that the large deposits of Chilian gold in Germany should be
set against the German-owned nitrate in Chile. The Chilian Government
bought the nitrate, and paid the German owners by drafts on Berlin,
which were met out of the Chilian money deposits in Germany. Thus
Germany received Chilian gold in exchange for the inaccessible nitrate,
while the Chilian Government received nitrate in exchange for its
inaccessible gold. Chile then sold the nitrate for American gold to the
largest manufacturer of explosives in the United States. Thus, one
result of the blockade and the statutory list is that this German
nitrate goes to make munitions, to be hurled at the Germans on the
French front from American guns. The German Government, by sanctioning
this sale of explosive material to its enemies, gave evidence of its
earnest desire to stand well with Chile. On the other hand, Germany was
impelled to this agreement in order to obviate grave financial loss to
Germans and especially to save a big Hamburg firm from disaster.
The active entry of Brazil into the war has in great part superseded the
action of the statutory list in that country: for Brazil has taken
decisive measures towards Germans within her borders. All enemy
enterprises are in the hands of government receivers. All contracts for
purchase of coffee or other Brazilian products by Germans are null and
void; and in cases where payments had been made by the German
purchasers, all such payments must be handed over to the official
receivers. The United States also publishes a Black List of firms with
whom her citizens are forbidden to deal. Evasion of allied watchfulness
becomes more and more difficult: yet ingenious, and sometimes successful
efforts are made to find loopholes in the wall of the blockade.
There are now in Buenos Aires nearly 150 Turkish firms--Levantines of
every denomination, Mohammedan, Christian, Jewish. Some of these are
long-established and well-reputed houses. But most of them have sprung
up during the war. Some of them, starting with exiguous capital, have
made large fortunes in a year or two of trade. This has been done by
supplying to German black-listed firms goods imported direct from
Manchester and Bradford. Through the close co-operation of the German
bank with German trade, these Syrians and Armenians are enabled, by the
Germans standing behind them, to pay cash against documents in place of
the usual sixty to ninety days' credit, and thus have a great advantage
over the British or allied trader. The British authorities now permit
export only to certain registered Turkish firms. The restriction does
something to limit the abuse of this kind of trading.
Besides these ingenious efforts to keep open communication with Europe,
there is another side of the commercial war. In the neutral states of
Latin America the German business man is as ubiquitous and energetic as
ever, nay more so as he has greater difficulties to contend with. So far
as he can, he sells from accumulated stocks of German goods, for the
German importing houses before the war had gathered great stocks,
especially in Chile. Where this resource fails, he repairs his stock by
buying anywhere. Up to April 1917 he bought largely in New York. Now he
buys where he can and what he can--American goods, French goods, British
goods--anything to hold the market until the ocean shall be free once
more to German keels carrying German goods.
From the Argentine Republic 6000 young Englishmen came home to serve
Britain on the fields of France. The young German would have found
difficulty in getting home, even had he wished to do so; so for the most
part he stayed in the River Plate. Other Germans have been released from
military service and sent out as commercial travellers; for the German
Government regards this too as National War Service. Thus today there
are three German commercial men in the River Plate to one Englishman.
The resources and confidence of the German traders are surprising. They
have bought great quantities of wool in the River Plate--not so much
indeed as is generally supposed; for German emissaries, in order to
force up the price of wool to the Allies, have methodically made
specious but fictitious offers of high prices to sheep-farmers all over
the Argentine Republic. Yet, even so, German traders hold large
quantities both of wool and of grain. These have been purchased partly
for selling at enhanced prices on the spot, but principally with a view
to after-war trade and the supply of raw materials to Germany. These
purchases are proof of firm belief in the future. Moreover, both in
Chile and in Argentina the interned German ships await their after-war
cargoes for Europe. And when the Chilian or Argentine asks whether the
German will be free to use these ships when peace comes, the Englishman
cannot reply. The ships are there, proof of Germany's future power to
trade.
And the Germans are active not only in trade. They have learnt from
British example that the road to business in Latin America is the
investment of capital. And, strange as it may seem, the German has
peculiar opportunities of investment at the present time. Such limited
trade as can be carried on yields great profits. There is difficulty
about remitting funds to Germany; and in any case "victory war loans"
and other investments in the Fatherland may seem less attractive than
investments in those Latin-American lands which look forward to rapidly
expanding prosperity after the war. Accordingly, the German merchant is
not only buying raw materials; he is also taking a share in the movement
of home manufactures which now offers peculiar opportunities to foreign
enterprise. Moreover, German firms in Buenos Aires have invested largely
in short loans to the Argentine Government. Besides these private
investments, which, like all German activities, have their official
side, loans have been repeatedly pressed on the Argentine Government,
ostensibly by neutral financiers (first in the United States and
afterwards in Spain) but in fact by Germany, evidently for immediate
political as well as for ulterior economic objects. These offers have
been declined. A German loan openly offered to Uruguay has also been
refused.
Obviously, the whole story of German war-efforts in Latin America cannot
yet be told. Enough has been said to indicate the character and the
intensity of those efforts. For this far western front Germany has
mobilised a business army, specially trained for the nature of the
country and for the kind of operations wherein it is to be engaged.
These efforts and aspirations are best illustrated by a recent utterance
from the Hamburg branch of the League for Germanism abroad:--"We should
like to insist that South America, the main field of our activity for
many years past, constitutes a great sphere. Wide areas, with great
possibilities of development, but little cultivated hitherto, are
waiting to be opened up. It must be our business to employ here all our
strength in order to retain and to make useful to ourselves these
countries with their markets and raw materials. What we have to do is to
_arm for the Peace_ and to collect money, in order to be able
immediately to act with energy--with our whole strength and with
adequate resources."
* * * * *
In this "arming for the Peace" there is one weapon which demands special
mention, namely the influencing of opinion by printed propaganda.
The German mobilisation of the Press is a vast business controlled by
the State. Upon the outbreak of war this organisation undertook the
special work of war propaganda through two newly formed departments: (1)
Press Office for influencing neutrals, (2) News Service for Spanish- and
Portuguese-speaking countries. This institution of a special
Ibero-American service proves the prominence given to the work in the
Spanish- and Portuguese-speaking lands. The last words obviously include
the Peninsula as well as Latin America. Nor can the propaganda carried
on in Spain be dissociated from that in Spanish America. "Spain is the
way to South America," writes a Spaniard discussing this very point. The
popular illustrated Spanish prints _A.B.C._ and _Blanco y Negro_, which
carry on a vehement Germanophil propaganda, are carefully perused, as
coming from "home," by Spanish emigrants throughout Latin America, who
thus become, half unwittingly, disseminators of German views and of
belief in German victory.
For the first object of this propaganda is to represent Germany as
invincible in war. This military propaganda is an essential part of
economic efforts. The Germans hold up a picture of German sagacity,
system, thoroughness, efficiency. They desire to impress as well as to
persuade. They know the effect produced by their victory in 1870. Credit
and confidence are the greatest of commercial assets; and in this case
economic credit is to rest upon belief in military strength.
In South America, as in Spain, the method is to capture the press, and
so disseminate German war-news, pro-German articles, photographs and
cartoons. But it was not enough to control or inspire existing
newspapers. In many capitals the Germans started new journals, printed
in the vernacular. Naturally, the chief effort was made in Buenos Aires.
Early in the war, a German organ, _La Unión_, was founded, in order
that the Porteño, as he walked the street or travelled by train or
tramway, might have the German case daily and forcibly presented to him.
Throughout Latin America, a dozen or more of newspapers have been thus
founded for propaganda purposes, some of them illustrated by effective
cartoons. The strangest examples of this journalistic campaign are two
Turkish newspapers, _La Bandera Otomana_ of Buenos Aires and _O Otomano_
of São Pãolo, which urge the cause of the Central Powers among Orientals
in those countries. Besides these purely German efforts, a host of
newspapers, many of them the local journals of country towns, serve the
German cause throughout Latin America, the newspaper offices sometimes
acting as distributing agencies for periodicals printed in Germany in
the Spanish tongue.
For, besides German and Germanophil periodicals published in America,
others are produced in Germany for circulation in those countries. The
number and the excellent quality of these Spanish productions of the
German printing-press are remarkable. _La Revista de la Exportación
Alemana_ is a most effective organ for German business, exhibiting side
by side, in pictures and letter-press, triumphs in the field and
triumphs of industry. The monthly _Mensajero de Ultramar_ and the weekly
_Heraldo de Hamburgo_ have been already mentioned. Hamburg also produces
the well-known weekly picture-paper, _Welt in Bild_, with letter-press
in twelve languages. These well-written and well-printed newspapers are
widely circulated in Latin America in order to uphold the German cause.
In addition to these permanent publications, special war periodicals are
issued, every one of them a German trumpet. Not least of these is the
comic paper _La Guasa Internacional_, which holds up the Allies to
ridicule and abhorrence in cartoons, squibs and sketches. A diary of the
war with a review of political and military movements is given in the
illustrated monthly _Crónica de la Guerra_. Another chronicle is _La
Guerra Europea Mirada por un Sud-Americano_, a piece of war propaganda
written by a Latin-American soldier, Señor Guerrero, who was, until
recently, Peruvian military attaché at Berlin. But perhaps the most
effective of these war periodicals is _La Gran Guerra en cuadros_, which
presents, in a series of pictures, the war as meant to be seen by
neutral eyes. All these periodicals attribute economic blunders and
financial errors or weakness to the Allies, sometimes making adroit use
of British or French self-criticisms: on the other hand, they magnify
German economic strength and organisation. This main object appears in
an article on "After-war commercial relations between Spanish America
and Europe" published in _El Mensajero de Ultramar_, which argues that
Germany will suffer least of all the belligerents from the effects of
the war; and that afterwards she will be the best purchaser and also the
most capable provider for Latin America. Such is the reiterated refrain
of a host of periodical publications.
In addition to periodicals, Germany pours over the Spanish-and
Portuguese-speaking world a constant inundation of fly-leaves,
photographs, pamphlets, books and miscellaneous war literature,
preaching German strength, efficiency, humanity, and even the democratic
character of German institutions.
What is the result? Has German propaganda succeeded in moulding
Latin-American opinion concerning the war? Opinion in those countries
has been moved by an argument more potent than all the German
propaganda, and that is the German submarine. The German offers to South
America with one hand persuasive self-eulogies, while with the other
hand he sinks her unarmed trading ships and drowns her sailors.
Unrestricted submarine warfare and the barring of zones to navigation
have drawn Brazil, by successive steps, into active belligerency, and
have done much to bring about rupture of relations and declarations of
war by other Latin-American republics. Yet it would be a mistake to
conclude that German propaganda has entirely failed. The Germans
certainly think it worth while to continue it. The pavements of Buenos
Aires are sometimes ankle-deep with pro-neutrality and anti-ally
leaflets. But it is principally through the persistent and reiterated
voice of the newspaper press, aided by the unremitting personal efforts
of every German and every friend of Germany, that she wages this
secondary warfare, this strategy of moral influence, which mobilises
public opinion, diffuses impressions, colours events, creates an
atmosphere.
A circular was lately issued to the German League in Chile urging that,
if propaganda could delay the severance of diplomatic relations between
Chile and Germany, even for a few weeks, it would help Germany and her
allies to an extent of several millions, and cause damage to her enemies
to the same amount. As the situation becomes more critical for Germany,
her propaganda redoubles in intensity. "Public opinion," says Napoleon,
"is a force invisible, mysterious, irresistible." The Germans recognise
that force, and have done all that was in their power to sway it to
their side. German persuasiveness has not wholly failed. But in this war
of words one decisive word has yet to be spoken, and that word is
Victory.
Yet military victory is not the final word in the economic struggle nor
in the propaganda used in its support. The German South American
Institute urgently emphasises the need of a more thorough and more
stable system of German news supply: and official steps are now being
taken in Germany to consolidate and extend such a system, in order to
provide a permanent support of German influence in the future. The
present aim of her propaganda is not only to exhibit victories, but to
prepare for possible defeat, while representing Germany as morally
invincible and as able, in any event, not only to hold her own, but to
extend and strengthen her position.